Mandate for Leadership II – Continuing the Conservative Revolution

The book does not mention Suriname at all.

U.S. Territories

The incoming Reagan Administration was urged to review the federal organizational scheme, and the current and alternative economic assistance programs for the nation’s overseas territories. Unfortunately, no progress has been made on this task. In fact, there are indications of a further fragmentation of policy. Progress on the examination of alternative economic assistance programs for territories and their inhabitants, for instance, has been limited to technical assistance and to efforts to attract investment.

The Interior Department has failed to make a compelling case for taxing the territories differently from the mainland. On the contrary, the major decisions over economic policy in the territories have been left with the Treasury Department, whose interests are in raising revenue and not in encouraging development and self-sufficiency.

The results of this approach can be seen in the Caribbean Basin Initiative, which represents a missed opportunity, thanks to organizational deficiencies and a lack of policy direction. It is also evident in a failure to consider U.S. Territorial Policy in the Treasury Department’s resolution of tax administration. Similarly, the proposal to permit Guam to assume the role of the United States’ Hong Kong generally has been ignored by most officials of the Interior Department, to the detriment of the island itself, to the rest of the United States, and to the possible future refugees from Hong Kong.

Three separate interagency groups on territorial policy have been created, further fragmenting administration and policy formulation. In addition, by switching the Micronesian status review to the national security side of the Office of Management and Budget, the limited coordination achieved by OMB in the past has been eliminated.

Assessing U.S.-Soviet Relations

by W. Bruce Weinrod and Manfred R. Hamm

The Reagan Administration came to office after years of Soviet advances during what was called “detente.” Western efforts to restrain Soviet expansionism and to control the arms race by offering Moscow a stake in a long-term, cooperative relationship with the West clearly had failed. Given the record of Soviet behavior during this period, it became apparent that detente had rested on false assumptions about the goals of Soviet foreign policy.

The 1970s were a period of rapid Soviet expansion throughout the Third World. Moscow fomented subversion and insurrection and exploited sources of instability, enthroned client governments with the help of proxy forces, and secured military bases that expanded its global military reach. In Africa, Moscow exploited the collapse of the Portuguese colonial empire, gaining important footholds in Angola, where Cuban involvement was decisive, and in Mozambique. Again with the help of Cuban proxies, Moscow gained a new ally in strategically important Ethiopia and exploited regional differences in the Horn of Africa. With Soviet backing, North Vietnam brought all of Indochina under Communist rule and Moscow took over vital former U.S. airfields and naval installations. Soviet expansion was capped by the invasion of Afghanistan in 1979, where over 100,000 troops are still engaged in bloody fighting. In the Caribbean, Moscow took advantage of Marxist seizures of power in Nicaragua and Grenada to extend its influence.

Equally sobering was the unprecedented magnitude of Moscow’s military buildup during these years. One cardinal goal of the U.S. arms control community, especially with respect to strategic nuclear weapons, had been to stabilize deterrence and to restrain the arms race. But there was mounting evidence that Moscow did not share this objective and was ignoring arms control to gain military superiority over the West. The Kremlin’s strategic nuclear arsenal grew enormously, bringing Moscow from a position of strategic inferiority at the onset of detente to superiority in some critical measures of nuclear deterrent capabilities. Most disturbing has been the mounting evidence that not only had the Soviets violated arms control agreements but that they had been doing so almost from the date of signing.

In Europe and elsewhere, Soviet conventional forces were modernized, closing the qualitative gap that formerly allowed NATO to offset in part the quantitative superiority of Soviet forces. The Soviet Navy, in particular, developed from a coastal defense force into a blue-water navy capable of denying to the U.S. its traditional use of sea lanes indispensable to maintaining trade and security with allies. The Soviet air force, meanwhile, is now able to insert troops on short notice virtually anywhere in the world.

Trade, scientific and technical cooperation, and loans on concessionary terms that were supposed to promote detente failed to moderate Soviet behavior. To the contrary, in many respects Moscow’s military buildup had benefitted from commercial ties with the West, particularly the transfer of technology with military applications. The West, not Moscow and its satellites, became dependent on trade with the Soviet bloc, which was skillfully manipulated by Moscow to sow discord within the alliance.

Thus, by the late 1970s, the once-fashionable liberal views about the sources of Soviet behavior had been discredited by Soviet actions. The conviction that Soviet obsession with military power grew out of a paranoia with territorial security based on a history of foreign invasions overlooked the fact that Moscow’s concept of security always has depended on creating insecurity among its neighbors. The belief that Moscow’s invasion of Afghanistan was merely to protect its security showed insufficient understanding of the power vacuum created by the chaos in Iran. The hopeful view that Moscow’s gains were at most ephemeral was discredited by the continuing presence of Soviet and Soviet proxy forces throughout the Third World.

