CHAPTER 5 Debt, Development, and Human Rights

Kissinger: The Special Relationship, Reconsidered

Kissinger’s strategy toward the NIEO was to use targeted concessions and bilateral appeals to break the unholy alliance of developing countries with oil (namely, OPEC members) and developing countries without. Latin America represented this nexus better than anywhere else. Venezuela—one of the most advanced, democratic, and cash-rich Latin American countries—used its status to promote the South’s agenda for trade and development in both global and regional forums. Finance minister Manuel Pérez-Guerrero had been a delegate at both the Bretton Woods and San Francisco conferences and served as secretary-general of UNCTAD (replacing Prebisch in 1969) and cochair of the 1975–77 Conference on International Economic Cooperation (CIEC).⁵ Others, such as Mexico and OPEC’s newest member, Ecuador (which joined in 1973), also used their status as oil price crisis beneficiaries to promote solidarity between OPEC and the less developed countries (LDCs) on issues of trade and finance.⁶

On September 24, 1973, two days after being sworn in as secretary of state, Kissinger pledged to the UN General Assembly that the United States would “give new vigor to our policy of partnership in the Western Hemisphere.”⁷ A week later, he informed Latin American foreign ministers of his desire to foster “a new dialogue … based on equality and on respect for mutual dignity.” Kissinger made clear the reason behind his sudden attention to Latin America, citing the “revolution of [the world’s] patterns” of trade, energy, and food that brought the problems—and thus the demands—of developing countries to the front of the developed countries’ agenda. The future of North-South relations—or, more specifically, the potential for the South to win concessions from the North—Kissinger suggested, would depend in large part on how cooperative Latin Americans were with the United States in international forums. “So if the technically advanced nations can ever cooperate with the developing nations,” Kissinger reiterated, “then it must start here in the Western Hemisphere.”⁸

The following day the State Department’s Bureau of Inter-American Affairs provided an outline of its “new conceptual approach” to Latin America. A policy of “Pan-Americanism,” the report explained, “has guided U.S. policy towards the countries of Latin America for over a century.” This system had worked well into the postwar period by providing “a philosophical rationale as well as a juridical basis for what was in fact a hegemonic power system with the U.S. at its head.”⁹ The problem, the bureau argued, was regionalism: whereas bilateral relations were still “quite satisfactory,” multilateral relations had sharply deteriorated to the point where even the friendliest of Latin American countries sided with the “radicals” against the United States in the UN and elsewhere. This was exactly the kind of regionalism that Zbigniew Brzezinski described in Between Two Ages, in which he predicted that the increasing unity of the European Community (EC) would spread to other regions.¹⁰ “Farthest along in Europe,” the State Department explained, “the regional bloc concept is taking hold in Latin America as well,” where the “Latins … slavishly attempt to imitate Europe and form a common market.” As with the EC, the United States had to accept the “inevitable”—that is, it could no longer seek to participate in Latin American multilateral politics “on an equal footing with all of the other countries.” Only by limiting paternalistic assumptions of diplomatic compliance and mutuality of interests, which had harmed both US–Latin American relations and North-South relations more broadly, could the United States hold on to a diminishing regional hegemony, the deterioration of which was having global consequences. “There would be ‘linkage’ but not 100% membership,” the report concluded. “The relationship would not be unlike the one we are seeking to establish with Western Europe.”¹¹

There were some similarities between US–Latin American relations and transatlantic relations. Both regions had taken on a new importance at the outset of the Cold War, and in both cases the United States had developed new mutual defense treaties—in Europe, NATO; in Latin America, the Rio Treaty—intended to deter foreign (namely, communist) attacks on the signatories. The United States claimed a special relationship in each instance that justified greater involvement in domestic and regional political developments, and it used economic and military aid to foster a firm anticommunist consensus and discourage Soviet interventionism.

However, the State Department’s comparison obscured crucial differences dating back to the 1820s. “Of the 50 times the United States sent troops outside North America during the nineteenth century,” one scholar notes, “43 instances were in Latin America and the Caribbean.” The US economic presence expanded side by side, so that by the end of World War I more than half of all US foreign investment was in Latin America and the Caribbean—as well as more than 60 percent of US diplomats stationed abroad.¹²

Due in part to president Franklin Roosevelt’s Good Neighbor policy, most Latin American countries were reliable partners during World War II, supplying commodities to the Allied powers.¹³ However, the outbreak of the Cold War quickly brought a reassertion of US power throughout the region. The 1947 Rio Treaty applied NATO’s Article V mutual-defense obligation to Latin America, and it was formalized the following year with the establishment of the Organization of American States (OAS). Socialist governments and even electorally competitive communist parties were tolerated in western Europe, but in the case of Latin America, their presence led to CIA interventions (Guatemala, 1954; Cuba, 1961) and even the landing of US troops (Panama, 1964; Dominican Republic, 1965–66).¹⁴

As the United States claimed extraordinary powers for intervention, it also pledged a special obligation to Latin America’s economic development. A first step was the establishment in 1959 of the Inter-American Development Bank, a sort of mini–World Bank for Latin America; like at the World Bank, the United States retained an effective veto power. In 1961 President Kennedy proposed a ten-year development program for Latin America, the Alliance for Progress, designed to prevent the spread of “Castroism” by promoting economic growth, social and institutional reform, and democracy.

The alliance’s high hopes for economic growth and democratic stabilization ran into the same contradictions as other US development projects. By 1963, Kennedy administration officials predicted that the goals of development and democracy would prove incompatible in several alliance countries; the Johnson administration confirmed this in 1964 when it sent US naval support to right-wing military officers in Brazil seeking to overthrow the left-leaning nationalist government of João Goulart.¹⁵ The contradiction was obvious: “The U.S. had promised change through another democratic revolution while training the armies to prevent it.”¹⁶

The economics of the Alliance for Progress was subject to its own inconsistencies. The focus on foreign investment was not lost on the US business community, which convinced Congress to place strict limits on any competitive imports and ensure that those countries could use alliance funds only to buy US-made capital goods.¹⁷ Further, despite meeting the alliance’s target of 2.5 percent annual growth in regional output per capita, social indicators such as income distribution, land reform, and wage levels were relatively unaffected.¹⁸ Because the majority of alliance investment was channeled through US corporations, only $1.9 billion of the $7.1 billion in income received through private investment between 1961 and 1968 was reinvested in Latin America; the remaining $5.2 billion was repatriated to the United States. Other aid was used to pay off growing public debts, which by 1966 had climbed to more than $12 billion; servicing those debts amounted to about 90 percent of total public and private grant disbursements. At the same time, due to congressional restrictions on competitive imports, US merchandise imports from Latin America fell from 27.2 percent in 1960 to 15.8 percent in 1968, lending support to claims by Latin American economists in ECLA and UNCTAD about North-South terms of trade. “When you look at net capital flows and their economic effect, and after all due credit is given to the U.S. effort to step up support in Latin America,” US ambassador to the OAS William T. Denzer confessed to Congress in 1969, “one sees that not much money has been put into Latin America after all.”¹⁹

These unbalanced and heavy-handed efforts to foster a Pan-American consensus on security and trade contributed to the regionalism identified by Kissinger’s State Department. US governments had always asserted a natural harmony of interests with Latin Americans, and indeed, US markets were essential to Latin American producers, and vice versa. However, the United States resisted lowering its own tariffs on Latin American–made industrial goods, the production of which had picked up rapidly under the import substitution industrialization policies of the 1930s and 1940s. Merwin L. Bohan, a member of the US delegation to the 1945 conference establishing the Inter-American Economic and Social Council, admitted at the time: “The United States has promoted the industrialization of Latin America not only as a matter of general policy, but specifically through lending capital and technical assistance. However, when the governments of Latin America take measures to protect the industries thus created, there is a disposition to frown on all forms of protectionism.”²⁰

