In an interview in 1977, Mexico's President José López Portillo observed of U.S.-Mexican relations that "there are no isolated problems; everything is part of everything else." In 1980 no more appropriate maxim could be found to apply to U.S.-Latin American relations generally.

Significant and cumulative growth sustained over the three decades since the end of World War II has transformed Latin American societies and institutions, and with them the very nature of the U.S.-Latin American relationship. Neither the scenery nor the actors are quite the same: Latin America stands at the beginning of the 1980s as the most highly industrialized region in the developing world. It has more than tripled its real product since 1950; its population is almost two-thirds urban and three-fourths literate; its urbanization rates are the dizziest in the world. All the social indicators show major progress in the last 30 years; women have moved massively into the labor force and the educational system; while gaps and differences between large and small, richer and poorer, have stretched, the larger countries have-to use Walt Rostow's terms-moved through take-off and are deep in the drive to technological maturity. Finally, all the Latin American economies have become integrated into the world political economy through trade patterns, expanded investment, capital flows, and international debt, creating new and interlocking relationships with the international system.

The region's current dynamics can be thought of, then, as taking place in terms of three different dimensions:

1) a central hemispheric dimension embracing the many unique and varied elements of internal dynamics, national policies and struggles for identity within and among the Hemisphere's nations;

2) the cluster of issues making up the international agenda of trade, debt, capital flows and energy, which complement and affect national events and policies-all of which may be subsumed under the rubric the North-South dimension; and

3) an East-West dimension referring to the effect given to Hemisphere events by geopolitical factors; by the sharpened global competition between the superpowers; and by Soviet/Cuban efforts to diminish U.S. influence in the region and increase their own influence both through exploitation of internal instabilities and through efforts to strengthen conventional ties of commerce, cultural exchanges and technical assistance with all the larger countries, including anti-communist ones.

What happens in Latin America cannot be correctly understood or adequately dealt with in terms of any one of these dimensions. All three do not necessarily touch on every event, but generally the three dimensions express separate aspects of the same phenomena. They are interrelated and, as in a game of three-dimensional tic-tac-toe, the policymaker's task is to align the elements and correctly understand their relative positions and importance.

II

By year's end, El Salvador had become the most exigent issue in the U.S.-Latin American relationship. It had also become a symbolic battleground for policy arguments within the United States.

A combination of serious social inequities, severe rural poverty, economic dominance by a small oligarchy, and a military-dominated political system had, by the end of the 1970s, produced an almost classic setting for political and social conflict in El Salvador. Ironically, even the substantial economic growth and development which the country experienced in the late 1960s and the 1970s sharpened the internal conflict. With economic growth came an increase in urban middle and working classes whose demands for political participation to parallel their economic mobility were not accommodated by the political system. In the absence of effective channels of redress, dissent and complaint generated pressure and instability. Just as the rigidity of the system frustrated evolutionary reform, so did it foster the attitude that violence was the only practical road to change. Thus left-wing insurgency and terrorism increased during the 1970s. By October 1979, the processes of change were so blocked, the threat of social disintegration so great, and the government's inability to deal with the situation so manifest, that military officers overthrew the regime and installed a military-civilian junta. Since then the governing junta has been restructured three times-most recently in mid-December 1980-as a result of almost constant negotiation and tugging between participating civilian and military factions.

In surveying the contemporary scene, an outside observer is assailed by two overwhelming impressions: the sense of fragmentation everywhere in the social and political body; and the climate of indiscriminate, almost pathological, violence. The current configuration of forces stretches across a fragmented spectrum: wealthy landed elites and some military on the far Right; industrialists, professionals, businessmen and most of the rest of the military, ranging from Right to Center; Christian Democrats, Social Democrats, labor groups, other small political organizations, and the Church stretching from Center to Left; and a few radical parties and armed insurgent groups on the extreme Left.

Moreover, there is fragmentation and incoherence within these groupings. Even within the broad institutional cohesion of the military, officers express a range of views, the Christian Democrats and the clerics are divided, and businessmen and professionals represent a varied range. The Left is also factionalized, despite surface organization. The opposition Democratic Revolutionary Front (FDR) is a mixture of moderate and radical political groups; the armed leftist insurgents consist of a number of factions, most avowedly Marxist in ideological orientation (and Cuban-supported), currently grouped as the United Revolutionary Directorate (DRU).

These elements function in a climate of violence that is similar to Lebanon's, and by now beyond almost anyone's control. Besides official government action against guerrillas, there are paramilitary "hit squads," hard-core terrorist groups on both extremes, vigilantism, and spontaneous "defense" groups, all operating with increased intensity and considerable autonomy.1

The current state of play within El Salvador can perhaps best be conveyed as a series of propositions:

1) The population overwhelmingly wants an end to the violence, and this desire now transcends political differences within the general populace. Violence is almost the central reality dictating the way forces maneuver.

2) The left-wing insurgents grouped in the DRU have not gained in popular support; through clandestine acquisition of military equipment from Cuban and other external sources, however, they have accumulated a significant military capability. In what appeared to be an effort to replicate the Sandinista strategy, the DRU launched a widescale assault against government forces in early January, 1981, in a major effort to bring down the governing coalition militarily, and consolidate the leadership and control over all opposition forces in the FDR.

3) Elements of the traditional economic oligarchy continue to try to use their old military channels to stop reform measures and restore the traditional power pattern. They have influence over some officers, but not the power over the military as an institution that they once had.

4) The government represents the shaky center ground on which the military and the Christian Democrats have met. The understanding between the military and the Christian Democrats now constitutes the new basis for official political power, but the understanding is a fragile one, for the participants' multifarious views are hard to reconcile. The military wants to concentrate on the elimination of the insurgency. For the Christian Democrats the problem is more complex than public order; they advocate a process of social and political reform as a basis for re-forming an internal political consensus, isolating the extreme Left, and making armed insurrection less appealing.

5) All agree on the need to reestablish order and eliminate the violence rocking the country; but the nature and extent of military enforcement operations, how to control the military and security apparatus, and how to eliminate the various extra-official violence are all questions that have persistently threatened the survival of the Christian Democrat-military coalition.

6) A concept has been gradually emerging in different versions and from a variety of sources-Christian Democrats, young business professionals, non-Marxist elements of the FDR-of negotiating with the opposition to re-form a consensus and, in effect, give the non-guerrilla groups a way to abandon the road of violence. This concept is also being advanced by countries like Costa Rica and Mexico, and by Social Democrat leaders in COPPAL (the Permanent Conference of Latin American Political Parties), a grouping of Social Democratic parties such as Mexico's Revolutionary Institutional Party (PRI) and Venezuela's Democratic Action (AD).

Any concept of a "center" in the current Salvadoran situation is a relative one. Taking it in that sense, the government is a "center" and could be the nucleus of a process that over time could depolarize the country. The policy of the Carter Administration has been to support that process and the governing coalition, including the provision of military assistance to help it defend itself against the extremist insurgency. The Reagan Administration will in all probability follow the same general policy for the same reason-there is no practical alternative. But at this writing, fundamental questions exist: Can the "center" hold? Will the government be pulled so far Right as to lose any credibility as a force that can reconcile the country? Are reforms and efforts to re-create a political process even relevant any more? Or has the situation degenerated so far that civil war may in fact be the only resolution left? Will external aid to the Left guerrillas convert the nature of the internal conflict into a kind of Spanish Civil War situation?