Even President Jimmy Carter, whose Administration, with the major exception of Zbigniew Brzezinski, had embraced these views, finally was forced to recognize that they were naive. During Carter’s last year in the White House, U.S. foreign policy began turning gradually toward a more realistic approach to dealing with the Soviets.

The Reagan Administration and Relations with Moscow

Ronald Reagan came to power with a cohesive and well-established view of the Soviet Union, its ideology and domestic political system, and its foreign policy objectives. He drew lessons from the failure of U.S. policy to restrain Soviet power. He believed that the overarching objective of Soviet Communism is to maximize the military and political power of the Soviet state and to extend it abroad whenever the opportunity arises. Since expansionism is endemic to Marxist-Leninist ideology and Soviet state interest, the incoming Reagan Administration concluded that it must be checked by countervailing military power combined with Western political will and unity.

Moscow correctly was viewed as the principal, though not exclusive, cause of international conflict and instability. Its past successes in extending its influence threatened to undermine the Free World. As the most powerful free nation, the U.S. has a responsibility to check Soviet aggression, to foster Western unity, and to mobilize liberal democracy to counter Soviet-sponsored Marxist-Leninist subversion.

Central to Reagan’s policy toward Moscow was the restoration of U.S. military strength, which had atrophied for more than a decade under Republicans Nixon and Ford as well as Democrat Carter. This involved strengthening the strategic nuclear deterrent, the rebuilding of the Navy to 600 ships and 15 carrier task forces, accelerated procurement of new equipment for the Air Force and Army, and improvements in military pay, maintenance, training, and readiness.

The Administration has scored major successes in rectifying the nuclear balance with Moscow. Reagan revived the B-1 strategic bomber program, aborted by the Carter Administration, proceeded with the development of the Trident II missile, and launched a major program to strengthen U.S. CT assets. Pursuant to the recommendation of the Scowcroft Commission, the Administration also began R&D for a small, mobile, single-warhead missile, the so-called Midgetman.

Despite these successes, the Reagan Administration could not devise a survivable basing mode for the MX missile which would reduce the vulnerability of the U.S. land-based nuclear deterrent. The Administration eventually halved procurement of the MX to only 100 missiles. Only this seemed to avert complete cancellation of the MX program by Congress.

Regarding arms control talks, the incoming Administration correctly examined the entire range of choices and took the time necessary to formulate clear objectives before returning to the negotiating table. Strangely, however, it pledged to adhere to SALT II (if Moscow also would), but failed to explain why it was observing a treaty that it considered unverifiable and fundamentally flawed. Nevertheless, it recognized that the U.S. arsenal had to be rebuilt, for arms control could not be negotiated from a position of weakness. The Administration correctly did pursue limited, narrowly drawn agreements, such as the “hotline” upgrading and specific confidence-building measures to avoid a surprise attack on Europe.

The Reagan Administration also strengthened NATO, particularly through deployment of Pershing II and cruise missiles in Western Europe. This deployment, in the face of tough Soviet, and some intense public, opposition in Western Europe, has strengthened the NATO alliance. In a broader context, the President also began forging a new strategic consensus among the principal Western countries. At the Williamsburg economic summit of 1983, the participants for the first time referred to the global Soviet threat and included a statement on the need for strategic, in addition to economic, cooperation with Japan.

The President also sought to stop Western subsidies for the Soviet bloc and to revise Western trade policies to restrict the transfer of high technology to Moscow and its satellites. Useful steps were taken in strengthening the Western COCOM strategic trade monitoring agency and in getting allied governments to agree in principle to stop the most visible forms of credit subsidies, although more needs to be done. The President’s determination to stem the costly hemorrhage of Western technology was clear from his willingness to risk a divisive row with the NATO allies when he imposed unilateral export restrictions to halt Western participation in building the Siberian gas pipeline. Other unilateral U.S. actions included an improved policing of trade with the Soviet bloc, which eventually won the cooperation of the European allies and Japan. The Administration did not reach all its objectives in curtailing East-West trade and ending Western subsidies of Soviet military power. But the improvements will have a significant impact on Moscow’s ability to draw on Western financial and technological resources to sustain its military buildup and forestall domestic economic collapse.

The Administration also spoke out forcefully against human rights violations and oppression in the Soviet Union and Central Europe at the Helsinki Review Conference held in Madrid. Together with the West Europeans, it used that forum to publicize Moscow’s systematic disregard of the obligations it assumed by signing the Helsinki Final Act in 1975. U.S. leadership in seeking Soviet compliance with the human rights provisions of the accord had a positive impact on European public opinion.