Thus, contrary to the State Department’s analysis, regionalism was not simply the consequence of paternalistic rhetoric or a desire to imitate the EC. Informed by the theories of the ECLA and its leader Prebisch, 1950s Latin American governments understood economic union as the only way to continue industrialization in the face of US and European protectionism. In 1960 the Latin American Free Trade Association (LAFTA) was established with seven members and was soon expanded to eleven; the same year, five countries created a Central American Common Market to promote free trade and establish a uniform Central American tariff. Seven years later, Latin American leaders pledged to establish a full Latin American Common Market by 1985, which would integrate LAFTA and the Central American Common Market. Further efforts at Caribbean integration followed in 1968, and the Andean Common Market (or Andean Pact) was formed in 1969 by Chile, Colombia, Ecuador, and Peru.²¹ Regional economic integration gained an international component in 1971 when the Latin American members of the Special Latin American Coordinating Commission—established in 1969 to form collective bargaining positions in external economic affairs—joined with the EC to announce a “permanent dialogue” to coordinate bilateral and regional trade relations, as well as to consult on Latin American economic policy in international organizations.²² “Either we must achieve the integration of Latin America,” Carlos Andrés Pérez announced after committing Venezuela to the Andean Pact in 1973, “or the transnational companies will do it for us.”²³

Despite several setbacks—in 1968 LAFTA was “deadlocked” over intercountry trade disputes, and in 1969 the Central American Common Market was “wrecked” by conflict between El Salvador and Honduras—integration continued alongside Kissinger’s “new dialogue” discussions.²⁴ On October 17, 1975, all twenty-five Latin American and Caribbean governments announced the creation of the Latin American Economic System (SELA). SELA was intended to bring together Latin American regional and international economic objectives, which had suffered from the proliferation of subregional organizations during the 1960s. The establishment of SELA in 1975 was critical because, as the North-South dialogue developed, pro-NIEO leaders Pérez and Echeverría could use it to foster regional and global solidarity in new negotiating forums such as the CIEC.

SELA’s formation was also a reaction to the US Congress’s 1974 Trade Reform Act, which included a provision excluding all OPEC members from the generalized system of preferences granting developing nations special tariffs—even though Venezuela had continued to ship oil to the United States during the 1973–74 OPEC boycott. Throughout 1974 Pérez had been defending OPEC against Ford’s charges at the UN that wealthy oil producers were gouging consumers, including developing countries, for their own benefit.²⁵ In response to Ford’s remarks, in September 1974 Pérez took out a full-page ad in the New York Times to explain the developing countries’ position: “Each year we, the countries which produce coffee, meat, tin, iron, copper, or petroleum, have been handing over a larger amount of our products in order to obtain imports of machinery and other manufactured goods, and this has resulted in a constant and growing outflow of capital and [the] impoverishment of our countries.… Great countries have created the economic confrontation by denying equal participation to developing nations who need to balance their terms of trade.”²⁶

Regardless of the actual economic impact of the Trade Reform Act’s anti-OPEC provision—90 percent of Venezuela’s exports already entered OAS countries tariff free, the US delegate to the OAS remarked—Pérez quickly organized a regional response. At a special OAS session in January 1975, delegates from twenty Latin American countries denounced the measure as “discriminatory and coercive,” and several even said that the issue was serious enough to call off Kissinger’s new dialogue, about which there had been much talk but no specific policy changes. The final resolution, approved by all delegations except the United States’, expressed “deep concern over the deterioration of inter-American solidarity cause[d] by the [act’s] provisions … [which] run counter to the fundamental provisions of the charter of the OAS.”²⁷ Inspired by this act of unity, two months later Echeverría hosted Pérez in Mexico City, where they agreed on the need for an omnibus organization—SELA—to represent Latin American regional interests within the context of global solidarity with the developing countries.²⁸

After the OAS resolution, Venezuela and Ecuador announced that they would not attend Kissinger’s proposed foreign ministers’ meeting in Buenos Aires; Mexico and Chile dropped out shortly thereafter, and the meeting was canceled. With one fell swoop, the new dialogue—never on firm ground anyway—was over. “Ironically,” Kissinger concluded, “the Trade Act had managed to unify Latin America to a far greater degree than the New Dialogue.”²⁹

Kissinger’s main goal in the new dialogue was to diffuse Latin American regional support for the NIEO, organized primarily by Pérez and Echeverría and supported by left-leaning governments in Peru, Ecuador, and elsewhere. Rhetoric aside, Kissinger’s proposal was unacceptable to Latin Americans mainly because there was nothing new about it. “The Europeans are forming blocs,” Kissinger insisted to Treasury Department officials. “We are the only multilateralists left and that plays into the hands of the countries that are forming blocs.” The new dialogue pledged to recognize Latin America as an independent bloc, but Kissinger refused to abandon the concept of a natural hemispheric community with mutually compatible interests, an idea that US policymakers had been asserting all the way back to Henry Clay. Was it a proposal for a new institution, Venezuela’s foreign minister wondered at the February 1974 meeting in Mexico City, or was it a new word for existing arrangements?³⁰ It was, in fact, the latter: as Winston Lord, head of policy planning at the State Department, put it to Kissinger in January 1975, the new dialogue was simply “old wine in new bottles.”³¹

After the fallout from the OAS resolution, the State Department examined the failure of its regionalist strategy. One problem was the fundamental ambiguity of the special relationship. Another was the growing economic diversity of Latin American countries. Despite the proliferation of subregional and regional efforts at economic integration, a few Latin American countries had incomes matching or exceeding some of those in western Europe. These countries were also the most vocal and influential supporters of Third World economic demands in international organizations. Yet, because of their new wealth and a protectionist US Congress, the United States lacked bilateral leverage just where it was needed the most. “The three countries where our interests are greatest: Brazil, Mexico and Venezuela, are rightly no longer eligible for concessional [US]AID programs, just as they have received no grant military equipment since 1968,” Lord and William P. Rogers, assistant secretary of state for inter-American affairs, wrote to Kissinger in September 1975. Nor had the United States been responsive “to their clamor for ‘trade, not aid,’ ” due to “competing domestic and international pressures.”³² In other words, if the United States could not or would not lower its trade barriers, why would Latin Americans endorse Kissinger’s emphasis on reciprocity and give up the regional and international influence they possessed as some of the South’s lead economic negotiators?

Kissinger had more success on another long-standing problem in US–Latin American relations. Ever since its signing by an unauthorized representative of the Panamanian government, the 1903 Hays-Bunau-Varilla Treaty, establishing permanent US rights over the Panama Canal Zone, played a major role in defining US–Latin American relations. US control over the Canal Zone was a powerfully enduring example of Yankee imperialism and was consistently opposed not just by successive Panamanian governments but also by virtually all Latin American governments, friendly or otherwise. After violent riots over the canal in 1964, the Johnson administration began negotiations with Panamanian representatives to reach a mutually acceptable agreement on a continued US presence. Talks fell apart in 1968 following two changes of government—one through elections, and the next, eleven days later, through a military coup.