III

In Nicaragua, the central question remains what it has been since July 1979-what shape and orientation the Nicaraguan process will ultimately take. The Marxist Sandinista Directorate is the dominating force in the government and the country because it controls the coercive power, i.e., the military and the security forces. Yet the Directorate cannot control the whole society, even though it may want to, because it cannot by itself manage the economy. It needs the private sector. Thus the economy remains mixed, negotiations take place between the government and the private sector, and non-Marxists remain in the governing junta and structure. Neither Cuba nor the Soviets have been willing or able to take on the burden of making Nicaragua economically viable, and the country's integration into the international economic system is one of the greatest deterrents to the consolidation of a Marxist system.2

Moreover, viable non-Marxist, democratic elements function in the society-the Church, La Prensa (the newspaper that played a key role in the opposition to former President Anastasio Somoza), political parties, labor groups, and private-sector organizations. Even the murder of a prominent business leader, Jorge Salazar, in November 1980 did not shake the private sector's surprising self-confidence and determination. The society and the power structure, in short, still exhibit pluralistic elements. At the same time the Sandinistas, showing some sense of feeling embattled, express considerable concern about "counter-revolution."

The premise of U.S. policy to date has been that the die has not been cast in Nicaragua, and that if non-Marxist elements in that society remain viable, there is a good chance that the internal process can evolve toward a Mexican rather than a Cuban model. The concept does not assume that the Sandinistas will be converted, but rather that if the non-Marxist elements can continue to function and the Sandinista-controlled government can be kept tied into the West's political economy, a Marxist system can be prevented from consolidating. In time, such an evolution could come about in spite of the Sandinistas. The implicit conclusion is that it is essential to supply aid to keep the monetary/economic system viable and enmeshed in the international economy, and to support the private sector. Failure to do so would leave the private sector abandoned and unable to compete with the currently stronger Sandinista structure. The same general policy is being followed by other non-communist countries-Mexico, Venezuela, Costa Rica, West Germany, Spain, France and other European countries-all of which extend aid to maintain pluralism.

What the Reagan Administration's policy toward Nicaragua will be is unclear. Some writers associated with the Reagan camp have argued that the die has been cast and that the Sandinistas have already shaped the ultimate outcome of the Nicaraguan political process; consequently, we should not aid an already Marxist government. The trouble is that the available facts do not justify this conclusion; the ball game is still on, whatever the inning. A few writers have argued that the United States should not only stop providing aid to Nicaragua but should destabilize the Sandinista government as well.3 No course could be better calculated to inflame the whole isthmus, raise tensions in the Hemisphere and create the potential for a Spanish civil-war situation.

In sum, it is hard to see any better alternative for policy in the immediate future than that currently being followed by the United States, Mexico and West European countries.

IV

Like Central America, the Caribbean-America's "third border"-has also become a policy concern of the first order.4 The nations of the Caribbean have been passing through a difficult period of economic and political transition for a number of years now, a transition marked by the rapid emergence from colonial status to independence of almost a score of these countries. In 1960 only three of the Caribbean islands were independent countries. Today there are eleven. In another two years there may be fifteen or sixteen.

What sent shock waves through the area, however, was the March 1979 coup in Grenada-the first in the history of the English-speaking Caribbean-which brought to power a leftist government that very quickly aligned itself unconditionally with Cuba and adopted a policy of outspoken hostility toward the United States. The coup, and the specter it raised of a Castroist influence spreading into this heretofore quiet region, may have had something of a "vaccination" effect on the rest of the Caribbean. Since the coup the political trend in the English-speaking islands has shifted toward moderate to conservative elements. In each of the six elections held in this sub-region since that time, moderate-conservative groups have won.5 In the most significant of these, Edward Seaga's victory over Michael Manley in Jamaica arrested a marked swing toward closer relations and cooperation with Cuba.

While 1980 was thus a somewhat quieter year for the region than 1979, difficult problems and uncertainties continue to hang over the area. The fundamental problems are of the same generic kind that roil Central America-poverty, severe socioeconomic inequities and maladjustments, frustrations about the latter which translate into political strains, and the potential for radicalization. Yet in the Caribbean they are cast in a very different context. In Central America, the context has been that of authoritarian systems eroding under the pressures of demands for reform which they cannot or will not accommodate. Except for Haiti, in the Caribbean region the essential issue is how open, democratic societies-most of them emerging from colonial status and many of them "mini-states"-can cope effectively with such serious economic, social and structural problems as massive unemployment, declining investment, emigration of skilled manpower, and smallness of the economies. What is more, all of these problems have been magnified and compounded by rising oil prices and persisting world inflation. High expectations and generational conflicts exacerbate the situation, and radical models are tempting to younger political leaders as a means of overcoming these seemingly intractable problems.

Stability and peaceful change depend essentially in these circumstances on economic and social development. This in turn will require a relatively heavy inflow of resources and concessional financing for infrastructural investment, and in some cases for aid to current budgets. To date, assistance has been marshaled through the Caribbean Group for Cooperation in Economic Development, under which the World Bank has brought together 31 donor and recipient countries arid 16 international financial institutions. Despite the consequent stimulation of somewhat larger aid flows to the region, the needs still remain considerably greater than available resources, and the doubling of oil prices in 1979 created needs for balance-of-payments financing which cannot be met through the Group. Some countries face the prospect of negative real rates of economic growth and higher levels of unemployment in 1981.

Embryonic security organizations and the danger of subversive intrusions into quickly changing situations make regional security a matter of concern to all the nations involved-and to the United States. The former metropole powers extend various kinds of assistance to police and defense forces. While the United States has sought congressional authorization to offer modest amounts of military sales credits for training and equipment to legitimate defense forces (U.S. law prohibits assistance to foreign police forces), this is not an easy area in which to provide help. Most of the governments do not feel they can afford to contract such loans for military equipment. Therefore, unless the United States can provide grant military assistance or more concessional terms for the sales credits, our cooperation may be ineffectual.6 Yet up to now no congressional appropriations for grant military assistance have been earmarked for the region, nor does the law permit easier terms for the loans.

V

Obvious geographic factors and economic and societal ties clothe our relationship with Mexico with a special importance. Few economies and societies are so entangled as those of the United States and Mexico. Our relationship functions, as it were, on two levels. In addition to the formal, official universe of substantive relations (which is what we normally think of as the "relationship"), there is, at a kind of micro level, a deepening and broadening of links between segments and institutions of both societies whose practical effect is to make for a trend toward de facto interdependence. These links include such things as the institutional and personal links of trade, finance and investment; the growth of border communities; academic and scientific exchanges; and transborder ethnic relationships. The trends making for de facto interdependence are the product of naturally complementary social, economic and geographic factors, and they occur largely independently of the will or design of either capital-and perhaps to the consternation of both. The paradox is that their very growth magnifies the problems of psychological differences, cultural dissimiliarities, and power asymmetries at the level of the official relationship. In short, as our overall relations become more interconnected, so do the prospects for conflict.

Trade, which is likely to be the most confrontational issue in the 1980s, is a case in point. Trade levels have tripled in the last three years. The value of two-way trade exceeded $25 billion in 1980, compared with $9 billion in 1977, and Mexico is now our third largest trading partner, after Canada and Japan. Even though Mexico's policy of diversification will broaden its range of trading contacts, the United States will probably remain Mexico's major trading partner, not only because of geographic proximity but also because of the size and relative openness of the U.S. market and the established ties between the private sectors.

The dramatic expansion in trade, however, heightens the differences between each nation's concept of commercial policy. Mexico's perceived need to use subsidies and incentives to stimulate export growth, for example, will sooner or later clash with U.S. law on countervailing duties. Mexico's decision not to join the General Agreement on Tariffs and Trade (GATT) raises the natural question of what policy framework ought to govern this booming trade. For now, both sides may well find it more feasible to deal with individual cases and issues as they arise rather than with larger constellations of issues. But sooner or later, as trade continues to expand, both sides may find it desirable to explore other courses, such as bilateral sector agreements, where complementarities exist.