When necessary, Reagan was willing to use direct military force to halt threatened Soviet expansion. He dispatched U.S. troops to liberate Grenada, a Soviet-Cuban outpost in the Caribbean and a springboard for Communist subversion throughout the region. In Afghanistan, the Administration gave active, but inadequate, support to the vastly outnumbered and outgunned Freedom Fighters who have resisted Soviet forces for five years. These actions represent a decisive reversal of a decade of U.S. retrenchment in the face of the Soviet challenge. The intervention in Grenada in particular shattered spreading notions that Communist advances are irreversible. It thereby encouraged democratic forces resisting Soviet domination elsewhere in the world. Indeed, with Reagan in the White House, Moscow has scored few solid gains and has suffered some reversals. Throughout the Third World, attraction to Soviet-type Communism is diminishing. Recognition also is growing that the West—not the Soviet Union—can help developing nations grow economically. Thus, even Marxist Angola and Mozambique have begun to eye closer ties with the West and the U.S. The White House has encouraged these moves.

The Administration also launched the “National Endowment for Democracy” (NED) to compete ideologically with Moscow. NED is to help develop or consolidate democratic ideals and institutions. The Administration developed Radio Marti for broadcasts to Cuba and upgraded and strengthened the Voice of America (VOA), which had received inadequate backing from the Carter Administration. Reagan recognized that VOA is an important and cost-effective asset in U.S. public diplomacy and that the U.S. must use it extensively if it is to parry Communist propaganda and defeat Moscow in the war of ideas.

Overall, while the rhetoric was sometimes strong, relations between the U.S. and the Soviets stayed on a steady course. There were no true crises between the superpowers, as for example the Cuban missile crisis, the Berlin crisis, or the 1973 Arab-Israeli conflict. Given the steady, sustained U.S. military build-up, prospects are reasonably bright at the beginning of the second Reagan Administration that Moscow finally will join in serious discussions on areas of disagreement.

Central America and the Caribbean Basin

by Esther Wilson Hannon, Virginia Polk, and Georges Fauriol

The major objectives of the Reagan Administration for the Caribbean Basin and Central American region have been to: 1) encourage the democratic process; 2) promote sound long-term economic development based on a strong private sector; 3) search for peaceful resolution of disputes through democratic elections and verifiable international agreements; and 4) strengthen the security of regional states against the threat posed by violent extremes and external forces.

The major focus of Reagan policy inevitably has been El Salvador. Through economic, technical, and military assistance, the Reagan Administration has supported the democratic process in that country and undermined the political and military strength of the predominantly pro-Cuban Marxist guerrillas, as well as anti-democratic forces of the right.

The establishment of a working democracy in El Salvador also has improved the prospects for peace in that country and the region by invalidating the assumption prevalent in the past decade that violent and leftist or Marxist revolutions were historically inevitable in undeveloped and authoritarian countries, and that, in the interest of peace and social justice, such movements should be allowed to gain control. Thus the Reagan Administration’s policies supporting real self-determination have greatly improved the prospects for long-term peace and security for the region.

Recognizing that economic growth in the Central American and Caribbean Basin region is vital to U.S. and Western Hemisphere security, as well as necessary for the emergence of stable, democratic governments, the Reagan Administration launched two major initiatives to promote economic growth in the region: the Caribbean Basin Initiative (CBI) and the Central America Democracy, Peace, and Development Act, based on the recommendations of the National Bipartisan Commission on Central America.

The original 1982 CBI proposal contained substantial U.S. trade concessions, investment tax credits, and balance of payments support. A predominantly protectionist U.S. House of Representatives, however, diluted the measure, limiting the impact of the program. Although the original CBI plan did not include tax breaks for U.S. corporations remitting profits from Caribbean investments and continued to restrict imports into the U.S. of sugar and textiles, significant gains have been made. Investments already range from agribusiness to assembly manufacturing, and increased U.S. shares of Caribbean exports show promise for the region.

The Administration’s foreign assistance package for Central America, which closely follows the Bipartisan (Kissinger) Commission’s recommendations, has been approved in part but is unlikely to be passed in its entirety. In fact, the program was overly ambitious given the limited absorptive capacities of the region’s nations. The Administration also has supported targeting U.S. economic assistance to the region through a new Inter-American Investment Corporation.

The Administration has worked toward the peaceful resolution of conflicts between Nicaragua and its neighbors by cooperating with the Contadora negotiations, begun in January 1983, by Colombia, Panama, Mexico, and Venezuela, to reach agreement on a regional peace treaty. The Contadora objectives are: national reconciliation through open elections, a ban on foreign military bases, an end to support for insurgencies and terrorism in neighboring countries, and restoration of a military balance among the region’s countries.

The Administration also began talks with the Sandinista government of Nicaragua on the same points. In both instances, the Administration has emphasized the central importance of realistic verification and control measures to ensure compliance with the treaty. For this reason, the Administration properly rejected the Sandinista acceptance of a draft treaty that did not adequately cover these matters.

In response to the massive, Soviet-Cuban supported military buildup in Nicaragua and the evidence of the Sandinista government’s efforts to undermine the stability of its neighbors, the Reagan Administration increased military assistance to Honduras and El Salvador. This has improved greatly these countries’ ability to defend themselves against Nicaraguan-supported guerrillas as well as to deter higher levels of hostility such as that posed by Nicaragua’s enormous army.

