Latin America Post WWII

1. Latin America Post WWII Whether the present democratic culture of L.A. is a temporary aberration or the beginning of an enlightened trend remains to be seen.

2. Today’s Objectives • Understand how L.A. countries responded to the growing influence of the United States in L.A. • Understand the impact of the Cold War on Latin America • Understand the political struggle between the Left and the Right in post WWII L.A. and the development of democracy in many L.A. countries. • Understand the Organization of American States (OAS) and the Alliance for Progress.

3. Latin America Post WWII • Organization of American States (OAS) • Primary purpose was to strengthen democracy in the region • Other purposes: • Defend human rights • Promote sustainable development • The US started the OAS to ensure that Communism could not make any inroads in L.A. • As the tension between the US and the USSR grew during the Cold War the US was looking for ways to contain communism (ie, Marshall Plan) • OAS was headquartered in Washington D.C. • 21 members initially

4. Latin America Post WWII • 21 members initially • In the 1960’s the ex-British colonies in the Caribbean joined • Canada joined in 1990 • Today, all 35 independent countries are members today • Cuba is in although the government is not recognized by the OAS • An attack on one OAS member is considered an attack on all members • The OAS, although strongly influenced by the US, can and does act independent of the US • Example: OAS condemned the US for its support of the Contras in Nicaragua and for the invasion of Panama in 1989 • Economically speaking most OAS members maintain trade and diplomatic relations with Castro’s Cuba even though the US does not

5. Latin America Post WWII • After the Great Depression and WWII the L.A. countries were looking to industrialize so they would not be so reliant upon others • Import Substitution Industrialization (ISI) was the way to do it in their opinion • The major problem was the lack of capital to get ISI started, so they needed loans and investments from the US • Another factor was demonstrating whose side they were on in the Cold War • Communism was banned or excluded from power. • Elections were held, even though democracy was not a certainty

6. Latin America Post WWII • Problems with ISI and dictators • Money being made from ISI was put towards holding on to power • The state would dispense • political and military positions • Export-import licenses • Gov’t subsidies for political backing • New interest groups were formed because they were looking to get a gov’t deal • Businessman • Trade unions • Industrialists • Professional organizations • The people who suffered most often were the unorganized lower class

7. Latin America Post WWII • The plan of using the ISI money to keep power worked until the 1950’s where inflation and unemployment was high • For example, Brazil’s leader, Vargas, found it impossible to give labor higher wages while maintaining a fiscal policy that would satisfy industrialists by reducing the costs of manufacturing. • Latin American gov’ts could not figure out how to control inflation without sacrificing social welfare, and doing one or the other, or nothing, brought about social and political unrest

8. 1950’s Guatemala • Leftist Colonel Jacobo Arbenz Guzmán was elected pres. in 1950. • One goal he had was to redistribute land since 2% of the population controlled 74% of the farm land • 1952 law stated that all land over 223 acres was to be expropriated to the gov’t and distributed to the landless • International Law requires compensation to foreign owners if this is done; Guatemala agreed to do this by issuing 25 year gov’t bonds

9. 1950’s Guatemala • The 1952 law brought US involvement because an American company, United Fruit owned over 550,000 acres where they grew bananas • The Guatemalan gov’t was prepared to offer $600,000 for the expropriated land on the underestimated land values the company had declared in order to avoid gov’t taxes • 1953: Eisenhower approved a CIA-State Dept. plan to overthrow Arbenz • May 1954: Czech arms landed in Guatemala which was in violation of a US imposed arms embargo • The US used that importation as a pretext for Operation Success-the planned coup d’etat against Arbenz

10. 1950’s Guatemala • Operation Success was indeed a success as Arbenz was overthrown by right-wing Guatemalan insurgents financed by the CIA and supported by CIA aircraft • The US hand picked a successor and a bloody crackdown of leftists ensued • 1952 land law was revoked and land was given back to landowners Side Note: Ernesto Guevara was in Guatemala at the time. These events most likely played a major factor in his radicalization. Guevara then joined Fidel Castro and they took over Cuba in 1959.