For the United States the major issue posed by the common border is illegal immigration. As one study described it:

Illegal immigration . . . links to so many sensitive concerns in both countries that it resembles a "lightning rod" for the entire bilateral relationship. Discussions regarding this issue in either country inevitably lead to discussions regarding controversial conditions in the other country.7

In the United States, policy perspectives tend to treat the question of undocumented workers as a problem to be "solved"; discussions of the issue are generally surrounded by a strong sense that "something has to be done." In Mexico, on the other hand, worker migration is generally viewed as a natural phenomenon created by structural interdependence with the U.S. economy. The sense that surrounds discussion there is that it is less a "problem" than a circumstance with which we will have to cope over a long term.

However one views the issue, it is clearly a subject whose bilateral links are so intense that it requires close and careful consultation and exchange in a spirit of good faith and understanding. The report of the Select Commission on Immigration and Refugee Policy provides a basis for intelligent assessment of the options open to the U.S. government and a framework for such consultations. The Mexican government, for its part, has already made clear it would like to discuss the issue with the new Administration. While Mexico's initial focus will undoubtedly be on human and labor rights of undocumented workers, its basic interest is to assure some reasonable share of the U.S. labor market for Mexican workers. Indeed, whatever else the United States does on this issue, this segment of our relationship is not likely to be stabilized without some kind of mutually agreed process to permit a legal flow of temporary workers.

And then, of course, there is oil. Petroleum obviously served to awaken U.S. policy toward Mexico. Yet it is the one item on our mutual agenda with the least intrinsic reason for problems and controversy.

The primary goal of Mexican petroleum policy, reflected in the National Energy Plan unveiled in mid-November 1980, is to exploit oil reserves rationally in order primarily to supply domestic needs, with exports kept down to amounts consistent with sound economic and development policy. The announced production goals-3.5 million barrels a day (MBD) by 1985 rising to 4.1 MBD by 1990-are based on estimated domestic needs. The Energy Plan establishes an export ceiling of 1.5 MBD which represents approximately the level of current contracts, and which should be reached by the middle of 1981.

A second major Mexican policy goal is to diversify oil markets. The Energy Plan specifies that no single destination should receive more than 50 percent of total exports. In effect, Mexico seeks to diversify its market away from the United States, since it does not want to become overly dependent on the U.S. market and it fears U.S. dependency on Mexican supply. The U.S. share has already dropped from around 80 percent in 1979 to 65 percent in the latter part of 1980.

The main lines of this policy, however, are not inherently adverse to general U.S. interests. Even though the U.S. share of Mexican exports has declined, for example, absolute amounts have continued to rise as total export levels have risen. Moreover, oil being a fungible commodity, export flows to other countries, such as Japan and Brazil, serve our global interests. Furthermore, our bedrock interest in seeing Mexico remain a stable, prosperous, progressive neighbor would favor Mexico's exploitation of its oil reserves at a pace which avoids the dangers of overheating the economy and destabilizing its political and economic evolution.

Americans frequently think of Mexico's oil predominantly in terms of their own energy needs, and discussion is often in terms of "energy agreements," linkages, and how to obtain more oil from Mexico. But this perspective misses the pervasive Mexican fear of dependency on the United States, overestimates our ability to influence internal Mexican decisions either by pressure or by concessions, and neglects the related interests of the United States which militate against pressing for production or export levels greater than Mexico feels it can handle.

The future of Mexican oil development, of course, may ultimately be affected by factors beyond Mexico's control. Such factors as the world price of oil, the economic health of Mexico's trading partners, and potential major disruption of Middle Eastern oil supplies may be crucially relevant. Furthermore, it remains to be seen how closely Mexico feels it can adhere to the various ceilings already established. Economic factors may push production ceilings and export levels upwards, and the natural market complementarities will be a constant push for sales to the United States. Barring any effort by Mexico to effectively shut the United States out of its export market or any misguided U.S. effort to try to shape Mexican oil policy, petroleum should not be a controversial issue in U.S.-Mexican relations over the next few years.

It is in foreign policy, and specifically policy toward Central America, that the potential for misunderstanding and friction between the United States and Mexico are greatest. Above all, Mexico is apprehensive that the United States will undertake an openly interventionist policy in Central America-indeed, apprehension runs so high that President López Portillo expressed strong concern publicly. The need for careful consultation and exchange of views is therefore important if differences and friction over foreign policy are not to wash over the whole relationship.

The change in Administrations in Washington offers a good opportunity to reexamine bilateral issues and improve the personal and psychological setting of our relationship. One hopes that the meeting on January 5 between President-elect Reagan and President López Portillo began that process. But if Americans are to avoid being surprised or disappointed, they need to understand accurately the nature of Mexican nationalism, its impact on Mexican policy and perceptions, and the consequent limitations on what is possible in our relationship. Mexican nationalism is deep and pervasive, and manifests itself in compelling notions of national dignity, independence and sovereignty which very often constrain policy choices. A profound sense-and fear-of dependency-cum-vulnerability pervades Mexico's relations with the United States, and Mexico's approach to the relationship has traditionally been one of mistrust. Mexico has a difficult time even accepting the notion of interdependence-or partnership or community. Mexicans tend to see in such notions an asymmetrical trap which may deepen Mexico's vulnerability. That is why U.S. suggestions about a "North American community" are received so negatively in Mexico. President López Portillo even felt compelled to reject explicitly the notion of a North American Common Market when he addressed the Canadian Parliament in May.

Yet even though the traditional principles of Mexican nationalism lend themselves to distrust of the United States, there is in the Mexican genius and system a capacity to adapt principles to pragmatic, innovative interpretations, and to adapt nationalism to changing circumstances at home and abroad. And whatever their historical sensitivities and fears, Mexicans respect fair dealing, and the extension of mutual respect and recognition of their dignity. Respect and dignity, indeed, are for Mexicans the essential ingredients in any bilateral relationship.

VI

Cuba represents a fourth major policy question for the United States. That question includes the increase of Cuba's influence in Central America and the Caribbean, its role as a Soviet proxy, and the generally hostile thrust of its international conduct.8 It is important to understand from the beginning that no practical policy the United States can fashion is likely to induce or force a Cuban break with the Soviet Union in the foreseeable future. Thus, as a practical matter, both the subject and goals of our policy are limited in considering how to cope with Cuba's hostility, adverse international conduct, and subversive threats.

There are two alternative ways of conceiving U.S. policy toward Cuba. One would be to continue the hostile, adversarial approach which has characterized U.S. policy for the last two decades, and to maintain the economic embargo. This is essentially a containment policy. It has no prospect of affecting Castro's hold on power or of loosening Soviet ties, and little prospect of modifying Cuba's international behavior. It is the easiest course to follow, however, and it would establish a kind of holding pattern until different opportunities or prospects offered themselves. Any sharpening of the policy to include efforts to destabilize Cuba forcefully, e.g., a blockade or paramilitary operations, would so heighten world tension and risk serious global confrontation as to be a policy incommensurate with the problem.9

An alternative approach would mount some carefully controlled U.S. initiatives aimed at promoting, in concrete, step-by-step fashion, an eventual modification of Cuban conduct and hostility. The United States would, under such an approach, consider increasing nonofficial contacts with Cuban society-selectively, at first-to induce greater tractability within Cuba. Examples would be authorizing regular airline service or permitting sports exchanges. At an appropriate time and as circumstances warrant, the U.S. government would probe, in a controlled way, the possibility of parallel steps, that is, each side moving on its own but in response to the other. For example, an agreement by Castro to take back criminals and mentally defective refugees and to stabilize rules of migration might be paralleled by the United States permitting selective commercial trade in pharmaceuticals. Increasing the amounts that Cubans in the United States may remit to relatives in Cuba might parallel continued repatriation of dual nationals. If those steps proved successful, we would proceed to more substantive matters in the same way. If they were unsuccessful or if Castro was unresponsive or continued subversion in Central America and elsewhere, the tactic would simply be halted.

