Further, under Eisenhower, the CIA moved more definitively into the territory of instigating, aiding, and participating in coups of governments deemed as posing a threat to US Cold War objectives. The first of the CIA-backed coups would be the well-known case of the overthrow of Iranian Prime Minister Mohammed Mosaddeq in August 1953 (see Blum 2003 for a detailed account). Covert intervention in Iran would be quickly followed by what would take shape as a steady stream of replications in Latin America over the next several decades. In the following section, where I turn to the implications of US post-war hegemony for Latin America, a review of these events will form part of the focus.
3.3 From Anti-Fascism to Anti-Democracy: A Change in Policy Toward Latin America
Turning now to post-WWII relations between the United States and the non-industrialized independent republics of Latin America the questions that section seeks to address is: how did this post-war globalization of US hegemony play out in this particular region? Given that the ethnographic context of this dissertation is Ecuador and in light of the preceding sections on US empire in Latin America what did the exercise of US imperial power look like in Latin America in the post-WWII/Cold War era?
As historians have illustrated, in the years following the war’s end, the United States moved quickly to institutionalize the Latin American alliance that had emerged during the war, quickly re-designating it as an alliance against communism (Grandin, 2006;; O’Brien, 2007). In 1947, President Truman touted the “Inter-American System,” which he claimed, had become “steadily stronger for half a century” (in Grandin 2006, 39). That same year, the delegates from United States and the Latin American republics attended the Inter-American Conference for the Maintenance of Continental Peace and Security, held near Río de Janeiro, Brazil. As Jeffreys- Jones (2003) argues, for the US, the aim was to establish a hemispheric anti-communist
collective defense agreement. For Latin American republics, securing economic aid on the order of the Marshall Plan concurrently being administered in Europe and Japan was the objective. In the end, the Conference yielded a commitment from the Latin American republics to a
presentation of their arguments for economic aid until a future economic conference. The
resulting Inter-American Treaty of Reciprocal Assistance, dubbed the Río Pact and signed by the United States and nineteen Latin American governments, indeed stipulated that any attack or threat of attack against any of the signatory nations (whether perpetrated by a signatory or non- signatory nation) would be considered an act of aggression against all, and armed/military action could be taken by any signatory nation as a defense against the aggression if approved by a two- thirds majority. In the following year of 1948, at the Ninth Inter-American Inter-American
Conference (held in Bogota, Colombia), the Organization of American States (OAS) was formed as the organizational channel through which the Río Pact was to be enforced (Ibid).
As Jeffreys-Jones (2003) emphasizes the founding charter of the OAS, which was signed by the US government and 20 Latin American governments, was significant in many ways. One of these was its striking tendency to simultaneously forbid and permit intervention among the signatory states. On the one hand, several charter articles emphasized the right of each state to determine its political, social, and economic system without external interference and stressed the obligation of each state to refrain from intervention in the affairs of other member states, including the use of armed force. Article 15, for example, stated quite clearly, “No State or group of States has the right to intervene, directly or indirectly, for any reason whatever, in the internal or external affairs of any other State. The foregoing principle prohibits not only armed force but also any other form of interference or attempted threat against the personality of the State or against its political, economic and cultural elements” (as cited in United States Department of State, 1952, p. 2419-20). Article 17 essentially reiterated the content of Article 15:
The territory of a State is inviolable;; it may not be the object, even temporarily, of military occupation or of other measures of force taken by another State, directly or indirectly, on any grounds whatever. No territorial acquisitions or special advantages obtained either by force or by other means of coercion shall be recognized (Ibid, p. 2420).
On the other hand, these articles were followed by several important qualifications that essentially served to dramatically weaken their provisions. For example, Article 19 went on to state that, “Measures adopted for the maintenance of peace and security in accordance with
existing treaties do not constitute a violation of the principles set forth in Articles 15 and 17” (Ibid). Even more pointed was Article 24, which specified that,
Every act of aggression by a State against the territorial integrity or the inviolability of the territory or against the sovereignty or political independence of an American State shall be considered an act of aggression against the other American States (Ibid, p. 2421).
Such text clearly provided for intervention in the affairs of a nation that was conceivably facing some sort of threat, with the nature of that threat left open to a case-by-case interpretation but the clear and present threat de rigeur being communism. This was even more apparent in Article 25, which Jeffreys-Jones (2003) has interpreted as containing a veritable loophole that effectively enabled the United States to intervene in the domestic affairs of any Latin American country in order to prevent it from becoming communist:
If the inviolability or the integrity of the territory or the sovereignty or political
independence of any American State should be affected by an armed attack or by an act of aggression that is not an armed attack, or by an extra-continental conflict, or by a conflict between two or more American States, or by any other fact or situation that might endanger the peace of America, the American States, in furtherance of the principles of continental solidarity or collective self-defense, shall apply the measures and procedures established in the special treaties on the subject (as cited in United States Department of State, 1952, p. 2421).