The Administration’s success in obtaining congressional approval for increased military and economic aid for the government of El Salvador has enabled the newly elected Duarte government to initiate talks with the guerrillas from a position of strength and without compromising El Salvador’s democratic process. President Duarte’s willingness to hold talks with the guerrillas, and the support given to him by the Salvadoran military on this initiative, refute the contention of Administration critics that increased aid inevitably would prolong the conflict.

The Administration also provided assistance to democratic forces fighting the Sandinista government. While critics predicted that such support would only stiffen Nicaraguan resistance, the opposite, in fact, has occurred. Since U.S. aid began, the Sandinistas gradually have become more willing at least to discuss changes in their expansionism and internal repression.

The Administration joined with several Eastern Caribbean states in 1983 to restore order and preempt a Cuban takeover in Grenada. This greatly enhanced perceptions of U.S. strength and willingness to act in defense of its allies and neighbors, and may have established a long-lasting basis for cooperation between the U.S. and many pro-democratic states in the Caribbean.

The most important lesson of the past four years is that the crisis in Central America is long-term and systemic, and will require sustained and coherent policies on the part of the next Administration. The complexity of the region’s problems, together with the greater presence of external forces, has diminished the capacity of the U.S. to solve such problems quickly and easily. The Caribbean and Central American nations are independent, nationalistic, and outward looking; they have developed close ties with other economic and political centers such as Western Europe and Japan, and also have some ties to the Soviet Union. In addition, the scope of U.S. influence and power is now constrained by the larger roles assumed in the last decade by Venezuela and Mexico, whose actions sometimes conflict with U.S. interests and objectives.

There also were important lessons from the liberation of Grenada: 1) the Soviet Union will not defend its proxies in a region it considers within the U.S. sphere of influence; 2) the call for U.S. action by the Organization of Eastern Caribbean States (OECS) demonstrates that inter-American cooperation against an extra-hemispheric power exists and should be strengthened; 3) the Soviet Union will try to exploit opportunities to influence and dominate revolutionary movements to secure military bases of operation against the U.S.; 4) and Cuba militarily will not oppose U.S. military actions in the Western Hemisphere.

The Next Four Years

Support Economic Development

The U.S. should support Central America’s development efforts. Economic growth can best be achieved by using U.S. economic assistance to help countries overcome the problems of excessive foreign borrowing and government intervention in the economy, encourage adoption of policies that favor private sector growth and private investment, and revive intra-regional trade through the Central American Common Market.

Sustained economic growth in Central America will depend on the domestic economic policies adopted by the countries, as well as on U.S. assistance. The U.S. should use its aid to foster private enterprise by encouraging reforms reducing state-owned enterprises, price controls and subsidies, centralized control of credit and foreign exchange, and other forms of government interference in the economy. Efforts should be made to dismantle inefficient state enterprises and return viable ones to private sector management.

Many of the measures aimed at restoring domestic economic growth, such as realistic exchange rates, reduced bureaucratic controls on credit institutions, and nondiscriminatory regulations for foreign investment, also would help establish a hospitable environment for private investment. Central America, until recently, traditionally had enjoyed a high and productive rate of foreign private investment. Sound policies that encourage efficient production and investment in the private sector should be the key to avoiding excessive foreign borrowing and undue reliance on foreign aid in the future.

The objective of economic growth in Central America also should be furthered by stimulating the region’s international trade. The U.S. should help to restore the Central American Common Market, and to widen access to U.S. markets for the region’s leading exports by reducing U.S. barriers to such important regional products as textiles, beef, and sugar. Restoration of trade financing is also necessary to revive Central American production and trade. A preferable solution to a trade credit guarantee would be an arrangement whereby overseas banks and suppliers would restore credit lines if short-term credits are insulated from debt rescheduling agreements.

Encourage Democracy

In the political arena, the preeminent long-term objective should continue to be support for aspiring and existing democracies in the region. Methods include finding ways to assist pro-democratic countries undergoing immense social, political, and ideological changes as they build the institutions necessary for stable, democratic government. This means assisting pro-democratic groups such as labor unions, trade associations, business groups, and educational institutions as a means of strengthening the foundations of a democratic system. Economic assistance to governments that are democratic or leaning in this direction should be viewed as an important component of U.S. support for democracy. The U.S., however, should not attempt to transplant its own institutions, nor interfere directly in the political process. It should also take care that U.S. assistance does not undermine existing political and social structures before new ones have matured.

The long-term objective of promoting democracy in the region should include assistance to genuinely nationalist groups seeking, through military and political pressure against Marxist regimes, to bring about democratic reform and free elections. Thus the U.S. should continue to help the opposition groups that are pressuring the Sandinista government to abide by its 1979 promises to the Organization of American States: human rights guarantees, representative government, and economic freedom.