The problem with such an approach is that it initially operates only at the margin, it may not progress very far, and it is hard to orchestrate. Past theories about improving relations and defrosting the climate, moreover, have usually started with unrealistic conditions. To insist, for example, that Cuba must drop its military or economic ties with the Soviet Union, or withdraw military forces from Africa, before any moves toward improving the climate can begin, is to stop before one starts. (The obverse is also true: Castro's insistence that the total-embargo policy be scrapped before any exploration of a less hostile relationship can begin is a non-starter.) These more sweeping conditions are better thought of as de facto goals toward which a relationship would be pushed than as prerequisites. And renewal of normal diplomatic relations-which is a legitimating act-is something that needs to be left as an end product (and a useful poker chip) of this strategy's evolution rather than an initial lever.

The Cuban refugee problem which exploded on the United States in the spring of 1980 is relevant for U.S. policy in this regard. On the one hand, it was the first time Fidel Castro found a lever that could affect the United States, and, on the other, it was a startling comment on the poor condition of the Cuban Revolution. All this, in turn, suggests that there may be mutual interest in developing a less confrontational relationship. It also suggests that Cuban society has difficulty resisting the pull of American society when exposed to it, and that increased contacts between the two societies, such as those described above, have good prospects for proving constructive over time.

VII

The drama and urgency of such crises as those that face Central America, and the concrete nature of major bilateral relationships such as those with Mexico, can easily obscure broader underlying trends which, if less obvious, are nevertheless central in explaining the region's dynamics. The relationship between economic development and internal political dynamics is just such a central factor, especially in regard to the larger countries of South America.

Besides changes in societies and institutions, cumulative economic growth has had even more profound consequences. Economic growth and social progress have been brought to the center of Latin American political agendas. Whether called modernization, development, economic rationality or even national security, growth and development have become paramount national objectives everywhere. Modernization and the ability of governments to achieve it are consequently serious, even grim, business for all the countries. And that is what political dynamics are about in Latin America today. Political struggles and debates center on how these societies are to organize themselves to deal with such matters as the efficiency of systems, welfare maximization, conflicts over the distribution of national product, and the power and bargaining elements that enter into these issues. What models of political systems are best; debates on the relative merits of state planning versus market forces and import-substitution versus export-led growth models; what priorities ought to be given to such things as job-creation and controlling inflation, order and liberty-all pose painful dilemmas.

Theories abound regarding the respective value of authoritarian, corporatist or democratic government models, or eclectic versions thereof. Some of the most serious political questions that may lie ahead for Latin American countries are: Can economic efficiency be achieved in a democratic framework? Can social justice be achieved without it? Where economic growth has been accomplished in an authoritarian setting, is democratization likely? If the redistribution of income and the correction of social inequities are long delayed, will the resulting inequalities lead to instability, or violence? For nations in which political processes are brittle, or which are developing more open systems, such as Honduras and Brazil, these can be matters of life and death.

Brazil is a good example of this interweaving of factors. The Brazilian military's decision to extricate itself from power after 16 years of rule by means of a gradual transition (abertura) toward a more open political system has unfortunately coincided with a world economic downturn and an energy squeeze, both of which have had a deep impact on Brazil. In 1980 Brazil faced rampant inflation on the order of about 100 percent, the largest foreign debt in the developing world, a $12-billion oil bill, a debt service of about $14 billion, and a gross financial gap of over $18 billion. The Brazilian government has indicated that it will take steps to restrict its economy after almost a decade of spectacular growth. To succeed in the gradual democratization which the regime has undertaken will require a minimum degree of social mobility and growing resources to allocate for rising demands. On the other hand, economic imperatives require a turn to austerity and a reining-in of the economy. The major challenge in the coming year, therefore, is how to steer within these two requirements. With realism back in economic policy and with President Figueiredo apparently firmly dedicated to implementing abertura, some optimism is warranted.

The struggle to achieve internal political consensus provides an interesting array of patterns elsewhere in South America as well. In July 1980, Peru installed its first freely elected president since 1963. The event was especially welcomed by Peru's northern sister states in the Andean Group, and helped strengthen the Andean nations' orientation as something of a "democratic lobby." In neighboring Bolivia, the results of a free election were negated by a power grab by military officers in what was surely the most unjustified coup in recent memory. That event introduced such strains into the Andean Pact that Colombia did not invite the Bolivian chief of state to the December ceremony in Santa Marta commemorating the 150th anniversary of Simon Bolivar's death. None of the member states wants to lose Bolivia's participation in the economic pact, but the other four governments feel uncomfortable, not only with the authoritarian nature of the Bolivian regime, but also with its obvious consequent gravitation toward Southern Cone governments. In Chile a government-proposed Constitution which would continue military rule for up to 16 years was approved in a plebiscite by a sizable margin, leaving General Pinochet in complete control of the government process. In Uruguay, on the other hand, a proposed Constitution that would similarly put the military in effective control of the future political process was soundly defeated in a plebiscite. The results created some confusion in the nation's politics, but the Uruguayan military has apparently chosen to interpret the results not as a verdict on military rule itself but on the particular transition formula proposed. A new proposal may be presented at some later date.

Argentina effected a peaceful transfer of power from one military president to another, with the selection of the former army commander, General Viola, as President for a three-year term beginning in March 1981. But the regime has yet to develop any clear rules for either political succession of the military or orderly transfer of power to a civilian regime. General Viola will have to cope with two major problems in 1981. The first is that all three members of the ruling military junta are due to be replaced by the end of the year, possibly necessitating a reworking of the complicated balance of power both within the military and between the junta and the presidency. The second problem is the increasing restiveness in the country over the economic liberalization policies of the Economics Minister, José Martínez de Hoz. Few basic changes in policies are likely, but General Viola will feel increasing pressure to do more to protect national industry.

Divisions among Latin American countries according to internal political systems are not new in the region's history. At present, however, something of an ideological polarization does exist between the military, authoritarian regimes of the Southern Cone and Central America, on the one hand, and Mexico, the democratic regimes of the Andean Group and the island Caribbean, plus Costa Rica and Panama, on the other. This kind of pattern will undoubtedly be an element in the area's dynamics over the next few years. Yet the importance of such divisions can also be exaggerated, for it is usually issues that determine alignments. Nations divided over one issue may be united with regard to another. Questions of human rights, for example, sharply divide military regimes and democratic ones, while a North-South issue will find democratic and authoritarian regimes aligned in a common front vis-à-vis industrial countries.

VIII

If there is a direct correlation between economic growth and internal political dynamics, an equally direct connection exists between the prospects for such growth and the state of the world economy. Latin America's emergence into the world arena had the advantage of broadening access to resources and increasing opportunities for development. But it also made the region more vulnerable to developments elsewhere. Global economic issues are thus being driven to the top of Latin America's agenda, with the financing of current imports, foreign debt service, and efforts to sustain short-run growth superseding in urgency longer run objectives such as infrastructure development and long-term economic growth. With world economic forecasts in 1980 universally pessimistic, especially for non-oil-exporting less-developed countries (LDCs), most of Latin America may have to cope with matters like unemployment in the context of reduced growth and living standards.