These collective defense and security agreements between one supremely dominant nation (the United States) and a large group of independent republics that possessed nowhere near the economic, technological, and military might of the former (Latin America) point to a clear instance of state-driven attempt to further consolidate US hegemony over extra-continental territories which, in the lexicon of the Cold War context, lay within the United States’ claimed “sphere of influence.” However, what accompanied this state driven effort and ensued in the wake of the OAS’ establishment was deeply indicative of that fusion of state politics and capitalist processes productive of uneven geographic development that David Harvey defines as the essence of capitalist imperialism. Before entering discussion of these kinds of events that defined the Cold War era US-Latin America relationship, however, it is important to highlight the Latin American context of the late 1940s.
As historians such as Greg Grandin (2006) have illustrated, during World War II, Latin America had undergone several significant economic and political changes. As US wartime production had soared, there had been increased US demand for Latin American raw exports, and as trade with the US flourished, economic growth in the region had skyrocketed.
Accompanying this phenomenon had been an increasing level of economic nationalism among many Latin American states. As historians point out, in response to the Great Depression, many governments had begun to intervene in their national economies in new ways geared at
containing its social and economic impacts (see Bulmer-Thomas, 2014;; Grandin, 2006;; O’Brien, 2007). For example, as global demand for raw resources had plummeted in the thirties, export- driven Latin American countries were left unable to import consumer goods and in response, many Latin American governments had founded development banks to subsidize domestic production of consumer goods. As for domestic demand levels, Latin American governments had actively intervened in matters of public interest and resource distribution to enable consumers’ purchasing capacity and this had meant clamping down on US corporations in various ways (O’Brien, 2007). In 1937, for example, the Bolivian government had nationalized Standard Oil (founded by John D. Rockefeller and at the time the largest oil company in the world), which had for years reaped astronomical profits while evading taxes, illegally funneling crude oil out of the country through a secret pipeline to Argentina, and failing to meet local demand for fuel (Gordon and Luoma, 2008). As O’Brien (2007) illustrates, in the mid-thirties, Mexican president Lázaro Cárdenas had implemented a land reform effort aimed at, expropriating land held by US
companies and redistributing it to the peasantry;; in 1938, when US oil companies refused to allow their workers to unionize, he nationalized them. In Chile, the national government raised taxes on the US-owned copper companies that operated within its borders (Ibid). Additionally, most of the governments of the larger Latin American countries, including those of Chile and Peru, instituted regulations requiring that the workforces of US companies be comprised of a minimum
In the meantime, waves of industrialization had given rise to processes of
proletarianization and worker mobilization (Grandin, 2006;; O’Brien, 2007). For instance, between 1941 and 1945, Brazil, Argentina, and Mexico (the region’s economic giants) had seen increases of between fifty and sixty percent in the number of manufacturing workers and these shifts had immediate impacts on the social and political reality (O’Brien, 2007). According to O’Brien (2007), “Growing urban workforces translated into larger and more militant labor movements that would press for greater economic benefits from their nation’s rulers and the American corporations that controlled key sectors of the region’s economies” (p. 182). Importantly, as Grandin (2006) points out, these local instances of class formation and mobilization were unfolding amid official high- level promotions of democracy that were taking place as many Latin American governments allied themselves with the United States in a worldwide conflict being construed as a struggle between democracy and fascism. The result, according to Grandin (2006) had been something of a regional transition toward democratic rule that proceeded with the encouragement of the United States. As Grandin (2006) emphasizes, beginning in 1944, there had been a revitalization of democratic governments in Chile and Colombia and an emergence of new democracies in Peru, Argentina, Venezuela, and Guatemala, all of which had previously been ruled by dictatorship. Importantly, many of these democracies were more social than liberal in nature. As Grandin (2006) describes these transitions, “Broad coalitions ranging from political liberals to Communists toppled dictators throughout the continent, while new reform governments extended the
franchise, legalized unions, expanded public education, provided health care, and implemented social security programs” (p. 40).
While the United States government had refrained from attacking Latin America’s shift toward economic nationalism during the thirties and early forties, this would change abruptly beginning in 1945 (Grandin, 2006;; O’Brien, 2007). In February of that year, Assistant Secretary of State William Clayton (a key player in the modified multilateralism movement pursued by the FDR and Truman administrations) effectively denounced Latin America’s recent leanings toward economic nationalism in a speech delivered to the region’s leaders at an Inter-American
Conference on War and Peace (held in Mexico City), calling explicitly for the lowering of tariffs, the increase of US industrial exports to the region, and a greater role for US corporations in the region’s extractive and agricultural industries (O’Brien, 2007). This abrupt shift was of course situated in the recent conclusion of World War II, an event that instantly diminished any leverage that Latin American governments had held over the United States when Nazi infiltration of the region was perceived as a real threat and a less confrontational stance with Latin American governments was understood as critical to winning and maintaining their alliance. With the pressure of active war now removed, it appears that the US political establishment no longer felt beholden to affecting such a diplomatic or “neighborly” stance.