11. 1950’s Guatemala • Castro and other Marxists believed that true independence could only be claimed if their was a removal of undue foreign political and economic influence through a state expropriation of property and through a state controlled plan of industrial development. • Real power was controlled by the armed forces • Nationalism and order were all the armed forces wanted so they would support the type of gov’t they believed would best deliver these goals

12. 1961: Alliance for Progress • JFK created this to counter the appeal of Castro and his revolutionary politics • The goal of the program was to relieve poverty and social inequities (the breeding ground for communism) and replace it with democracy and economic development • The US agreed to put $20 billion towards the program over a ten year period • What killed the program from the US side of the Alliance? (2 reasons) • JFK’s assassination • Vietnam War

13. 1961: Alliance for Progress • Most L.A. nations were not willing or able to meet the criteria demanded for US loans and aid the program soon foundered. • In 1973, the OAS disbanded the committee that it had created for the Alliance. Stretch

14. Catholic Influence • After the 19th century revolutions, many independent nations separated church and state. Yet the Catholic church still had a major influence on the affairs of those countries. • The Church had dual roles • Local priests often supported the aspirations of the down-trodden • The Church hierarchy tended to associate itself with the conservative landed elites.

15. Catholic Influence • During the industrialization and urbanization of the 1950’s the Church began to compete with the Communists for mass support by supporting a democratic, socially responsible form of capitalism guaranteeing workers’ rights and promoting agrarian reform. • In many countries Christian Democratic Parties were formed that advocated a “middle way” between the right-wing death squads determined to preserve the status quo and Communist guerillas bent on overthrowing the gov’t • In the 1960’s and 70’s the Church increased its commitments to social justice, and while it criticized capitalism for its inequalities, it did not condemn the system itself.

16. Catholic Influence • In the 1970’s the struggle between Communist guerillas and conservative authoritarian regimes intensified, the Church began to be a champion of individual human rights in an attempt to protect the people from both political extremes. • With the breakdown of law and authority, the Church attempted to act as a conscience for decency in societies where the rule of law did not exist. • For example: El Salvador, the Church consistently denounced the activities of the right-wing death squads and the use of torture by the military. In March of 1980, the Archbishop of San Salvador was murdered as he was delivering mass.

17. Catholic Influence • The Church moved to change its policy in the 1970’s by moving away from direct political action • In July 1980, Pope John Paul II, while visiting Brasil, explicitly forbade clergy from political office • This was applicable worldwide, not just in L.A.

18. L.A. Debt • 1970’s • US and European banks were flush with deposits from the Organization of the Petroleum Exporting Countries (OPEC) which were used to give loans to L.A. countries • Many L.A. leaders were eager to apply for these loans because of their balance-of-payments deficits. • The only way that L.A. countries could support the industrialization effort was through hard currency loans. • By 1982, L.A. debt was over $315 billion • Brasil owed $87.5 billion • Argentina owed $43.6 billion • The domestic products made for the ISI program were priced out of the world market • Locally manufactured products were often 300% above the world price

19. L.A. Debt • L.A. economies were based: • on low income commodities • Bananas, flowers, wheat, cattle, sugar, coffee, cotton, oranges, timber, minerals 2. And an insufficient industrial sector, which consumed expensive imports of technology. • The unstable economic condition was exacerbated by capital flight from L.A. • With few investment opportunities at home, many investors looked abroad and not in their home countries. • A worldwide recession in the late 1970’s and early 1980’s cut off all flow of capital into L.A. and caused severe economic hardships. • Underemployment and unemployment were already high prior to the recession and there were few benefits for the destitute.

20. L.A. Debt • 1980-1984: overall growth in L.A. dropped 9% • 1980’s: most L.A. countries refinanced debt • Higher interest in the 1980’s caused the debt to increase 9% per year • The World Bank, the IMF, and the US attempted to resolve the debt issues of L.A. but were unsuccessful in finding a long term solution. • One benefit that grew from the economic crisis was the recognition that the old system of gov’t based on military rule and inward looking nationalism was a failure. • The debt crisis forced one military junta after another out of office after failing to solve the crisis.

21. L.A. Debt • The factors for a true pluralistic democracy were present: • A large and influential urban middle class • Urban entrepreneurs • Professionals • Industrialists who replaced large land owners as the economic elites • A working class that was organized and active politics • By 2003 all of L.A. countries (excluding Cuba) were under some form of elected gov’t • Spain and Portugal, in the 1970’s, went from traditional dictatorships to functioning democracies which proved that countries derived from the Iberian Peninsula do not have the heritage to develop democratic institutions.

22. Future of L.A. • Whether the present democratic culture of L.A. is a temporary aberration or the beginning of an enlightened trend remains to be seen. Any thoughts on the above statement?