The new government was led by General Omar Torrijos, a Panamanian military officer who had received training at the notorious School of the Americas, an anticommunist US military institute. Torrijos, who positioned himself as a left-leaning nationalist, soon expressed interest in reopening negotiations. In 1973 Richard Nixon appointed Ellsworth Bunker, a respected diplomat who had served as US ambassador to the OAS under Lyndon Johnson, to represent the new US position, which was to ensure permanent US use of, rather than control over, the canal.³³

Kissinger placed great emphasis on the negotiations and established a personal relationship with Torrijos based on their mutual interest in reaching a new agreement. In 1974 few Americans had any knowledge of the Panama Canal; the “small minority” who did, he explained to Torrijos, was “violently opposed to the agreement, but no group is really for it.”³⁴ But because the canal was tremendously important to Latin Americans, it was central to Kissinger’s goal of reducing Latin American support for developing countries’ strategy of confrontation at the UN. “If these [canal] negotiations fail,” Kissinger explained to Ford in 1975, “we will be beaten to death in every international forum and there will be riots all over Latin America.”³⁵ Torrijos also had to tread carefully. “There is a large group of people [in Panama] whose mission it is to see to it that there is no agreement,” he told Kissinger. “They live off this problem.”³⁶ Nevertheless, negotiations proceeded slowly throughout 1975, and it was clear that even if the two sides reached agreement on a new treaty, neither would risk bringing it to the US Senate during an election year. The final negotiations and signing of the treaty would have to wait for the next president, Jimmy Carter, whose administration had its own idea of what Latin Americans really needed from the United States.

The Carter Approach: A Global Policy for Latin America

Kissinger’s private efforts could not prevent Panama Canal negotiations—a relatively bipartisan if low-key issue up to that point—from playing a part in the 1976 presidential election. Ronald Reagan, Gerald Ford’s challenger for the Republican nomination, used opposition to the negotiations to fire up the Republican base. “We built it, we paid for it, it’s ours, and we’re going to keep it!” Reagan thundered in Florida during the Republican primary. Even Carter was unwilling to take a strong stand in favor of a new agreement. “The Panamanian question is one that’s been confused by Mr. Ford,” Carter alleged during their foreign policy debate in October 1976. “He had directed his diplomatic representative to yield to the Panamanians full sovereignty over the Panama Canal Zone at the end of a certain period of time.”³⁷ Here, Carter was confused. Although neither wanted to admit it, both candidates supported—and Carter eventually signed—an agreement to return sovereignty of the canal to Panama at a later date, in exchange for a guarantee of permanent US access: the same conditions under which Bunker had begun negotiations in 1973.

Despite Carter’s reticence during the campaign, concluding the Panama Canal treaties was the first official policy decision to emerge from his National Security Council’s inaugural meeting. Just as Kissinger had emphasized to Ford, secretary of state Cyrus Vance and national security adviser Zbigniew Brzezinski both stressed to Carter that settling the negotiations was the necessary first step in reshaping US–Latin American relations.³⁸ The implications were especially important for US relations with “regional influentials” such as Brazil, Mexico, and Venezuela, which, in addition to their role in the North-South dialogue, together accounted for almost 70 percent of all US trade with Latin America and more than half of all US investment in the hemisphere.³⁹ “Latin America has become our primary LDC market for machinery, consumer goods, and chemical products—almost as large, in fact, as the entire European Common Market, and larger than Japan,” the State Department wrote in early 1977. “Venezuela (for its huge financial reserves) and Brazil (one of the world’s largest economies) have global roles that match or exceed many of the Western European countries.”⁴⁰ The treaty’s urgency was confirmed during the transition by a joint cable sent from the presidents of Venezuela and Mexico describing it as “the crucial test of the degree of sincerity of a good inter-American policy of the United States.” “The Panamanian cause is no longer the cause of that nation alone,” they insisted. “Its intrinsic merits have made it the cause of all Latin America.”⁴¹

Carter was also urged to make the Panama Canal a priority by the conclusions of the independent Commission on United States–Latin American Relations, also known as the Linowitz Commission. Its chairman, Sol M. Linowitz, had left his job running the Xerox Corporation to replace Bunker as US ambassador to the OAS. Other members included future Carter administration officials W. Michael Blumenthal, Richard Gardner, Samuel Huntington, and Father Theodore Hesburgh, as well as several former US government officials and scholars.⁴²

The Linowitz Commission issued two separate reports in 1974 and 1976, both of which called for an end to the “paternalism and so-called ‘special relationship’ ” that had guided US policy in the past. The authors of the second report recognized that Kissinger had initiated a “more appropriate and effective policy” but determined that its largely defensive nature missed the point: “This Commission believes the new administration should focus early attention on improving U.S. relations with Latin America not because of hidden dangers but because of latent opportunities. Latin America presents the United States with a good chance to fashion a coherent and constructive approach to the fundamental issues of North-South relations more generally.” Instead of a regional approach that sought to co-opt a Latin American bloc in global forums, the authors recommended a new strategy that focused on pressing global issues with regional implications, such as commodity policy, debt, food, technology, arms sales, and human rights. “The primary aim of United States policy in the Western Hemisphere,” they explained, “should be to work with Latin American countries in dealing with this broad global agenda.” First, however, the United States had to resolve the “smoldering dispute” over the canal, “unquestionably … the most urgent issue” in Western Hemisphere relations.⁴³

After Carter’s election, Linowitz sent a copy of the report to Vance, and Vance brought it to Brzezinski and the president. In early December Brzezinski asked the twenty-nine-year-old executive director of the commission, Robert A. Pastor, to join the NSC staff as head of Latin American affairs. (Linowitz was also brought on as Bunker’s conegotiator.)⁴⁴

Pastor’s first task was to draw up two presidential review memorandums (PRMs) on Panama (PRM-1) and Latin America (PRM-17). Pastor finished PRM-1 quickly, and Carter signed it on January 21, 1977. PRM-1 was essentially a refinement of the original US negotiating terms pursued by Kissinger and Bunker. It specified that US negotiators should seek to retain control of the canal for “the longest possible period, to terminate not earlier than December 31, 1999,” and to obtain a “right in principle” to continue defensive operations for fifty years (though negotiators were permitted to go down to twenty). Additional terms were set for possible expansion and access to certain water and land areas along the canal. The negotiations were to remain confidential, but the State and Defense Departments would be in regular consultation with congressional leaders to build support for ratification of a treaty.⁴⁵

Negotiation was difficult on both sides, but Linowitz and his Panamanian partners reached a final agreement on August 10, 1977, six months after Linowitz’s appointment. Two separate treaties resulted from the negotiations. The first treaty required the United States to eliminate the Canal Zone, its “state within a state,” and to transfer all property and responsibility for the canal by the year 2000, when Panama would be in full control. The Treaty on the Permanent Neutrality of the Canal, meanwhile, gave the United States and Panama joint responsibility to defend the canal and keep it open.⁴⁶

Carter was determined to put his own stamp on the canal treaties. He decided that the signing ceremony would be held not at the White House, as Torrijos preferred, but at OAS headquarters. And instead of inviting representatives of the four democratic governments that had advised Torrijos during the negotiations, as Pastor and Brzezinski recommended, Carter decided to invite all Latin American heads of state, including dictators Augusto Pinochet and Anastasio Somoza. “The point of the ceremony,” Carter explained, “was for the American people to see that the treaties enjoyed complete support by all the countries in Latin America and the Caribbean.”⁴⁷ He stressed this in his speech at the treaty’s signing. “This opens a new chapter in our relations with all nations of this hemisphere,” Carter declared. “We do not have to show our strength as a nation by running over a small nation.”⁴⁸