Block Marxist Expansionism

A major objective and priority of the next Administration should be to impel Cuba to end its destabilizing activities in the region. This requires clear and unambiguous statements by the U.S. government of the kinds of activities it will not tolerate; it also requires reinforcing U.S. security relations with the regional states and carefully targeting economic and political assistance to prevent regional susceptibility to Cuban-Nicaraguan supported subversion and revolution.

The next Administration should seek from Nicaragua a cessation of its aggression against its neighbors El Salvador, Honduras, and Costa Rica, a reduction of its military arsenal and foreign military advisors, and progress toward political pluralism.

Promote Human Rights

Democracy is the best guarantor of human rights. Elected governments are held accountable by the people, and thus cannot violate human rights with impunity. Totalitarian regimes are not subject to such constraints, and the Soviets and Cubans never pressure them to respect human rights. The next Administration, as part of its human rights goals, should try to prevent Communist movements from gaining power in the hemisphere. This should include: 1) assisting democratic and nationalist opposition movements; and 2) informing public opinion, domestically and abroad, to counter the considerable ability of Cuban-Soviet supported groups to mobilize political campaigns on a world-wide basis.

Strengthen the Inter-American System

The U.S. should clarify its interest and objectives in the region through stronger and more consistent support for the Organization of American States (OAS), the Central American Democratic Community, Contadora process, and the defense treaties and pacts embodied in the Rio Treaty, the multinational Regional Defense Forces of the Eastern Caribbean states, the Inter-American Defense Board, and Condeca. Not only will this underscore the U.S. special relationship with Latin America, it will strengthen the basis for cooperation and communication among American states and increase the chances for the peaceful resolution of potential conflicts. The special U.S. obligations with regard to defending region’s nations detailed in the Rio Treaty should be emphasized.

Military Assistance

Enhancing the security of the inter-American system should remain a primary objective of the next Administration. A major objective of the next Administration should be to bolster the ability of those nations to defend themselves, to strengthen existing collective security agreements, and to formulate new ones where they are needed. In addition to providing low-cost arms and equipment to the region’s nations, the U.S. should offer regional military forces more grants and educational and training opportunities, particularly in modern and humane methods of counter-insurgency and civic action. This broader approach not only will enhance the defense capability of specific nations, but also will broaden the base of understanding and cooperation between U.S. and regional military leaders and help local governments make their armies more professional.

For the U.S. and its allies to succeed in defeating externally supported insurgencies and effectively combat threats to such strategically vital areas as the Panama Canal and the Caribbean sea lanes, there must be a greater emphasis on the development of irregular warfare units such as the U.S. Special Forces, Rangers, Navy Seals, and the Special Air Force units. These can project U.S. power effectively into areas of low-intensity conflicts involving Soviet-bloc trained and supported forces. Even more important is irregular warfare training for Central American forces. The next Administration also must recognize the special needs of such warfare in its military assistance programs so that adequate and appropriate arms, equipment, medical supplies, and training are made available to local armies.

Following the events in Grenada, which highlighted Soviet-Cuban military interests in the area, there has been a renewed regional interest in the Caribbean Basin’s security and stability. Part of the overall objective of strengthening this security should be the encouragement of closer ties between the larger nations of Colombia, Mexico, and Venezuela and the Caribbean states. The U.S. should encourage Venezuela, Mexico, and Colombia to assist in stabilizing and ensuring the independence of these islands. Venezuela, which in the past expressed interest in playing such a role, should be encouraged to take the lead.

Support from Western Europe

The next Administration should encourage U.S. allies and friends to play a more constructive role in the region. West Germany, Spain, Great Britain, France, and Portugal have substantial political and economic interests in the Caribbean and Central American region. In particular, Spain, with its special ties to Latin America, should be asked to assist in seeking political solutions; Great Britain should maintain its small but useful troop presence in Belize as symbolic as well as material support for U.S. efforts in the region; and West Germany and France should continue diplomatic and economic support to the beleaguered democracies in the region.

To maintain West European support for U.S. policies in Central America, the next Administration should continue to send regular diplomatic missions to Western Europe to explain U.S. objectives in Central America and the consequences to West European security should U.S. efforts fail.

Make Mexico Policy a High Priority

Mexico’s importance to U.S. strategic and economic interests will require greater efforts in dealing with bilateral issues as well as great sensitivity to Mexico’s concerns. The unprecedented challenges facing Mexico today, due to a severe economic crisis, growing political challenges from the left and the right, overpopulation, and vulnerability to external challenges, pose clear threats to U.S. interests and security. It should be a major long-term objective of the next Administration to assist Mexico in strengthening its security as well as its economic and political stability. The next Administration should, while respecting Mexico’s independence, pursue improved bilateral trade and financial agreements, and seek greater cooperation with the Mexican government on narcotics trafficking and immigration.

With respect to Central America, the U.S. should continue seeking to convince Mexico that the democratic model of political and economic development—such as represented by El Salvador—is better for Mexico’s interests than the Soviet-Cuba aligned Marxist model of Nicaragua.