For Latin America, as for the rest of the world, energy is now a crucial issue. In 1980 the real price of oil was 80 percent higher than it had been in 1978,10 and new price rises are already in train for 1981. The crucial question is whether the international financial system can recycle enough funds to maintain import levels and growth needs.11

Latin America's huge indebtedness is another key constraint. The region's debt accumulation in the past ten years has been more rapid than that of any other part of the developing world, with Brazil having the largest foreign debt of any country in the Third World, an estimated $56 billion. Together with Mexico, whose debt is estimated at over $30 billion, the two countries account for almost 70 percent of the region's total. But the external debt of a number of other countries, notably Peru, Colombia, Chile, Argentina and Venezuela, is sizable as a percentage of GNP. Debt has, in fact, become the principal form of capital inflow into the region; direct investment, a major capital source a decade ago, now accounts for only ten percent of capital inflow. Private commercial banks, moreover, have become the region's principal creditors, being responsible for 40 percent of the officially guaranteed debt, compared to ten percent some ten years ago.12

This massive debt accumulation resulted from the use of loans to finance high-growth strategies in the early part of the 1970s, and continued borrowing to meet the 1973 oil price rise and subsequent adjustments, rather than import restraint and short-term curbs on internal growth. Even though import and growth rates have declined, foreign borrowing continues, largely to accumulate reserves and provide the creditworthiness needed to sustain more borrowing. As one expert has put it: "For many of the countries of Latin America, the debt cycle threatens to come full circle in little more than a decade-from a process of debt-led growth to one of potentially debt-constrained growth."13

The debt problem is also a trade problem. Export growth is the basis for generating the required foreign exchange both to service debts and to permit subsequent new financing. However, import demand from the industrialized countries promises to decline in 1981 because of rising energy costs, necessary deflationary measures, and structural reasons.

Latin American countries, in short, will need to adjust to payment imbalances and higher energy costs precisely at a time when demand for many of their exports has slowed and when the outlook for capital flows is unpromising. Many must deal with poverty as well, in all its socio-political aspects-malnutrition, food production, demands for education, health services and better income distribution-none of which is likely to be managed successfully over time without economic growth. These countries feel compelled, therefore, to join in Third World demands for reform of the international economic order that would improve development and living standards, the distribution of world income, and, ultimately, the Third World's stake in the system. Hence Latin America's embrace of the New International Economic Order and the North-South dialogue. The North-South dimension is of basic economic, psychological, political and nationalistic concern to Latin America, and Mexican President López Portillo's strong sponsorship and advocacy of a North-South "mini-summit" tentatively scheduled for Mexico City in 1981 is a case in point.

IX

Still another region-wide perspective must be noted to round out our understanding of hemispheric dynamics-that of regional governance and subregional cooperation. No region of the world has a longer history of international organization and cooperation. The Hemisphere has the most elaborate system of international governance in the world outside of Europe-more than 30 regional and subregional, general and specialized, organizations and agencies.

It is fashionable today to label the Organization of American States (OAS) anachronistic, and the idea of an "inter-American system" meaningless. Such a dismissal of regional governance, however, makes three mistakes: (1) it underestimates the appeal of the region's rich tradition and experience in international organization; (2) it mistakenly equates Latin American fears of dependency and dislike of U.S. hegemony with opposition to any organized cooperation with us; and (3) it fails to recognize that international cooperation and resort to international structures have been traditional and persistent Latin American strategies for dealing with power asymmetries. These countries have consistently sought to overcome relative weaknesses in bilateral leverage by joining forces, and by seeking to tie others into legal commitments and juridical obligations.

Latin Americans have thus viewed the OAS as valuable precisely because it has been a useful vehicle for dealing with American power. In contrast to frequent negative verdicts from American commentators, the desire for finding new common motivations and modes of cooperation is persistently voiced by Latin American statesmen. And the real significance of the dramatic 36-hour marathon session at the OAS General Assembly in November 1980, which found a way to accommodate differences over human rights, was not so much the human rights issue itself as the fact that even on a subject as deeply felt as human rights, the members were prepared to go to great lengths to find a fig-leaf compromise, rather than walk out and let the organization collapse. Even Latin American arguments that Latin Americans should organize among themselves (e.g., in such bodies as the Latin American Economic System-SELA) rationalize this not as a way of excluding the United States, but as a way of dealing with us (and by extension with the industrialized world).

In addition to region-wide organizations, growing instances of subregional groupings suggest that new patterns may be developing around such subregional "building blocs." The Andean Group, formed around the Andean Common Market (ANCOM), is the most significant of these.14 While economic integration was the major reason for forming ANCOM, its "geopolitical" value as a means for dealing with larger power units, such as Brazil or the European Community, was also a real, if unstated, motive. In addition to significant economic links, the group has now expanded into political and foreign policy fields, with the institutionalization of foreign ministers' meetings to coordinate foreign policies and common positions on regional and world affairs.15

The Andean Group was subjected to serious strains in 1980, both because of internal economic policy disagreements on such items as a common external tariff, and as a result of Bolivia's coup. Whatever the internal contradictions, however, the centripetal force of the "geopolitical" factor is strong. Occasionally a centrifugal element may be stronger, as in the case of Chile, but by and large the governments do not want to break up the Pact, and they go to great lengths to avoid such an eventuality. They customarily deal with economic policy problems, for example, either by postponing them or by finding pragmatic formulas permitting "national discretion." Even if Bolivia's current voluntary "abstention" from participation in the Pact turns into formal withdrawal, the other four members are likely to continue.

In the Caribbean, economic cooperation is institutionalized in some four different organizations, including a subregional development bank. In addition, the English-speaking countries have begun to function as something of a "caucus" in international forums. Even in strife-ridden Central America the pull of subregional association is strong. In July, a meeting of Central American economic ministers in Nicaragua outlined a series of concrete measures to restructure the Central American Common Market (CACM). Perhaps no event had greater significance, however, than the little-noticed treaty-signed in October and promulgated in December-between El Salvador and Honduras terminating the ten-year-old war between them. The reopening of that border holds great promise for the CACM, and even for El Salvador's internal problems.

Relatively unnoticed, too, was the signature in Montevideo in August 1980 by 11 nations-Spanish-speaking South America plus Mexico and Brazil-of a treaty establishing a new organization to replace the defunct Latin American Free Trade Association (LAFTA). The new organization, the Latin American Integration Association (ALADI in its Spanish acronym) also aims at a common market, but was designed to eliminate the rigid rules of LAFTA, especially the equal-treatment provisions. The new treaty provides for three categories of development, with preferential treatment of less-developed nations by richer ones, thus allowing concessions to some and not to others. In effect, ALADI will favor the emergence of subregional arrangements like ANCOM.

But perhaps the most important potential event in regional governance in 1980-again largely unnoticed-was the presentation to the OAS in July of a report on "Hemisphere Cooperation and Integral Development" prepared by an OAS-established group of experts.16 Intended to assist planning for the OAS Special Assembly on Integral Development scheduled for 1981, the report identifies major problem areas which are especially suited to Hemisphere cooperation, and recommends actions to cope with them. Aside from the merits of the recommendations themselves, the importance of the report lies in the two principles it implicitly proclaims: that there are major development problems-e.g., energy, food production, education-which are so large and urgent that international cooperation is needed to confront them; and that even given the global nature of many of the problems, the natural affinities of regional groups can make regional cooperation an efficient complement, and not just an impediment, to global efforts.

