The US and Latin America

Eisenhower, Kennedy and Economic Diplomacy in the Cold War

Bevan Sewell

• Publisher: I.B. Tauris
• Year: 2015
• Print ISBN: 9781350153233
• eBook ISBN: 9780857729293
• Edition: 1
• Topic: Technology & Engineering
• Subtopic: 20th Century History
• Index: Technology & Engineering

The US in the 1950s and 1960s wanted to prevent a new communist regime in the Western hemisphere at any cost. Under President Eisenhower the US pursued a policy of support for dictators, the economic shoring up of regimes that impoverished their own people and sanctioned direct interventions such as the overthrow of the Guatemalan government in 1954. When John F. Kennedy came to power, he promised a reset of relations and set about pouring aid into Latin America. Yet in 1961 Kennedy also attempted to intervene in Central American domestic politics with the Bay of Pigs operation. How far was each of the approaches pursued by the two administrations responsible for increasing tensions and encouraging radicalism on the continent? In answering this question Bevan Sewell shows how Eisenhower's strategic stance on the Cold War became increasingly detrimental to Latin America over time, and shows how similar policies were continued by the Kennedy administration. The US and Latin America provides a new lens through which to assess US policy towards Latin America at an important time in inter-American relations.

CHAPTER 1

FORGING A GRAND STRATEGY

NSC 144/1 and the Eisenhower administration's new regional policy

‘President Eisenhower's interest in Latin America began when he was a student in high school’, wrote his brother Milton in his memoirs. ‘While I, nine years younger than he, was absorbed in Horatio Alger and Motor Boy books, he was reading, for sheer pleasure, every history available in our home and the Carnegie Library of Abilene. A few dealt with the Americas, and he became fascinated’.¹ During the course of his pre-presidential career, however, his postings and commissions had not – aside from one brief spell in Panama – afforded Eisenhower any significant opportunity to immerse himself in the region. Despite his purported affinity for Latin America, therefore, the newly inaugurated president had little practical experience of the region as he entered the White House. Like many elite figures of his time, he leaned eastward, toward Europe, rather than west or south. His policies toward the area would be characterised by cool pragmatism as opposed to any sense of misty-eyed romanticism.²

Born in Texas in 1890, but raised in the small town of Abilene, Kansas, Dwight D. Eisenhower grew up in an age when the United States’ role in the world was undergoing a profound change. As America emerged as an international power at the dawn of the twentieth century, the belief that many Americans had in the providential nature of their nation increased significantly. The precise nature of America's role in the world was a topic of serious debate, but the view that the US was now a fully fledged international power was not.³ A product of the lessons derived from life in small-town America and the shifting parameters of the nature of America's international role, Eisenhower's education and early career hardly marked him out as someone destined for the presidency. High school had been negotiated easily enough, but life as a cadet at West Point nearly proved his undoing as a tendency for pranks, poker and tobacco saw him constantly running into trouble with his commanding officers. Eventually, he made it through to the other side, joined the Army proper, and ascended the ranks. Through a mixture of hard work and no little fortune, he made his name and his reputation during World War II as the commander of Allied forces in Europe as the war neared its end. Eisenhower became the public face of the Allied assault against mainland Europe following D-Day. Victory in Europe gave Eisenhower a major public profile and reputation as a war hero.⁴ When he returned to the United States, therefore, it was little surprise that he was courted so vigorously by both political parties, who recognised that this sweeping popularity could be translated into an unassailable number of votes. Initially, he was far from keen. By 1952, however, concerned about the direction of American foreign policy and the nation's trajectory, he was persuaded that the time was now right and agreed to stand as the Republican candidate.⁵