Pastor’s second task was PRM-17. He quickly ran up against the State Department bureaucracy, which was eager to protect the powers and interests of its embassies. “The main conceptual issue,” Pastor recalled, “was whether the United States should assert a ‘special relationship’ with Latin America or adopt a single global policy for the developing world that could be adapted to the unique characteristics of the region’s past relationship with the United States.” Pastor and the NSC advocated the global approach recommended by the Linowitz Commission, while the State Department’s Bureau of Inter-American Affairs favored the special relationship.⁴⁹ When Brzezinski wondered whether “we need a Latin American policy,” Pastor said “No … Your question struck at the heart of the issue. The idea of ‘Latin America’ as a region is a myth. It is composed of extremely diverse economies and polities, which can manage to form a collective negotiating position only when there is a symbolic need to confront the U.S., such as in the Trade Act of 1974 (GSP/OPEC provision). The most important business of the governments of this hemisphere is dealt with bilaterally or globally.” He went on to explain, “The policy that we should seek is one which will help us move from a special policy toward the region to a global North-South policy.” Regardless, Pastor conceded that because of Carter’s special emphasis on the region, any new approach would reflect in part the language and assumptions of the old one. “We cannot move from our current policy—which is indeed a ‘special one,’ ” Pastor acknowledged, “to no policy in a single step.”⁵⁰

Pastor’s analysis shared important similarities with that of Kissinger’s State Department following the failure of the new dialogue. In September 1975 Lord and Rogers recommended to Kissinger that in place of the new dialogue, “we should approach individual countries and groups of countries in Latin America in a differentiated fashion, placing greater emphasis on bilateral and sub-regional relationships, and attempting whenever possible to implement our global economic policies in a way that will engage Latin America’s new middle powers in productive commercial relationships and contain the inevitable conflicts their global emergence will entail.” Although vague on specifics—two of their three recommendations involved stressing the importance of Kissinger’s initiatives at the UN Seventh Special Session to Latin America—their main conclusion could have been lifted straight from a Trilateral Commission or Linowitz Commission report: “interdependence and trade rather than special relationship and aid.”⁵¹

Pastor later admitted that a truly global policy was wishful thinking. “The debate had an unrealistic, theological quality,” he recalled, “because one could argue that in the postwar period the United States always tilted global policies to favor Latin America, and this did not change.” Nevertheless, he recommended that Carter place economic issues at the forefront of his approach to Latin America, so that all the major concerns of the developing countries—“trade, finance, investment, science and technology, aid, human rights, arms transfers and nuclear proliferation”—would be addressed “according to global criteria.” At the same time, the United States should pledge noninterventionism in Latin American affairs and tolerance of political diversity, except in the case of gross violations of human rights; then, Carter should seek to isolate the worst offenders through bilateral and multilateral pressure. But because “North-South economic issues are [Latin America’s] principal preoccupation,” Pastor recommended global trade policies that reflected the existing economic diversity of the so-called Third World: “This means concessional assistance for the poorest countries, and increased trade prospects and improved and coordinated debt management for the middle-income developing countries, which are most of the Latin American countries. Trade, not aid.”⁵²

Carter consolidated Pastor’s initiatives in a speech to the OAS on Pan-American Day, April 14, 1977. After an introduction in Spanish, Carter acknowledged Latin America’s role as a “driving force” in North-South relations, citing as examples Prebisch’s work at ECLA and UNCTAD and Pérez-Guerrero’s current role as cochair of the CIEC. In place of Kissinger’s attempts to separate Latin America from the G-77, Carter pledged “not [to] seek to divide the nations of Latin America one from another or to set Latin America apart from the rest of the world.” His three-point approach included respect for Latin American sovereignty, support for human rights and democratic governments, and progress on the North-South dialogue through “global policies [that] are of particular interest to other American states.” As recommended by Pastor, those policies included supporting the creation of a Common Fund for Commodities, redirecting bilateral aid to the poorest countries, increasing contributions to multilateral lending institutions for more advanced developing countries, flexibility on new rules for foreign investment, support for regional and subregional economic integration, and special treatment for developing countries in General Agreement on Tariffs and Trade (GATT) negotiations. Carter also stressed reductions in conventional weapons and arrangements for nuclear fuel sharing as an element of North-South cooperation, the latter issue being of particular concern to Brazil.⁵³

Almost by definition, the most important economic initiatives of Carter’s global approach to Latin America would take place outside of specifically inter-American forums. The developed countries formally consented to negotiations for the Common Fund during the CIEC, which concluded in June 1977; subsequent Common Fund negotiations were carried out over the next two years by a special committee of UNCTAD. Support for basic human needs became enshrined in the State Department’s definition of human rights, which Secretary Vance announced in speeches throughout 1977; however, effective implementation would be held up by both Congress and the administration when political developments in Africa, South Asia, and Latin America led to a reassertion of Cold War priorities. The administration had its greatest success in the conclusion of the Tokyo round of trade negotiations in 1979, where the generalized system of preferences was formalized in the GATT charter.

The Carter administration’s North-South policy played out in Latin America largely as Kissinger had predicted in 1975: through bilateral, subregional, and occasionally multilateral diplomacy. Carter used bilateral relationships with key Latin American countries—namely, Mexico, Venezuela, Brazil, and Jamaica—to encourage a common position on human rights, economic development, and the Panama Canal. Carter and Vance gave new purpose to the multilateral OAS—which both Pastor and Kissinger had declared essentially dead—to enhance the positions of the region’s most advanced economies (as well as its few emerging democracies, which were often one and the same) and to isolate its worst human rights offenders. First lady Rosalynn Carter traveled to Jamaica, Peru, Ecuador, and Brazil to reiterate the themes of the president’s OAS speech, and Carter met several times throughout 1977–79 with the presidents of Mexico, Venezuela, and Jamaica to solicit their cooperation in cooling North-South tensions. Additionally, President Carter gave special attention to the Caribbean. In a sign of good faith, he surprised Caribbean governments in May 1977 by meeting with the region’s major sugar producers before taking any action to protect domestic sugar producers; the following day he announced that the United States would pursue new international sugar agreements.⁵⁴ Carter’s ambassador to the UN, Andrew Young, also became personally involved in the creation of the Caribbean Group for Cooperation in Economic Development, a subregional development bank launched in 1977 with World Bank support.

Human Rights and the North-South Dialogue in Latin America

A real human rights policy was the Carter administration’s most visible legacy in Latin America and, arguably, the world. “Nothing the Carter Administration has done has excited more hope, puzzlement, and confusion than the effort to make human rights a primary theme in the international relations of the United States,” historian Arthur Schlesinger Jr. wrote in 1977.⁵⁵ Time has hardly cleared this confusion. Historian Tony Smith reflects an enduring and conflicting consensus on Carter’s human rights policy. While Carter’s “abiding concern for human rights abroad” was his “finest legacy to the post–cold war world,” Smith writes, his moralism and “naïve failure to understand” the realities of global politics ensured his ultimate failure.⁵⁶

Not everyone who backed Carter during the campaign embraced human rights as much as he did. For most of Carter’s interlocutors at the Trilateral Commission, including Brzezinski, human rights was just one aspect of the new interdependence, and even then it ranked below the need for trilateral economic coordination, energy cooperation and conservation, and moderation of the North-South dialogue. Brzezinski shared Carter’s belief in human rights “up to a point,” he explained. “Indeed, later on, when a choice between the two had to be made, between projecting U.S. power or enhancing human rights (as, for example, in Iran), I felt that power had to come first.”⁵⁷

For Carter, a human rights policy implied not only ending the “Nixon-Kissinger-Ford” policy of supporting anticommunist governments regardless of their human rights records but also actively using the United States’ bilateral leverage to push its nondemocratic partners toward openness and reform. His predecessors’ policies, Carter believed, had contributed to developing countries’ dissatisfaction with a US-led world order, causing an otherwise false coalition of Third World states to unite around the common denominator of US hypocrisy. Kissinger’s conciliatory speech at the UN Seventh Special Session in 1975 had been a start, but such gestures were undermined by the rest of the Ford administration’s policies toward the Third World, including its intervention in Angola and its approval of Pinochet’s regime in Chile. Here, Brzezinski agreed. “I was concerned that America was becoming ‘lonely’ in the world,” he explained in his memoirs. “I felt strongly that a major emphasis on human rights as a component of U.S. foreign policy would advance America’s global interests … [in] the emerging nations of the Third World.”⁵⁸ In other words, the United States could not have it both ways: to credibly align itself with progressive and democratic reform in the Third World, it had to match its criticism of other states’ human rights records with improvements to its own.