Narcotics-Terrorism Threat

A recent phenomenon threatening the economic, political, and social stability of many countries in the Caribbean-Central American region, as well as certain areas of the U.S., is the linked activities of narcotics trafficking and terrorism. In response, governments in the region, including Mexico and Colombia, have begun cooperating with each other and responding to U.S. appeals for cooperation on drug control, interdiction, and prosecution of drug producers and distributors. The next Administration must increase diplomatic efforts to win continued cooperation and find ways to help regional governments establish programs for drug education and crop substitution. There must be increased coordination between U.S. and regional intelligence and drug control agencies.

Central America and U.S. Oil Security

The next Administration should consider ways to enhance the security of its oil imports from Central America and the Caribbean, which have risen considerably in relation to other sources since 1977. In 1977, the peak import year, 17.3 percent of U.S. oil came from Arab members of OPEC (AOPEC), and roughly 7.7 percent from Central America and the Caribbean Basin. Today, only 4.7 percent of U.S. oil needs are met by AOPEC members, while 9.4 percent comes from Central America and the Caribbean. When Venezuela’s contribution is included, 12.6 percent of total U.S. oil needs, or 37 percent of all U.S. oil imports, comes from Central America and the Caribbean.

The most immediate regional threat to U.S. energy security comes from Marxist insurgent groups. The Panama Canal, through which about 44 percent of Alaskan crude oil passes on its way to U.S. refineries, and the oil fields themselves are vulnerable to guerrilla attack. Although the Reagan Administration has made some moves to counter the threat from insurgents in Central America, governments have indicated that they need training assistance and equipment to protect oil sources and shipping.

By providing such aid, the U.S. will avoid higher military expenditures in the future to maintain oil security. Furthermore, both U.S. oil security and Central American prosperity can be enhanced in the long term with U.S. technical assistance in oil exploration and development techniques. Moreover, because food production levels tend to decline in countries with new oil revenues due to the migration of workers to newly created industrial jobs, the U.S. should provide technical assistance aimed at maintaining food production levels with a smaller agricultural labor force.

Initiatives for 1985

1. Block shift in regional balance: The U.S. should take whatever actions are appropriate to prevent a fundamental shift in the regional balance of power through shipments of advanced weaponry to Nicaragua or Nicaraguan subversion of neighboring nations.
2. Proceed cautiously with Contadora Process: The U.S. should participate in attempts to arrange a regional settlement of the Central American turmoil. Any pact must: prohibit military alliances with the Soviet bloc; require an end to cross-border export of Marxism and the Nicaraguan military build-up; contain ironclad verification procedures; and address political, economic, and social pluralism in Nicaragua.
3. Urge Congress to maintain high levels of U.S. military assistance to El Salvador: Emphasis should be on low-cost, low-technology equipment, such as mortars and pack artillery. A centralized means for coordinating intelligence gathering and dissemination should be developed. Advisory efforts should focus on counterinsurgency techniques stressing selective targeting, minimal violence, and separation of insurgents from the populace. Improvement of army medical care and supplies is essential. Additional military assistance should include more boats and training for the Salvadoran navy and an increase in the size of the U.S. Military Group beyond the current limit of 55.
4. Support El Salvador’s 1985 National Assembly and mayoral elections and encourage the government to draw non-Marxists away from the guerrilla movement into participation in the democratic process.
5. Encourage modernization of the Salvadoran judicial system: The rule of law, including an honest and independent judicial system, is essential for a liberal democracy and maintaining support for the Salvadoran government. Training and advice should be offered by other Latin American democracies where possible.
6. Urge Congress to authorize funds for unified anti-Sandinista forces: This pressures the Sandinista government to honor its 1979 pledge guaranteeing free elections, human rights, and economic freedoms. Support for the anti-Sandinista forces is an important bargaining chip in promoting democracy and regional security.
7. Devote sustained attention to Grenada: Ensure the long-term success of the 1983 rescue mission. Encourage early national referenda on the interim advisory council, elections, and a new constitution. Work with the Grenadian private sector to develop a market-oriented economic strategy.
8. Urge Congress to approve economic and military assistance to Guatemala: Given its strategic significance, economic weaknesses, and steps toward democracy, U.S. involvement is warranted.
9. Urge Congress to increase military and economic aid to Honduras: Funds should be increased for the Regional Military Training Center, continued access to Honduran facilities maintained, and joint exercises continued to apply pressure on the Sandinista regime.
10. Encourage Congress to: Support Caribbean efforts to develop regional security; eliminate or modify constraints on U.S. foreign security assistance; increase grant funds for training regional military forces through IMET and other programs emphasizing respect for civilians and human rights; and increase Economic Support Funds for foreign exchange needs, balance of payments support, and economic stabilization programs.
11. Restore tax incentives to the Caribbean Basin Initiative for U.S. equity investments in the region.
12. Urge Congress to authorize $51 million for U.S. membership in the Inter-American Investment Corporation within the Inter-American Development Bank to promote private sector growth by providing loan and equity capital to undercapitalized small and medium-sized enterprises in Latin America and the Caribbean.
13. Promote changes in the Inter-American Foundation programs: Focus on private sector and market economy development through loans, credit facilities, technical and educational assistance, leveraging local private groups.
14. Bring in Pacific Basin nations: Encourage free Pacific nations such as Japan, South Korea, and Taiwan to invest and trade in Central America, providing new markets, investment capital, and transfer of management and technological know-how. Encourage closer economic ties through meetings and conferences between government and private sector representatives from both regions.