John Foster Dulles, the man Eisenhower asked to craft his foreign-policy position in the election and on whom, eventually, he would settle as his Secretary of State, had a very different route to high office. Born two years before Ike and raised in upstate New York, Dulles had seemingly been destined to be Secretary of State from childhood. Though his father was a Presbyterian minister, his grandfather and his uncle both served as Secretary of State, and Foster was subjected to a rich education in the art of international diplomacy. A highly successful legal career working for Cromwell and Sullivan had been punctuated, at various times, by his being part of the US delegation to the Versailles Peace Conference; becoming a leading voice on American internationalism in the years before World War II; and, during the war, leading the Federal Council of Churches Commission on a Just and Durable Peace. After the war he gave up his legal career, advised Republican candidate Thomas Dewey in the 1944 and 1948 elections, served briefly in Congress, worked as a consultant for Harry Truman's administration, and helped to draft the peace treaty with Japan that was signed in 1951. By 1952, in spite of this trajectory, it was beginning to look as if Dulles would never achieve his destiny.⁶

Along with Eisenhower, though, he would form an effective partnership that oversaw US foreign policy for most of the 1950s.⁷ Never close friends, but respectful of one another's abilities, the two men set out to wage the Cold War more effectively, and more efficiently, than had hitherto been the case. In the campaign against Democrat candidate Adlai Stevenson, Dulles's foreign-policy statements had lambasted the incumbent administration for swinging ‘erratically from timid appeasement to reckless bluster’ and pledging that ‘our nation will become again the dynamic, moral and spiritual force which was the despair of despots and the hope of the oppressed’.⁸

And yet, despite the grandiose promises to roll back the Iron Curtain, Eisenhower's foreign policy would not depart that radically from what had gone before. NSC 162/2, which formed the heart of what became known as the New Look, was finalised in the administration's first ten months in office; its aims were to present a less apocalyptic vision of the Cold War, to construct a new approach based around massive nuclear retaliation and fiscal responsibility, and to make more prominent the importance of psychological warfare and covert action in achieving US objectives. Nevertheless, as George Herring has argued, this was essentially Containment Mark II: ‘It sustained the principles of containment while altering the methods used.’⁹

While the New Look came to define the administration's approach in most areas of the world, its applicability to Latin America was more limited.¹⁰ Doctrines of massive retaliation did not apply to the situations that the administration faced in the region; the threat posed by the Soviet Union, meanwhile, remained negligible. Covert operations and psychological warfare would both feature, but – apart from Guatemala – these were of a different order to similar policies pursued elsewhere in the global South. Indeed, the administration would see much that they agreed with in the policies they inherited from their predecessor. The Truman administration's initial positions toward Latin America after 1945, through a series of political and military pacts, had served to shore it up against any potential Soviet or Communist incursion. Eisenhower and Dulles would see little need for change in these aspects of policy.

Where they did differ, however, was in the economic field. When they looked at the state of inter-American relations, the Eisenhower administration believed that their predecessor had not done enough to put US policy toward the region on a sound economic footing. True, they had strongly rejected calls for a hemispheric Marshall Plan. But the new administration did not believe that Truman had been firm enough when it came to loans and economic aid; this was particularly true in terms of balance-of-payments assistance and help in combating the problems of high inflation. With such trends unlikely to be curtailed unless corrective measures were implemented, one of the administration's key objectives would be to try and reshape the nature of inter-American economic relations. Underdevelopment, not Soviet machinations, was the main problem confronting them – and the answer, Eisenhower and Dulles felt certain, lay in encouraging Latin American leaders to adopt what the United States believed to be more appropriate forms of economic management.

Accordingly, they would swiftly set out a new policy document for the region that reaffirmed the strategic aspects of Truman's policy but sought to offer a far firmer stance on economic matters. NSC 144/1, finalised in March 1953, stressed that aid and assistance would be curtailed in all but the most urgent of circumstances; much greater encouragement would be given to persuade the Latin American nations to be more open to the potential of private capital; and, in the short term, a series of public-relations efforts would be initiated to foster a climate of greater cooperation. Moreover, the central principles that underpinned this – the desire to limit the extent to which foreign aid was used to drive economic advancement, the belief that development was both desirable and sustainable, and the willingness to utilise state guidance or financing in areas where immediate action was required – were consistent with the principles set out in the New Look.