The task of defining a human rights policy fell to an interagency commission chaired by deputy secretary of state Warren Christopher. The group worked largely from the template Carter had laid out in his Notre Dame speech, and the results reflected the importance he had placed on meeting basic human needs. PRM-28 defined three areas of human rights: (1) “the right to be free from governmental violations of the integrity of the person,” such as torture and a lack of fair trials; (2) “economic and social rights,” including “the right to be free from government action or inaction” that inhibits individuals’ access to “basic needs” such as health care, education, and shelter; and (3) “the right to enjoy civil and political liberties.” There was unanimous support for inclusion of the first group of rights, Christopher wrote, but “considerable discussion” about the second and third. However, Carter and Vance “expressly included them” because of their relevance for North-South relations. “A policy which subordinated these rights would not only be inconsistent with our humanitarian ideals and efforts,” Christopher explained, “but would also be unacceptable in the Third World where the tendency is to view basic economic and social rights as the most important human rights of all.”⁵⁹

Although PRM-28 defined all three groups of rights as central to Carter’s human rights policy, the administration suggested giving priority to the first set of violations. Civil and political liberties were a “long term goal” that required building strong democratic institutions, while social and economic rights were “primarily a matter of helping to stimulate economic development.” However, “in countries where the first group of rights is denied or threatened, the protection of those rights has obvious priority.”⁶⁰ This was especially relevant for US policy in Latin America, home to both the most advanced developing economies, which no longer qualified for the basic assistance provided by USAID, and the most blatant and well-publicized violations of “the integrity of the person” prioritized in PRM-28.

There were other important reasons why a human rights policy was implemented first—and pretty much exclusively—in the Western Hemisphere. The two countries in which the United States had the greatest economic stake, Mexico and Venezuela, were functioning if imperfect democracies, and despite their support for the NIEO, the United States retained good bilateral relations with both of them. In the military dictatorships of Chile, Argentina, and Uruguay, the United States had few interests beyond shared anticommunism, and the only real admirers of these regimes were other sitting or aspiring military dictators. “Venezuela’s interests are not the same as ours,” the State Department noted, “but they are closer to ours than any other regional power.” Among Pérez’s goals, only “high prices for oil and OPEC solidarity … directly conflicts with our own.” Pérez had “a much larger role to play” than other Latin American heads of state in issues ranging from Panama Canal negotiations to human rights to regional economic development. Cooperation with Pérez—the leader of the most important developing country in the most important region of developing countries—on human rights and development, State decided, “would be a model for similar projects in other developing countries.”⁶¹

Carter’s goal of creating inter-American solidarity around human rights received an early victory at the June 1977 meeting of the OAS in Grenada. Intent on sending a signal, within months of taking office Carter reduced military aid to Argentina and Uruguay, two of the worst violators of the first category of human rights. Two weeks later, Vance traveled to the OAS meeting with the intention of multilateralizing what was still only bilateral pressure. With the support of the democratic governments of Venezuela, Costa Rica, and the Caribbean, the OAS passed a resolution declaring that “there are no circumstances that justify torture, summary execution, or prolonged detention without trial contrary to law.” Attempts by Argentina and Chile to include an amendment justifying extreme actions in the face of terrorism were rejected by the other members.⁶²

The State Department viewed this OAS session as a major step forward. “We now have hard evidence that human rights concerns have genuine support in Latin America,” with “half of Latin America, including the entire Caribbean, lined up behind us.” However, there was a caveat: “The Grenada Assembly put us clearly on notice that we cannot escape the economic dimension of human rights.” Although the human rights resolutions narrowly passed, a resolution from Colombia calling for the promotion of human rights through economic development was “carried by acclamation” from all delegations. The rhetoric on development had been delivered by the president, the first lady, and Vance; now, action was needed to ensure that human rights was not seen as a smoke screen for avoiding “the aspect of human rights emphasized most in Latin culture, socio-economic well-being.” “Progress on economic issues,” the State Department concluded, “will be critical to allay fears that we are defining human rights narrowly to divert attention from basic North-South issues of growth and equity.”⁶³

That action would be hard to carry out. In fact, it would have been easier if the administration’s slogan—“trade, not aid”—were reversed. “A decade ago,” the State Department pointed out, “aid was our major tool, and the Executive Branch could take most of the decisions.” But now the president had less authority, explicit or otherwise, to negotiate on trade and finance. “Decisions on trade are shared with Congress and critically influenced by domestic pressure-groups,” while for capital and technology transfers, “which come right after trade [in terms of importance] for the Latins … private firms and banks call the tune, not the U.S. government.”⁶⁴ In the age of interdependence, US foreign economic policy was stuck between Congress, beholden to corporate and labor lobbies, and capital, beholden to profit. Of course, the same criticism could be made of the corporate- and interest group–dominated Alliance for Progress in the 1960s, which benefited US firms far more than Latin American ones. But that was the point: post-Bretton Woods capital mobility, aided by petrodollar recycling, transformed banks into supranational entities capable of dictating terms to poor and rich governments alike. As Carter would learn in his meetings with Latin American leaders, they would find this defense self-serving at best.

Debt, Development, and Human Rights: Venezuela

Venezuela had long occupied a unique position in Third World politics. “At minimal risk of inciting U.S. retaliation,” one scholar explains, “Caracas could express a Third World solidarity and sometimes defy cold war policies.” During the Alliance for Progress, the progressive Romulo Betancourt was the Kennedy administration’s chosen partner, sharing a commitment to both social and economic reform and regional anticommunism. Like other US allies, Betancourt condemned Cuban guerrillas and defeated his own country’s insurgents by force, but he also allowed Marxist political parties to operate freely, believing “from experience … that a policy of tolerance and flexibility could divide and weaken the communist left.” Pérez continued Venezuela’s policy of resisting Castro’s adventurism in the hemisphere, but he also pursued a cautious rapprochement, opening diplomatic relations with Cuba in 1974. He expanded Betancourt’s democratic progressivism into a strident Third World internationalism, though he distrusted the Non-Aligned Movement due to Castro’s ambitions for pro-Soviet leadership. Pérez preferred to use the United Nations to advocate for developing countries, where they had the best chance to achieve both solidarity and credibility.⁶⁵

Pérez also used his international advocacy to build support for his government at home. Venezuelan television networks carried his UN speeches live, and newspapers celebrated Venezuela’s outsized role in global politics. However, unlike many other countries in a Third World leadership position—especially its OPEC brethren—Venezuela abstained from the infamous 1975 UN resolution equating Zionism with racism. Instead, Venezuelan diplomats Pérez-Guerrero and Simon Alberto Consalvi were widely respected for their approach to international economic issues in UNCTAD and the General Assembly.⁶⁶ Venezuela’s insistence on a link between the arms race and global poverty also matched the beliefs of Jimmy Carter and many other liberal internationalists in the West. Pérez received support for his efforts from the leaders of several Christian Democratic and Social Democratic parties, including West German chancellor Willy Brandt, who made the link a main theme of the 1980 Brandt Commission report titled North-South: A Programme for Survival.⁶⁷