South America

by Esther Wilson Hannon

The objectives outlined by the incoming Reagan Administration for South America were: 1) to restore the Western Hemisphere alliance and the special relationship between the U.S. and Latin America; 2) to impede communist advances; and 3) to encourage long-term economic growth through private sector development. The idea of promoting democracy emerged after events in Argentina, Peru, Bolivia, and Ecuador indicated that a democratizing trend was occurring.

Relations between the U.S. and South America have greatly improved in recent years, and there is a growing consensus on many political, economic, and defense issues. In addition, there is stronger support by some governments for U.S. policies in the region, particularly with regard to Central America.

However, efforts to strengthen the Western Hemisphere alliance system have been impeded by a reluctance on the part of many South American nations to become dependent once again on the U.S. for military and economic assistance. Countries such as Brazil, which welcomes closer ties to the U.S., and to a lesser degree, Chile, have become independent weapons producers and import arms from Europe. Other South American countries have sought and gained new markets for their manufactured goods and commodities. These developments check U.S. ability to exert its influence and promote its policies.

The Administration’s efforts to increase the level and number of contacts between governments have been inconsistent. The Andean countries, Venezuela, and Colombia, for example, have not received the same attention and diplomatic efforts as the Southern Cone nations.

The debt crisis, involving a majority of the South American nations, somewhat reflects U.S. failure to strengthen the private sector and to encourage market-oriented policies in these countries. The problem was compounded, moreover, when the U.S. encouraged borrowing from the International Monetary Fund and from other multilateral lending institutions, which in turn encouraged the private banks to lend to governments. This enhanced rather than limited the role of the state in a country’s economy and consequently restricted the productive capacity of the private sector. The structural base of South American economics is, as a result, weaker now than at the beginning of the Reagan Administration.

As for trade, a key to economic growth and stability, the Reagan Administration can boast of important gains. Strategies for countering trade barriers, quotas, and other protectionist measures are being addressed continually at summits and bilateral meetings. Earlier, the Administration resisted calls for increased steel quotas against Brazil, which would seriously undermine its economic stability and its ability to pay its foreign debt obligations. Negotiations are now underway, however, to secure from Brazil and Argentina so-called voluntary restrictions on steel exports from these countries to the U.S.

The most notable results of the Administration’s South American policy have been seen in improved ties with Brazil. The 1983 U.S.-Brazil Cooperation Pact covered economic, cultural, nuclear, and trade issues. It was an important improvement in the two nations’ relations and a signal to the rest of Latin America of renewed U.S. interest in the region. Recent increases in economic assistance to the Andean countries are an important step toward stabilizing a region of fragile political and economic structures and responding to increased Soviet presence and influence there.

The Administration also has fostered democracy in South America and has avoided, for the most part, heavy-handed interference in this process. The support given to the democratic process also has underscored U.S. commitment to human rights, self-determination, national sovereignty, and other commonly shared principles and values. By backing South America’s at times fragile democratic movements, the U.S. has been able to deter leftist totalitarian movements in the region without having to prop up unpopular regimes or interfere overtly in the political processes taking place.

The Administration has, for the most part, successfully linked human rights to the overall democratic process. Although less successful in strengthening the role of the private sector in the region and thus promoting long-term and stable growth, the Administration has drifted away from policies that encourage irresponsible lending and state-dominated economies.

A questionable Administration action, and one whose effects cannot yet be fully determined, was its support for Great Britain in its war with Argentina. U.S. support of a NATO ally in a war that had little to do with the North Atlantic Alliance set back relations with Argentina and undermined U.S. credibility as a dependable ally in the Western Hemisphere. Had the U.S. remained neutral, a position acceptable to both sides, it would have been in a better position to negotiate a peaceful solution to the war and at the same time would have strengthened its position throughout the hemisphere.

Promote the Democratic Process

As a long-term strategy, it is not enough simply to support “anti-communist” regimes. The U.S. also must understand the region’s political and cultural traditions and identify those national groups that aspire to genuine sovereignty, economic development, and democratic government. The most effective strategy is to support local democratic organizations and institutions such as labor unions, business groups, trade associations, and educational groups. These are the foundations of stable democracies, and the U.S. can play an important role in their development.