X

Having roughly sketched the intricate, multidimensional complexity of hemispheric dynamics, we must now turn to how U.S. policy should deal with them. The answer hinges initially on how policy makers define the national interest, both regionally and globally, for how the United States "sees" Latin America depends in large part on how it sees itself and the world.

Defining "national interests" and how to pursue them is an agonizing task. Only occasionally are "interests" objectively evident and unquestionable-e.g., raw-material supply. Most of the time, interests are postulates. The U.S. interest in the Persian Gulf, for example, is much easier to demonstrate because of the objective importance of oil than is the U.S. interest in Central America. The latter cannot be easily justified by such things as the amount of trade or investment. The concept of U.S. interest in Central America depends more on what premises one posits about Soviet/Cuban motivations, the nature of strategic interests, security threats, the U.S. image, the role of influence, and the nature of power. In a real sense, "interests," like beauty, frequently lie in the eye of the beholder.

Nor are policy goals always a matter of objective and free choice. They are the result of an interplay of values, institutions and experience, as well as realities. Furthermore, situations are not, as analysts sometimes seem to assume, simply passive states of affairs in which the only variable is our strategy. We are constrained by the interests and goals of others with whom we deal, as well as by circumstances. This is especially true with regard to Latin America where we are dealing as much with perceptions as with tangible circumstances.

The problem which most Americans have in thinking about Latin America, in fact, is that they have come to consider the dominant U.S. position in the world and the overwhelming hegemony the United States exercised in the Hemisphere in the 20 years following World War II as the normal state of affairs. Consequently, they are tempted to believe that relative declines in U.S. power-especially in the sense of power to control events-are the results of self-imposed policies, and that with will and effort this can be reversed and the "normal" state of affairs reinstated. There are, to be sure, some correctible elements in the obviously changed American position in the world. Rebuilding military strength is an example. But there are also structural changes which are not reversible. These include the changes implicit in the relative rise in power of Western Europe and Japan, and in Latin America, of the "newly influential"; in the complexity of world politics; in the growing interdependence of the political economy; and in the limitations and costs all these trends place on the use of power.

These factors are compounded by a basic tension in the international system caused by trends toward greater international cooperation on the one hand, and an increased desire for greater national freedom of action on the other. Moreover, this tension between international interdependence and national independence is likely to increase.

Nowhere is this clearer than in relation to the U.S. domestic economy. Current American stagflation makes certain measures unavoidable if the economy is to be revived. What this means for Latin American policy can be sensed if one thinks of how the need to combat inflation, curtail government expenditures, reduce unemployment and increase productivity will all relate to the simultaneous need to encourage Latin America's export growth; cope with migration and refugees; and provide our required share of resources to stimulate development and improve international liquidity.

In the late 1960s the United States devoted 0.5 percent of its GNP to foreign aid for LDCs. In 1979 the share had fallen to 0.19 percent, the lowest of any of the industrialized countries of the non-communist world except Italy.17 Yet the constraints are real. Only about ten percent of the current federal budget is "controllable" in the sense of being either non-mandated or non-defense expenditures. If budget-trimming is to be achieved, it must be done out of this ten percent slice which covers the entire foreign affairs budget as well as all other operational expenditures. The dilemma is thus agonizing. If it is in the national interest to aid Jamaica, for example, and the requirement is substantial, where does the aid come from? If national interests dictate assisting simultaneously Turkey, Jamaica, Poland, Portugal, Pakistan and El Salvador, who gets priority and how do we slice the pie? There is, in short, a real question as to whether U.S. policymakers will have available either the level of resources or the degree of popular support required for regional (or world) leadership.

XI

In addition to the "setting" factors described above, we need to take note of two major conceptual issues which emerge from current Latin American dynamics and with which the Reagan Administration will have to grapple from the start: how to deal with Third World change and revolutionary conflict in a setting of sharpened global competition with the Soviet Union; and what to do about human rights.

The former is a generic question which is sure to evoke increasing concern and controversy.18 It is obviously the possibility of a convergence between a local situation and a Soviet threat that makes the question crucial. Were it not for that, the United States could be relatively detached about internal conflict in LDCs. An initial conceptual task with regard to Third World conflict, therefore, is to determine exactly what is really at stake. Are vital U.S. interests involved? What is the true nature of any Soviet or Cuban connection? What can we tolerate and what can we not risk?

One formulation views not just Soviet/Cuban incursions into the Third World, but the rise of "radicals" as well, as threats to the United States. In this view, Third World conflict is seen, in a kind of Manichean way, as a struggle between "moderates," i.e., those who support our general policies and political values, and "radicals," i.e., those hostile to us and our system and who advocate totalitarianism. Some versions of this formulation would include in the former category traditional, authoritarian regimes, if they are "friendly," rationalizing that they may be only moderately repressive and in any case are capable of moving toward democracy.19 This concept, in short, would have us step back from supporting reform, and would in fact implicitly have us defend "friendly" regimes against revolution and internal change-all on the grounds that we do not understand change, cannot steer it, and cannot predict its outcome. Better the devil we know.

The trouble with this concept, in the first place, is that it assumes one can easily classify everyone as "moderates" or "radicals," whereas these are relative terms whose meaning depends on local circumstances. It tends particularly to cast the "radical" net too widely, implying that the presence or support of any Marxist or Castro-ist element automatically taints any group, however diverse, or any cause, however intrinsically legitimate. This concept thus too readily yields to our adversaries the initiative and leadership or reform and redress; and it gives up too easily any possibility of isolating Marxist elements, or disarming or modifying the hostility of "radicals." Second, there is an implicit assumption that unjust or repressive situations are not inherently unstable and that whether change occurs or not depends on us-i.e., on whether we can "destabilize." In fact, unjust situations are unstable over the long run. Demands for reform and change can be suppressed for a while, but the likely consequence is to push demands into violence and to make the change more disrupting when it occurs. Finally, the concept disregards the fact that "friendly" autocrats frequently resist reforming; and since we should not press reforms because the idea is not to destabilize, the practical result would be to force the United States to dance to the weaker "friend's" tune and to become associated with the elements of repression, corruption or injustice that bred instability in the first place. This, in turn, makes it easier for our Soviet/Cuban adversaries to get on the "right side."

Another approach argues that the United States should not get involved in questions of a state's internal order, but should attend to these situations only in cases of clear Soviet/Cuban intrusion. The problem here is that it would involve the United States only at the most deteriorated and dangerous point, when a Soviet threat was unambiguously clear and the only option left was confrontation. It foregoes the opportunity of earlier, less risky actions by us, such as fostering reform which might diminish Soviet/Cuban chances for exploiting poverty and injustice. The obverse may also be true-our initial detachment might actually encourage the Soviets.

A third concept would have the United States encourage reform and correction of abuses both because it is right and because it would "dry up the ponds" in which radicals fish (to use Stanley Hoffmann's imagery). The premise is that over time the internal balance of power in these countries will be weighted in favor of those groups sponsoring reform and correcting abuses; therefore, U.S. influence in them would derive from our identification with such forces (or from our identification with the status quo in a repressive situation). This was essentially the rationale of the Alliance for Progress. The problem with this approach is that it also assumes that we can easily label "progressives," and that we can understand what is needed for sound change and reform. The risk is also great that we would fall into the error-as the Alliance did at times-of being tutelary and overdirective instead of just supportive. To steer change, moreover, may require more resource assistance, such as aid, than we now have available.

Obviously the basic conceptual question cannot be answered in the abstract. A mixture of policy and instruments will clearly have to be fashioned case by case, and different policy approaches may be necessary in different places. But the "support change" concept has one fundamental advantage over the "defend-the-status quo" or "just-pay-attention-to-the-Russians" option. The last two view internal conflict and revolutionary situations exclusively through the East-West prism. The "support change" option has the virtue of dealing directly with the situations and issues affecting the people involved; this does not preclude accurately assessing threats to our interests, and has the best chance of keeping different dimensions in proportion and reality in perspective.