At the same time, however, the immediate danger of Nazi infiltration had been quickly replaced, from the US government’s perspective, with the threat of a post-war economic slump triggered by an overaccumulation of capital that would come with the sudden decrease in demand for war supplies and the inability of war devastated Europe to serve as market for US consumer goods. Compounding this was the known fact that Western European nations had already begun talks with Latin American about postwar economic relations and the related fears among US political class that the United States could conceivably be economically bumped out of Latin America by its old imperial competitor. There was also growing US preoccupation with maintaining access to Latin America’s raw resources (oil, cotton, rubber, etc.) in the event of a feared third world war with the Soviet Union All of these realities and concerns add further context to Clayton’s remarks and the accompanying draft resolution to end economic nationalism in Latin America.
In addition to reversing its World War II position of support for Latin America economic nationalism, in the years following the war, the US government also changed its stance on democratization in Latin America (Grandin, 2006). As the newly declared threat of Soviet communism now replaced the danger of Nazi fascism, the US political leadership now cast the particular brand of social democracy spreading across Latin America as both a gateway to Soviet/communist infiltration and an indirect threat to US corporate property (a point now being
strongly lobbied by US corporate interests, which now amped up their calls for the US
government to protect their holdings in the region). According to Grandin (2006), by 1947, just two years after the end of World War II, the United States was sending “signals that its preference for democrats over autocrats was now contingent on political stability” (p. 41). Not insignificantly, these US-American concerns meshed with growing anxieties among Latin American elites who had grown increasingly intolerant of political mobilization of the proletariat class and of the social democratic reforms that were being passed by political leaders, viewing such developments not only as a significant threat to traditional social-racial hierarchies but also as a deterrent to foreign (ie United States) capital investment and the accelerated industrialization and capital
accumulation that such foreign investment was expected to stimulate (Ibid).
In the late forties, a highly publicized response to the demands made by Assistant Secretary Clayton came from the Argentine economist Raul Prebisch, a figure who lent
intellectual legitimacy to the region’s policy shift toward economic nationalism (O’Brien, 2007). As head of the Economic Commission for Latin America (ECLA), a division of the newly formed United Nations, Prebisch posited the thesis that the economic vicissitudes and intractable poverty of Latin America were directly related to the region’s continued allegiance to an economic model that was based on raw resource exports and finished good imports. This, Prebisch argued, was because on the global market, raw resources, or “primary products,” tended to be priced lower than finished goods, or “secondary products,” thus creating a perpetually unfavorable terms of trade for Latin American countries. Prebisch’s solution was for Latin American countries to wean themselves off of finished good imports by pursuing state-led industrialization that was to be facilitated in part by imposing high tariffs on imported goods, thus ensuring that domestically produced goods would substitute imported goods and provide the demand that would trigger and propel industrialization.
As O’Brien (1999) observes, Prebisch’s prescription, which came to be known as import substitution industrialization (ISI), thus legitimized what many Latin American countries had been doing as a matter of pragmatism during the Depression – developing national industry through
state intervention that ranged from subsidizing domestic manufacturing enterprises to
redistributing wealth in various ways so that populations could purchase domestically produced goods. In the years that followed, Prebisch’s prescription was thoroughly adopted by those larger Latin American nations – Mexico, Brazil, Argentina, Chile, Colombia, Uruguay – that had already made significant advances in state-led industrialization and had the market size and resources to sustain import substitution policies. Governments of smaller, poorer countries (Ecuador,
Paraguay, all of the Central American countries) also pursued ISI but, in light of smaller domestic consumer markets and relatively limited resources with which to underwrite domestic
industrialization, did so on a relatively minimal scale.
O’Brien (2007) points out that during this time, and despite the consternation of the US government at Latin American economic nationalism, US multinationals actually proved to be adept at adapting to ISI policies in Latin America. This was facilitated in part by the fact that those Latin American governments that adopted ISI simultaneously maintained the intention of
accepting foreign investment directly into their domestic manufacturing industries, viewing it as “a further spur to industrialization, although they remained committed to protecting those
manufacturing sectors dominated by local capitalists” (O’Brien, 2007, p. 194). In fact, building up domestic industrialization specifically through the use of foreign investment was actually part of Prebisch’s prescription for Latin America (Ibid). Thus, by the late forties and early fifties, after a decade of increased expropriations of US agricultural enterprises and amid a wave of Latin American policymaking that institutionalized both the use of heavy tariffs on foreign imports and the strategic reliance on foreign investment for industrialization, the nature of US investment in Latin America shifted to accommodate these realities and became more heavily based in manufacturing and less tied to agricultural production (Ibid).
Additionally, as O’Brien (2007) underscores, to appease Latin American governments’ demands that US companies contribute more significantly to the countries where they did business, in the late 1940s and throughout the 1950s, some US manufacturing companies made a decided effort to integrate more thoroughly into the social and economic fabric of the Latin
American countries where they had operations, abandoning the enclave model (so favored by agricultural giants such as United Fruit). In this model companies created their own virtual towns and supplied their own goods and services to sustain the operations and the workers (who were required to live in these towns). In contrast, the post-war model of US capitalism in Latin America was one in which the US firm actually purchased goods and equipment from domestic suppliers and, in some cases, worked with these suppliers to improve the quality of the products they were selling. With Latin American governments showing no indication of rejecting US direct investment and with US capital proving adept at adapting to particular kind of investment preferred by these