Pérez had been elected president in March 1974, just as human rights abuses in Latin America were becoming the focus of concerted international attention and activism in the United States and especially western Europe.⁶⁸ He welcomed Carter’s focus on Southern Cone dictators such as Pinochet, whom he held responsible for the death of his friend Salvador Allende. Following Pinochet’s seizure of power, Pérez “opened his country to a flood of [Chilean] exiles,” turning Caracas into “a central meeting place for UP [Unidad Popular] and Christian Democratic leaders, some of whom moved clandestinely back and forth from Chile.”⁶⁹

From the beginning of his administration, Carter wrote to Pérez regularly, describing him as his “counselor” on North-South and Latin American issues. Pérez, impressed with Carter’s sincerity and commitment to human rights, praised his counterpart as “a voice [rising] from a great nation to tell the world that human values are paramount.”⁷⁰ In their first official meeting in Washington, two weeks after the OAS resolution against the Southern Cone, Pérez joked to Carter that “coordination of policies might be too easy,” given their mutual interest in human rights, democracy, and development. Indeed, as they ran through bilateral and regional issues—human rights, terrorism, Caribbean development, Cuba—Carter and Pérez were mostly in agreement. Where disagreement existed, such as Pérez’s decision to reopen diplomatic relations with Cuba, both sides appeared to be understanding about their varying domestic and international pressures. Pérez proposed that they issue a joint declaration and take additional measures to strengthen the Inter-American Human Rights Commission of the OAS following the resolution at Grenada.⁷¹

Pérez continued to support Carter’s human rights policy throughout 1977. He publicly endorsed Carter’s nonproliferation and arms control agendas, increased contributions to the Inter-American Human Rights Commission, and backed a Carter administration proposal to grant the commission the authority to conduct “automatic, on-site investigation[s] of alleged abuses in individual countries.”⁷² Yet State Department fears about the economic dimension of human rights persisted, for good reason. In past years, the United States had failed to meet the 0.7 percent of GDP target for official development assistance recommended by the UN; in fact, it rejected the target as unfair because the United States gave more aid in absolute terms than any other country.⁷³ Most important, in June 1977 the much-hyped CIEC, cochaired by Pérez-Guerrero, concluded with only modest results.

As Kissinger had done at UNCTAD IV,⁷⁴ Secretary Vance delivered a well-received opening speech at the CIEC committing the United States to a new era of North-South cooperation. The US delegation generally held to the positions advocated by the Overseas Development Council and Trilateral Commission during the campaign—which were not far off from Kissinger’s stance in 1975. US officials agreed to a Common Fund but left its content and capitalization ambiguous; they supported a special action program for the Fourth World worth $1 billion, with a US contribution of $375 million (subject to congressional approval); and they pledged to increase official development assistance to multilateral agencies, with Vance promising to double bilateral and multilateral assistance within five years (also subject to congressional approval). No substantial agreements were reached on energy—the most important issue for the United States—and debt—the most important issue for developing countries. “At the Conference’s last plenary meeting,” an executive director of the International Monetary Fund (IMF) reported in Foreign Affairs, “a hastily drafted, and uncommonly bland, report was presented for adoption to a glum and exhausted audience.” The report was “approved but not applauded by the delegates.”⁷⁵

The State Department was “reasonably satisfied” with the CIEC’s results, in that blandness, not acrimony, dominated its concluding resolutions. The real failure was the persistence of bloc politics, “on which the state of bilateral relations between the U.S. and particular countries has had only a rough bearing.” For instance, Iran and Saudi Arabia were “helpful” at the CIEC, largely because any major plan for debt relief would negatively impact their own status as creditors. Mexico and Venezuela, two countries especially attuned to the growing debt problem in Latin America—the result of excessive lending of Arab petrodollars by the Washington, London, and Paris banks that held them—“were not [helpful].”⁷⁶

In fact, CIEC discussions had been postponed near the end of the Ford administration for this very reason. “Brazil, Venezuela, Argentina,” and others, the NSC remarked, “all indicated that their support for postponement was based on expectations that the new Administration will soften the U.S. position on LDC debt.”⁷⁷ By 1977, the debt problem had eclipsed the Common Fund as a priority for not only the oil-importing developing countries. In the 1970s Washington banks saw oil-rich Venezuela as a safe bet, and under Pérez, the country’s external debt expanded from just $700 million in 1974 to $6.1 billion in 1978.⁷⁸ Venezuela, Nigeria, and other indebted oil exporters argued that action on debt at the CIEC would greatly improve the climate of future North-South discussions at UNCTAD, the UN Convention on the Law of the Sea, and the GATT.⁷⁹

However, instructions from the State Department guaranteed that no substantial agreements would be reached at the CIEC. “Because of its temporary nature and restricted membership,” State explained, “it is not a forum for negotiating binding commitments. It should not be expected, therefore, that CIEC will provide final answers to any of the outstanding North/South issues.” The CIEC could provide “general guidelines” on issues under discussion in other forums, such as commodities (UNCTAD), basic human needs (World Bank), external financing (IMF), and trade (GATT), but on debt, negotiators had no instructions beyond opposition. The State Department concluded, “We see no prospect of action in CIEC or elsewhere on generalized debt relief.”⁸⁰

In March 1978 Carter made his third official trip to Venezuela to consult on human rights and the North-South dialogue. After a series of press conferences, Carter gave a major speech to the Venezuelan congress in which he recommitted the United States to the (limited) agreements reached at the CIEC, emphasized basic human needs, and proposed new cooperation on the sharing of science and technology for development.⁸¹

North-South issues again dominated Carter’s private meeting with Pérez. Despite their harmony on human rights, a serious divide had emerged on the future direction of the dialogue. “Since [the CIEC] virtually nothing has happened,” Pérez complained, noting that he felt “pessimistic” about the future. “What worries us is that the North-South dialogue has stagnated.” Pérez-Guerrero, former UNCTAD secretary-general and CIEC cochair, explained why: “We have the impression … that even the U.S. at times was more inclined to defend the status quo than create new solutions. There seemed to be at times those who looked to poverty as the problem rather than to structural changes. But while poverty and the need for aid should be attended to, a change in the rules of the game to permit nations to develop more equitably was also important.” Pérez added: “Concern over the poor is understood, but poverty is a symptom not a cause.”⁸²

Venezuela’s criticisms of the United States’ emphasis on basic needs and poverty rather than the developing countries’ structural agenda for trade and finance put Carter on the defensive. He blamed the G-77 for wanting “all or nothing” in the North-South dialogue and accused it of being unaware of the “practical limitations that exist,” especially in the US Congress. In a way, Carter’s criticisms of the Nixon-Kissinger-Ford style of foreign policy had painted him into a corner. Kissinger and Ford had been “prepared to cooperate more with the developing world than [with] Congress,” Carter explained, whereas he had pledged closer cooperation and consultation with Congress on foreign policy. Carter also blamed the lack of progress on the diversity of the developing countries’ coalition, which led to an “inability … to negotiate with any semblance of order or mutual understanding with 90 different nations.” He and Vance recommended smaller groups to work out proposals on issues such as commodities and debt, and UNCTAD did establish a body to work through the Common Fund, as agreed to at the CIEC. But without a commitment from the United States to back a specific forum for dealing with debt, nothing substantial could occur. On debt, the United States was prepared to do exactly what Pérez-Guerrero suspected and what Vance had indicated behind the scenes at the CIEC: defend the status quo.⁸³