XII

The second major conceptual issue is what to do about the human rights policy. The assertion of support for human rights by the United States has had a net benefit for the U.S. image in Latin America. There have been obvious criticisms from regimes and elites that have felt themselves targets. But there has been support from democratic regimes, and growing evidence that the perception among ordinary people has been favorable. Successes can be cited in terms of lives saved, prisoners released, and torture curbed as a result of pressures for the observance of human rights. As was stated in a recent New York Times editorial:

Human rights are not just a matter of morality; they are a practical concern. Regimes pass, but people remain. And there is a subtle linkage between the American position on human rights and the whole web of relationships abroad. . . . Morality apart, the logic that governs a human rights policy is national interest.

Judgments on the policy's consistency and implementation, however, would have to be mixed. In Latin America, implementation failed to take into account bilateral contexts, the maintenance of relationships we would need for other ends, and the intangibles of how one deals with Latin Americans to achieve a desired goal. The policy was thus allowed to fall with full weight on Latin American countries, largely unrelieved by other considerations. It was too easily assumed that if there were no concrete interests clearly evident, like a military base, all other considerations could be substantially disregarded.

The problem with the human rights policy, in short, was not that it asserted support for altruistic ideas. It was that conceptually it failed to appreciate what was possible and what was not when the ideas were translated into foreign policy. The difficulty was not that the United States sought to persuade other nations to observe human rights. It was the hubris and the finger-pointing with which we tried to do it.20 A legitimate objective was thus both overwhelmed and diminished by the zeal with which it was pursued.

If, however, the Reagan Administration jettisons the human rights policy-including support for democracy-or even neglects it, it will throw out the baby with the bath water. It will resurrect negative images and identifications. Critics of the human rights policy and officials of the new Administration should ponder carefully the words of the respected Foreign Minister of Barbados, who at the OAS General Assembly on November 19, 1980, said:

[The human rights policy] has been the single most creative act of policy in the Hemisphere in many a long year. It has raised the consciousness, and stirred the consciences, of many a leader in this region; it has given hope to many an oppressed citizen; it has helped . . . to correct the image of the United States as an unfeeling giant, casting its shadow over its neighbours.

Given the wisdom and correctness of the human rights concept on the one hand, and the difficulty of implementing it bilaterally on the other, the new Administration might well consider placing this valid concern in a predominantly multilateral setting. The Inter-American Human Rights Commission (IAHRC) has been a useful device for focusing attention and pressure within the Hemisphere on serious situations; it played useful roles in both Nicaragua and Argentina. Its multilateral character gives it a prestige and credibility governments cannot ignore. It is potentially more effective than bilateral U.S. policy, moreover, precisely because it removes from the equation the fears of U.S. hegemony or intervention or dependency which blunt rather than sharpen our influence. Strong and active support for the IAHRC, therefore, including adequate budgets, could provide clear U.S. identification with human rights, create an effective instrument for securing better observance of them, and yet depoliticize the issue in bilateral terms.21

The American people have always felt a deep commitment to ideals, and the liberties and well-being of other people have been persistent major concerns of U.S. foreign policy. Much of the history of foreign policy in the last 30 years can be written in terms of attempts to reconcile the compulsion to serve these principles with what was perceived to be the requirements of self-interest. The issues of human rights and whether or not to support democracy and reform in the developing world are manifestations of this old foreign policy debate. In the 1940s and 1950s "idealism" versus "realism" was a central motif in public literature. A re-reading of the "debates" of the time between "realists" such as George Kennan and Hans Morgenthau and "idealists" such as Reinhold Niebuhr is both illuminating and relevant to our current condition. What it all underscores is that effective policy and wise self-interest can only be found at a point in between the sentimental illusion that nations can pursue moral crusades without reference to interest and the cynicism that believes that the nation in practice has no obligation beyond interest.

XIII

The change in Administrations in Washington may well turn out to be a significant benchmark in the history of U.S.-Latin American relations. Besides apparent differences in the way the world is perceived, there is the likelihood that Latin America will be the sector of foreign policy in which there are the largest differences in perceptions and premises between the old and the new Administrations.

The Carter Administration policy's greatest strength lay in its understanding of the changes that had taken place in Latin America, in its appreciation of the importance of ideals and principle, and in the vision it had of the kind of international relations it wanted to see achieved in the Hemisphere. Its greatest deficiencies lay in its efforts to reconcile the use of power and influence with the larger principles it proclaimed; in persistently being unable to trade off conflicting minor goals and consequently oscillating back and forth between contradictory objectives with dismaying inconsistency; and in overestimating the degree to which the region's dynamics could be isolated or considered apart from global balance-of-power considerations.

We do not, of course, yet know what the Reagan Administration's Latin American policy will turn out to be. To the degree that the writings and comments of advisers adumbrate that policy22 one suspects that the previous Administration's strengths and weaknesses will be reversed. Indications are that the region will be viewed predominantly in terms of the global balance of power; that emphasis will be on security arrangements and on mobilizing the Hemisphere in terms of the cold war. The Reagan Administration is likely to have a good appreciation of power, but it may overestimate its utility in given situations; it may also underestimate the importance of "abstractions" such as human rights. Indeed, one has an uneasy feeling of déjà vu when one reads currently the same kinds of concepts and arguments as those that marked U.S. policy in the 1950s. It may not be unfair to suggest that incoming officials should ponder carefully that U.S. experience and the Latin American reaction to that decade, especially our association with such "friends" as Perez Jimenez, Rojas Pinilla and Trujillo, in the name of both anti-communism and the protection of U.S. investments. They could do worse than include in their briefing papers a rereading of Milton Eisenhower's book, The Wine is Bitter.

XIV

In sum, deep changes are occurring in all the countries of Latin America and the Caribbean. They have different meanings and take different forms in different countries. In the larger, more differentiated and institutionalized national contexts, for example in Brazil, the dynamics are of a more conventional, less volatile kind. In the more primitive and smaller contexts, as in Central America, the manifestations are more volatile, more conflictive and more reminiscent of the 1960s than the 1970s. In most cases, such as in South America, affecting or determining the process of internal change and modernization is beyond our power or resources. In some cases, as in Central America, we have more capacity to shape outcomes.

In all cases, however, geographic and historic factors, and the international role these dynamic countries can play, especially the "new influentials," all make a constructive relationship with them of profound consequence to the United States. That in turn requires being relevant to national concerns and situations. For the larger countries, relevance means being responsive and helpful to their central anxieties-trade, access to capital, debt management, economic and social development. For revolutionary situations it means help in fostering moderate resolutions of internal conflict and "drying up the ponds."

Being relevant also means having available an adequate array of tools and resources to carry out relevance, that is, inter alia, substantial aid resources, adequate commercial policies, help in assuring international liquidity. That brings us back to the basic dilemma-that there may be a fundamental contradiction between what a wise foreign policy for the region requires and what domestic policy will permit. But this contradiction has to be faced. If we want to play in this poker game we need the chips; if we cannot afford the chips we should get out of the game. The role and interest we seem to want to proclaim for the United States cannot be carried out on the cheap. This is precisely the point eloquently articulated by both Secretaries Vance and Muskie in 1980.23 In Muskie's words, "There is no lack of rhetoric calling for more American leadership in the world-leadership we must continue to provide. But if we are to continue to lead, then we must be prepared to pay the costs that leadership requires."24

What is required now in U.S. policy is balance, compassion, sensitivity and cultural understanding; we need a sound and proportionate sense of power and how to use it; we need an equally accurate appreciation of the intangibles and the relationship of larger principle to self-interest; and we need a sense of history.