Human rights cannot be separated from broad U.S. policy objectives in South America. The evolution toward democracy is, overall, favorable to human rights and should be a major reason for the support given to this process.

Emphasize Regional Cooperation and Mutual Assistance

Past emphasis on arms and weapons as the primary means of strengthening security and enhancing U.S. relations with Latin American military establishments and governments must be complemented by emphasizing cooperation and mutual assistance. The growing number of democratically elected governments in Latin America should facilitate U.S.-Latin American cooperation within the Organization of American States (OAS) as well as in bilateral relations. U.S. participation in the OAS should aim at demonstrating a strong and continued interest in the region, and at strengthening the Organization’s effectiveness in dealing with potentially divisive political issues.

U.S. goals should be to assist allies and friendly governments to maintain an effective defense against externally supported aggression and subversion, to strengthen alliances and contribute toward a common defense effort, and to make military facilities throughout the region accessible to American forces. In a major world conflict, such an enhanced regional alliance would lessen or eliminate the need to withdraw American forces stationed in Western Europe to defend the Western Hemisphere and U.S. borders.

The overall objective of strengthening Western Hemisphere security and the alliance system will require increased military assistance to those friendly countries whose defense needs have been clearly demonstrated and whose defense capabilities affect the security of their neighbors and the entire region. The U.S. should make available low-cost arms and equipment, military grants, and U.S.-sponsored or -assisted educational and training opportunities for South American military personnel.

Western Hemispheric Security and the Pacific Coast

Promoting long-term objectives in the region requires greater recognition of the strategic and geopolitical importance of the Pacific Coast of South America. Should the Panama Canal be blocked by an unfriendly power, U.S. forces and merchant vessels would have to pass through the Straits of Magellan to reach the Atlantic. Access to safe ports in Peru and especially Chile would be essential for refueling and logistical support. At present, the southernmost U.S. Pacific base is San Diego.

Conditions are very favorable for strengthening U.S. relations with Pacific Coast countries. Their governments are democratic or moving in that direction; they are pro-Western and urgently need and desire U.S. economic and security assistance. Moreover, they have shown an increasing willingness to cooperate actively with the U.S. on hemispheric defense matters.

Crack Down on Narcotics and Terrorism

Although generally separate issues, narcotics and terrorism increasingly are linked in South America and pose a double threat to political and economic stability, the security of the region, and to U.S. efforts to curb drug traffic into the U.S. In response to this growing threat, the U.S. should negotiate with all Latin American countries—particularly Colombia, Peru, and Bolivia—to establish mutual assistance programs, better diplomatic and program efforts, and increased coordination of intelligence and drug control agencies throughout the region.

These efforts should be reinforced by diplomatic initiatives to strengthen cooperation between countries on such difficult issues as extradition treaties and drug crop eradication and control programs. Diplomatic efforts should be backed by aid to provide economic alternatives for illicit narcotics crops and programs aimed at reducing demand for drugs. U.S. objectives and interests clearly lie in greater cooperation and mutual understanding on the international narcotics-terrorism link and the danger it represents for every country.

Encourage Long-Term Economic Growth

Long-term and stable growth and wider distribution of wealth via the private sector should be a major U.S. objective. This requires strategies to deal with two fundamental issues of economic growth: trade liberalization and private sector development.

The international debt crisis involving much of South America depends for its resolution on the maintenance of free trade flows between developing and developed countries. This requires political resistance to protectionism and trade barriers. Bilateral and multilateral meetings and agreements are needed to find ways to coordinate the financial policies of the International Monetary Fund and the International Bank for Reconstruction and Development (World Bank) with countries’ efforts to maintain free trade flows, and to establish a consultative framework for debtor countries and their industrialized trading partners so that each is kept informed of the others’ economic developments and difficulties. In many cases, conditions attached to IMF loans require debtor countries to increase taxes and cut exports in a way that might hinder economic recovery.

The U.S. should not tie assistance to acceptance by debtor countries of any economically harmful IMF loan conditions. Since anti-protectionist measures must be reciprocal, the White House must promote legislative proposals to effect commitments made in international meetings. This would mean coordinating any sound IMF debt resolution efforts with trade liberalization goals.

Equally important to long-term growth is improving the framework for U.S. private direct investment in South America. While the investment climate in South America is created mainly by those countries’ policies, U.S. agencies such as AID, Commerce, and State can provide more information on opportunities to the U.S. private sector and facilitate private investment in South America. This could be accomplished through increased trade and investment missions, Foreign Commercial Service programs, information banks, matching U.S. investors with South American resources and opportunities, and other agency-sponsored projects aimed at fostering cooperation and understanding between U.S. and South American business leaders and business groups. Improved diplomatic relations, and a greater number of bilateral and multilateral negotiations will go a long way toward improving the investment climate.

U.S. economic assistance programs and loans from U.S. and multilateral lending institutions should be targeted to the private sector instead of government projects, which are generally costly to create and maintain, inefficient, and harmful to the productive private sector.