The Carter administration’s decision on debt would have profound consequences for Latin America and for the South in general. Not exactly blameless, Pérez was the first to fall. He had entered office with an unprecedented 48.7 percent of the vote, a plurality not seen since Betancourt’s victory in 1958, and his Acción Democrática Party controlled both houses of the Venezuelan congress. Pérez used this mandate to nationalize the country’s oil and iron industries, giving his government control over the massive revenues flowing in from a global commodity boom.⁸⁴

As part of his “Great Venezuela” program, Pérez embraced a populist social policy, subsidizing education and health care, and a nationalist industrial policy involving large subsidies to existing and new state-owned enterprises. By 1978, Pérez’s government had managed to reduce the poverty rate to 10 percent and the unemployment rate to 5.5 percent, and Venezuela had a per capita income equaling that of West Germany.⁸⁵ With an eye to rising inflation, Pérez established the Venezuelan Investment Fund to reinvest oil profits in various regional development projects and to provide aid to Latin American and Caribbean oil importers.⁸⁶

The boom did not last. Efforts to “sow the oil” through industrial policy, such as an attempt to build a Venezuelan auto industry, required far more investment than could ever be realized in profits. Pérez ended up putting more money into industry and infrastructure than into social programs, spending 15 percent less on education, health, housing, and government services than his predecessor. The focus on industrial policy left other critical sectors behind: by the end of Pérez’s term, dependence on foreign food had increased to 70 percent, and food prices had risen by 16 percent, leading the government to subsidize basic foodstuffs in addition to industry.⁸⁷ His strategy also suffered from the vast web of patronage and corruption encouraged by ready money and a lack of adequate oversight. Public corruption became the focal point of opposition to his government, including within Acción Democrática, which began to block his spending proposals in congress.⁸⁸ Falling oil prices in 1976–77 did not help, leading Pérez to seek outside loans to meet his large domestic and foreign commitments.

In December 1978 Pérez and Acción Democrática were defeated by the Christian Democratic Party. The new president, Luis Herrera Campins, quickly “liberated” domestic food prices and eliminated automobile production. “I inherited a country mortgaged by debts,” Herrera explained to Venezuelans on the day of his inauguration.⁸⁹ His meetings with US officials were dominated not by the North-South dialogue and human rights but by concerns about falling oil prices and new energy-based cooperation with the United States and Mexico, which had just discovered large oil and gas reserves off its coast.

Like Herrera, José López-Portillo—Echeverría’s successor in Mexico—was “expected to moderate Mexico’s flamboyant advocacy of Third World positions.” Echeverría’s leadership in the North-South dialogue had become “an irritant” in bilateral relations with the United States and had caused worry among both US and Mexican investors, Carter administration officials explained.⁹⁰ Calming investor fears was essential for the success of López-Portillo’s plans for a gas pipeline to the United States, which involved a complicated interplay of inviting but also containing US influence in the project.

López-Portillo would not return to the North-South dialogue in a significant way until 1981, when he agreed to host a North-South summit in Cancún attended by the new conservative leaders of the United States and Britain: Ronald Reagan and Margaret Thatcher. That North-South summit—expected to revive whatever little spirit of generosity remained in the North after a second oil crisis, more inflation, and the return of East-West tensions—would be the last. Less than a year later, López-Portillo’s finance minister announced that Mexico was defaulting on its foreign debt, kicking off a regional debt crisis culminating in La Década Perdida—the lost decade of development for Latin America.

Security Crises and the End of the Global Approach

Changes of government in Venezuela and Mexico were one reason why North-South issues virtually disappeared from the United States’ Latin America strategy by 1979. Another was a series of global and regional security crises that would overturn fundamental assumptions about human rights and democracy central to the Carter administration’s post–Cold War vision.

Many scholars have described a second half of the Carter administration, in which a series of international crises overtook its lofty goals for world order and cooperation.⁹¹ Much of this transition is centered on a Vance-Brzezinski split, in which Carter sided with the hawkish cold warrior Brzezinski over the more dovish Vance.⁹² In fact, most of the impetus for a tougher stance on security came from Carter. Frustrated with the State Department’s failure to speak out on Soviet-Cuban interventions in Angola and Afghanistan, the president instructed Brzezinski to take the lead.⁹³

The first and most serious crisis in Latin America involved Nicaragua, which had been run as a family dictatorship since the 1930s. By the mid-1970s, the Somoza family had alienated virtually every group outside of its inner circle with its blatant corruption and repression. In September 1977 Anastasio Somoza, under pressure from the Carter administration, permitted a more open political atmosphere, but he soon reversed course when he realized the full scope of the opposition to his regime, which included not just the lower and middle classes but also the leaders of the Nicaraguan business community. Following the assassination of Pedro Joaquín Chamorro, a prominent opposition leader and newspaper editor, members of the business community called for a general strike that shut down the capital. However, their leadership during the strike was eclipsed when the Sandinista National Liberation Front (FSLN), a Cuban-inspired group of guerrillas founded in 1961, seized control of the palace in August 1978, signaling the end of nearly five decades of family dictatorship.

“Caught between a dictator it refused to defend and a guerrilla movement that it would not support,” the Carter administration sought a multilateral solution through the Organization of American States. After Somoza rejected OAS calls for a national plebiscite, the Carter administration imposed sanctions on his regime but declined to support the FSLN, which, despite representing an increasingly broad coalition, proclaimed a revolutionary Marxist ideology. However, the administration’s allies in Panama, Costa Rica, Mexico, and Venezuela supported the FSLN, as did Cuba, which supplied the guerrillas with much-needed arms. With help from Panama, Mexico, Venezuela, and others, the OAS rejected a US proposal designed to limit the FSLN’s representation in a transitional government. Lacking the support of his democratic friends, Carter decided against a unilateral solution, and a Marxist government took power in Managua on July 19, 1979. With his country’s fortune in tow, Somoza fled to Miami, but unlike the ailing shah of Iran—who spent his final days in Minnesota receiving treatment for cancer—the Carter administration denied him entry. Somoza eventually took up residence in Paraguay, where he was assassinated one year later.⁹⁴

The crisis in Nicaragua marked a turn back toward Cold War worries in the Western Hemisphere and away from the global approach urged by Pastor and the Linowitz Commission. When the Marxist New Jewel movement seized control in Grenada in March 1979, Carter again asked the Latin American democracies for advice. This time, they recommended neither helping nor confronting the increasingly pro-Cuban, pro-Soviet regime. Instead, the United States supported democratic governments in the Caribbean by increasing its aid programs, including the Caribbean Group for Cooperation in Economic Development, promoted by UN ambassador Andrew Young. Support in Congress for Carter’s Caribbean development policy was never on firm ground, and it took another hit when the United States discovered a Soviet brigade off the coast of Cuba during the 1979 Non-Aligned Summit in Havana. According to Pastor, “Castro thought the United States had concocted the entire incident to embarrass him at the Summit, but the incident was more embarrassing and politically costly to the Carter administration. As with each of the strategic confrontations in Cuba, the Soviet brigade issue had almost nothing to do with Cuba and almost everything to do with the perceived balance of power between the Soviet Union and the United States.”⁹⁵

There was one bright spot in the Caribbean. Since the “quite successful” start to the Caribbean Group for Cooperation in Economic Development, a hopeful Brzezinski reported to Carter, “the political winds in the Caribbean are definitely blowing in a moderate direction.”⁹⁶ But this was too little, too late. According to Pastor, there was “no question” that the greatest failure was the administration’s economic policy. “We have been criticized most vigorously not for what we have failed to do, but for what we have done,” including doubling sugar duties, dumping tin, holding back funds from development banks, giving Australia and New Zealand but not Latin America preferences on meat, and imposing countervailing duties against Brazilian exports. “These decisions do not seem terribly important to us, but each has provoked a bitter response in Latin America, and they have a cumulative effect.”⁹⁷