No simple Manichean view of the world as either red or white will provide wise policy. No Hobbesian analysis or neo-Metternichean view of political change will be a sufficient guide. The realities are too convoluted, interlocked and multidimensional for that. President López Portillo was right. Everything is part of everything else.

1 It has been estimated that in 1980 more than 9,000 people, including the popular Archbishop, Oscar Romero, were killed by political violence. In December 1980 the torture and murder of the leadership of the FDR and a short time later the brutal murder of three American nuns and one lay missionary sparked a crisis that led to the most recent reorganization of the government.

2 In September 1980, after nine months of negotiation, the Nicaraguan government reached agreement with a committee of 13 private banks, representing some 120 American, European and Japanese creditor banks, on rescheduling $600 million of previous debt. That development locked Nicaragua into the private money market, and Nicaragua's willingness to do so was a significant move toward a pragmatic, pluralistic course.

3 See Cleto de Giovanni, Jr. and Alexander Kruger, "Reports: Central America," Washington Quarterly, Summer 1980, p. 179. See also Cleto de Giovanni, "U.S. Policy and the Marxist Threat to Central America," The Heritage Foundation Backgrounder, No. 12, October 15, 1980.

4 As used here the term Caribbean denotes the islands, both independent countries and territories. While Cuba technically falls within this definition, these comments obviously do not apply to that nation; the Cuban question is dealt with later. It has become fashionable to refer to Central America and the Caribbean together, as if they were part of the same subregion. The history, institutions, culture, traditions and circumstances of the two areas are very different, however, and it is distorting to try to consider the two together in any kind of unified concept.

5 These were St. Lucia (July 1979); St Vincent and the Grenadines (December 1979); St. Kitts/Nevis (February 1980); Antigua (April 1980); Dominica (July 1980); and Jamaica (October 1980). In Guyana the December elections virtually eliminated Cheddi Jagan's Communist Party as an effective political force.

6 Under U.S. law, military sales credits must be repaid over a seven-year period at interest rates equal to the Treasury's short-term rate for borrowing, plus a service charge of roughly one percent. This would translate into a current interest rate of over 12 percent.

7 David Ronfeldt and Caesar Sereseres, "Treating the Alien(ation) in U.S.-Mexican Relations," RAND Paper P-6186, August 1978, p. 1. This study has an excellent account of conflicting perspectives on the issue, and I have drawn on it for the succeeding remarks.

8 Developments involving Soviet strategic weapons in Cuba are not considered here. That issue lies outside the scope of this paper.

9 Cf. "A New Inter-American Policy for the Eighties," Council for Inter-American Security, May 1980; "If propaganda fails, a war of national liberation against Castro must be launched." The report was written by the Committee of Santa Fe, composed of L. Francis Bouchey, Roger Fontaine, David Jordan, General Gordon Sumner and Lewis Tambs.

10 World Development Report, 1980, The World Bank, August 1980.

11 The joint oil concessionary facility established in August by Mexico and Venezuela to assist needy Caribbean and Central American countries has been a remarkably helpful measure, both politically and economically. The two oil-producing countries have agreed to provide jointly about 200,000 bpd with a partial (up to 30 percent of the purchase) low-interest, no-down-payment credit.

13 Ibid., p. 52.

14 ANCOM was formed in 1969 by Colombia, Ecuador, Peru, Bolivia and Chile. Though Venezuela participated in drawing up the Pact it did not join the organization until 1973. Chile withdrew in 1976 to retain its autonomy in economic and investment policy. In 1979 Spain became an "associate member" of the Pact and attends the foreign ministers' meetings.

15 The Andean Group played a significant role in the OAS deliberations on Nicaragua in 1979, and in preventing annulment of free elections in the Dominican Republic in 1978. It supported democratic processes in Ecuador and Peru, and was a factor in the reversal of a military coup in Bolivia in 1979, though its protests were unavailing in 1980.

16 "Hemisphere Cooperation and Integral Development," OAS/Ser.T/II, GTC/15-80, August 6, 1980. The group of experts (known in the corridors as the OAS Brandt Commission) was made up of Felipe Herrera, chairman; Miguel Ozorio de Almeida, Nicolas Aradito Barletta, William G. Demas, Gert Rosenthal, Walt W. Rostow, Jorge Sabato, Germanico Salgado and Leopoldo Solis.

17 For a graphic account of the drop in aid levels, see "Hard Luck Story," The Economist, September 13, 1980, p. 26.

18 The literature is already full of descriptions, typologies and arguments on this issue. A good concise summary of different theories is contained in Seyom Brown, "The Trilemma of U.S. Foreign Policy," in "Foreign Policy Priorities for the President: Toward a Future Agenda," AEI Foreign Policy and Defense Review, Vol. 2, No. 5. See also Robert W. Tucker, "The Purposes of America Power," Foreign Affairs, Winter 1980/81. Two divergent views are Jeane Kirkpatrick, "Dictatorships and Double Standards," Commentary, November 1979, and Tom A. Farer, "Searching for Defeat," Foreign Policy, Fall 1980.

19 Kirkpatrick, op. cit. p. 44: This article has many useful insights. But it is a little startling to read: "There are, however, systemic differences between traditional and revolutionary autocracies that have a predictable effect on their degree of repressiveness. Generally speaking, traditional autocrats tolerate social inequities, brutality and povety while revolutionary autocracies create them. Traditional autocrats . . . do not disturb the habitual rhythms of work and leisure, habitual places of residence, habitual patterns of family and personal relations. Because the miseries of traditional life are familiar, they are bearable to ordinary people who, growing up in the society, learn to cope, as children born to untouchables in India acquire the skills and attitudes necessary for survival in the miserable roles they are destined to fill. Such societies create no refugees."

21 The same would be true with regard to U.N. and other international contexts-U.N. Human Rights Commission, the Third Committee, the Helsinki Accords. We could also ratify some of the international conventions on human rights questions, such as the Genocide Convention, now pending in the Senate.

William Buckley's suggestion for a U.S. commission to publicize facts, op. cit., could also be adopted. But just publicizing facts would soon degenerate into an exercise people could ignore with impunity. It would be the active role of international bodies that would afford the best practical chance of improving international performance in this area.

22 See text of remarks by Roger Fontaine, speaking for the Reagan campaign, on June 25, 1980, in the Center for Inter-American Relations, Presidential Candidates Forum Series. See also Pedro San Juan, "Why We Don't Have a Latin American Policy," Washington Quarterly, Autumn 1980; Kirkpatrick, op. cit., DiGiovanni, op. cit., and the remarkable document by the Committee of Santa Fe for the Council for Inter-American Security, op.cit. Understanding is not helped by the kind of unscholarly but carefully crafted innuendo and insinuation contained in the article by Fontaine, DiGiovanni and Krueger, "Castro's Specter," Washington Quarterly, Autumn 1980.

23 Commencement address delivered at Harvard University by Cyrus R. Vance, printed in The New York Times, June 6, 1980. Address by Secretary of State Edmund Muskie, "The Costs of Leadership," delivered to the Foreign Policy Association, New York, July 7, 1980, reprinted as State Department Current Policy Paper, No. 196.

24 Muskie, op.cit.

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  • Viron P. Vaky, formerly a career Foreign Service officer, was Assistant Secretary of State for Inter-American Affairs from 1978 to 1980. He is currently Associate Dean at the School of Foreign Service, Georgetown University.
  • More By Viron P. Vaky