Mexico was one example. The United States had failed to reduce trade barriers against Mexico during the negotiations over López-Portillo’s proposed gas pipeline. The conflict on trade expanded to disputes over border policy and weapon sales, and Carter’s unfortunate public comment about contracting “Montezuma’s revenge” while visiting Mexico in March 1979 compounded López-Portillo’s sense of disrespect, unnecessarily prolonging the important gas negotiations and straining US-Mexico relations.⁹⁸ When López-Portillo refused to admit the shah of Iran into Mexico after his operation in the United States, reasoning that it would hurt his standing in the Third World, Carter was “outraged.” “By the end of 1980,” Pastor concludes, “the relationship that Carter had hoped to build with Mexico had become a casualty to miscalculations, divergent perceptions, and some policy differences.”⁹⁹

All the economic policies listed by Pastor had one thing in common: they had been determined primarily by Congress. There was scarce public or congressional support for liberalizing US trade with developing countries when Carter entered office, but as Kissinger had learned with the 1974 Trade Act, the one factor uniting the diverse governments of Latin America—Marxist, leftist, democratic, capitalist, liberal, nationalist, or authoritarian—was US trade policy. Outside of GATT negotiations, the only real tool the president had to change trade policy was to convince Congress and the American people that it was in their interests to do so. But the domestic effects of interdependence—in the form of surging energy prices, stagflation, and unemployment—contributed to support for protectionism not seen in the United States since the 1930s. And considering the strong precedent of US corporate influence over economic legislation affecting Latin America, even a direct appeal to the American people probably would have had little positive effect (and almost certainly would have caused a great deal of backlash).

Carter’s call for increased economic and political cooperation with the Third World proved persuasive enough in 1976, but his seeming inability to deal effectively with multiple security crises in Latin America, the Caribbean, the Middle East, and Central Asia—as well as a stagnant economy impervious to the tools of the old Keynesian playbook—exhausted public support for development before his administration could really get started. Nor did he continue to make the case for Third World development to Americans after the first few months of his presidency, a fact not lost on officials in the NSC’s North-South cluster.¹⁰⁰ As two public opinion analysts put it, the American public “felt bullied by OPEC, humiliated by the Ayatollah Khomeini, tricked by Castro, out-traded by Japan, and out-gunned by the Russians.” When the second oil shock hit in July 1979, the same month the Sandinistas took control of Nicaragua, Carter’s popularity was lower than Nixon’s had been two months before he resigned.¹⁰¹

Despite claiming to take a global approach, the Carter administration’s strategy in Latin America never really extended beyond regionalism. It was not without its successes: the number of human rights violations related to the integrity of the person declined significantly in the Southern Cone, and Carter would leave a powerful legacy in US foreign policy that both Republicans and Democrats would draw on, sometimes for opposite purposes. However, a global approach based on changing US trade policies for advanced developing countries and a basic human needs strategy for poorer developing countries was impossible without support from Congress, which Carter neither had nor sought.

Instead, as the NSC’s Thomas Thornton explained, congressional protectionism was running opposite to “the open trade policies that the situation requires.” As for the basic needs approach, it was “seen as patronizing, if not interventionist, by most of the poorer countries with whom we deal,” and it “reflected a condescending American attitude and was therefore especially ill-suited to mesh with a key aspect of our North-South strategy—the attempt to cultivate regional influentials.”¹⁰² Key developing countries remained unconvinced that Carter’s emphasis on basic needs was not a tactic to avoid a discussion of structural issues. Thus, Pérez characterized poverty as a symptom of international economic relations rather than a cause in itself.

If the global approach never really happened, the bilateral or regional approach failed to translate to other areas—namely, functionally specific forums such as the CIEC and UNCTAD. According to the NSC, these forums constituted the “soft” plane of North-South bargaining and were the only places where the United States confronted the South as a whole. Despite warm relationships with several Third World leaders, “there is no effective link between our bilateral concerns with specific developing countries and the implementation of international economic policy on the one hand,” Guy Erb wrote to Brzezinski, “and [soft] ‘North-South’ encounters on the other.”¹⁰³ This made sense when considering the generally conservative position taken by the United States in each of the soft forums; as Pérez-Guerrero told Carter, developing countries saw the United States as “more inclined to defend the status quo than create new solutions.” These contradictions—between Carter’s rhetoric and bilateral relationship building and his diplomats’ conservatism in UNCTAD and the CIEC—produced a strategy that was “fragmented and limited,” causing division in both North-South and North-North relations.

Nowhere was division more likely than on debt. From the beginning of the North-South dialogue, US proposals on debt focused almost exclusively on the poorest Fourth World countries. But since then, official debts had skyrocketed in the fourteen “upper-tier” developing countries. Their annual interest payments were estimated at $7 billion, and their annual payments on principal were expected to reach $16 billion by 1979, a 45 percent increase from 1976 and nowhere near the modest amounts the United States had pledged for the Fourth World.¹⁰⁴

If the United States was not prepared to act on debt, it would at least have to allow more exports from debtors—but it was not prepared to do that either. “Without an adaptation to that need,” Erb foreshadowed, “we run the risk of threatening the viability of the international financial system.” The outlook for UNCTAD V in May–June 1979 was not good: “The US position for the forthcoming UNCTAD meeting on international debt is currently so modest that strains within the OECD group and a confrontation with the developing countries appear inevitable.” Within the OECD, France, Britain, and Germany viewed the United States “as a conservative force whose defense of economic principles will prevent the adoption of measures that some European countries are willing to accept,” and progressive countries such as Sweden and the Netherlands considered it “an obstacle to real progress in the North-South Dialogue.”¹⁰⁵

Erb then outlined three strategies the United States could take. One, it could continue to “muddle through” soft forums, with the hope that G-77 disunity would prevent confrontation. Two, it could “buy some time” with “a long list of initiatives,” as Kissinger had done in his speech at the UN Seventh Special Session: “Such a policy might buy some time, but our credibility would be immediately questioned, and we would be correctly perceived as retreating from stated objectives.” Three, the United States could embrace the theme of shared cooperation from Carter’s speech to the Venezuelan congress. Such an approach would include stressing the “hard choices” limiting US policy, such as congressional pressure and other domestic concerns, “coupled with a serious effort to move toward mutually beneficial policy initiatives wherever possible,” especially in the areas of science and technology, food, and energy. This approach would also emphasize US actions in the UN and functional entities such as the IMF, World Bank, GATT, and especially UNCTAD, where the United States was farthest apart from both the G-77 and the OECD. Option three would not resolve the North-South divide by itself, but it “could break the deadlock in which the OECD countries and Group of 77 now find themselves,” while also helping to “clear the air” in US bilateral or regional relationships.¹⁰⁶ However, it would require a substantial change in the State Department’s conservative position in soft forums. “We approach these economic negotiations individually without any grand strategy,” Thornton elaborated, “What we need to do is find some areas where we need not be defensive. The only way to force [undersecretary of state for economic affairs Richard] Cooper and Company to do this is to make them show their entire hand on the full range of North-South negotiations. They have a very good case to make on each individual point. The poverty of their position seen as a whole, however, will be so evident that Vance or the President will tell them to do something.”¹⁰⁷ “Firm implementation of this option would entail some bureaucratic upheavals,” Erb concluded, “but without a commitment to take that risk I see little prospect that our North-South policies will be any different in 1980 than they are now.”¹⁰⁸

Brzezinski approved option three and put Pastor, Erb, and Thornton to work on an outline for a new US strategy for the North-South dialogue. But would they succeed against bureaucratic resistance, a hostile Congress, and a skeptical public at a moment of economic crisis and foreign policy reversals?