***

The immediate catalyst for the process that led to the formation of a new national security strategy was the death of Soviet leader Josef Stalin, just six weeks after Eisenhower was sworn in. After several weeks of indecision, the administration eventually determined a response in the form of a presidential speech intended to put diplomatic pressure on Moscow. By this point, however, they were playing catch-up: some weeks before, the new Soviet leadership had stolen the initiative by calling for peaceful co-existence with the West and setting the Kremlin's foreign policy in a new direction.¹¹ The lack of certainty as to what the United States should do in response to Stalin's death persuaded Eisenhower and Dulles that a reappraisal of national security policy was needed. Operation Solarium, an intensive bureaucratic process, was subsequently launched and tasked with redefining US objectives and the methods that would be used to achieve them. Though the main focus was understandably on how they would wage the Cold War more effectively, this period also saw the notion of development becoming more important in US strategy, which would come to have significance with respect to Latin America.¹²

Eisenhower had referenced the importance of development in his inaugural address, noting that the ‘impoverishment of any single people in the world means danger to the well-being of all other peoples’.¹³ At a subsequent meeting of his National Security Council (NSC), the president even mused on the possibility of the US being at the vanguard of an effort to solve global underdevelopment.¹⁴ ‘It may be possible to secure’, Eisenhower suggested at a meeting on 11 February, ‘the money and resources necessary to enable the world to reach a decent economic position.’ He was quickly cautioned against such a move, however, by his fiscally conservative Treasury Secretary, George Humphrey, who stated ‘very emphatically’ that ‘from now on this Government must pay its way, and that all major policy recommendations should be accompanied by an estimate of how much it will cost to execute them’.¹⁵

Despite Humphrey's attempt to dissuade the president, the issue arose again in the debates that took place after Stalin's death. At an NSC meeting on 11 March, Eisenhower intervened in a spat between Foster Dulles and his adviser for psychological warfare, C.D. Jackson, over whether the administration should seek to provoke discord in the Soviet bloc, to note that he had received some correspondence recommending that the US should focus on its ‘determination to raise the general standard of living throughout the world’. ‘We do need something dramatic’, the president went on, ‘to rally the peoples of the world around some idea, some hope, of a better future.’ Any response to Stalin's death – which looked likely to be a presidential speech – should emphasise this idea and focus on ‘the common man's yearning for food, shelter, and a decent standard of living’.¹⁶

The Chance for Peace address – the speech that served as the administration's response – thus contained within it a clear sign that combating underdevelopment would be a part of the new administration's policy. Brokering peace between East and West, Eisenhower told the Society of Newspaper Editors, would provide the opportunity to ‘declare war’ not ‘upon any human enemy but upon the brute forces of poverty and need’.¹⁷

As the process of forging the New Look gathered pace across the summer and autumn of 1953, however, it was clear that the administration had a very particular view on how development might be pursued: it was to be supported, but it would have to be cost-efficient. In an NSC meeting on 30 July, George Humphrey reaffirmed this central point, stating that ‘assistance to other countries should be on the decline in the near future’.¹⁸ The final meetings to conclude what would become NSC 162/2 reaffirmed this stance, agreeing that a limitation ‘would be placed on further economic grant aid and loans “based on the best interests of the United States”’. The position on foreign aid would be flexible if the provision of financial assistance was deemed to be strategically vital; but, if the situation in an area was relatively stable, the model of development led by private financing and the markets would be to the fore.¹⁹ The final version of NSC 162/2, while recognising the importance of developing countries by noting that their evolution ‘into more stable and responsible nations, able and willing to participate in the defense of the free world, can increasingly add to its strength’, did not foresee sustained financial interventions by the US to achieve this. Economic efforts to improve relations between the US and the developing world, Clause 12(d) of the document stated, would take place in an environment where ‘it should be possible in the near future to eliminate most grant economic aid, if coupled with appropriate US economic and trade policies’.²⁰

Development was clearly recognised as being of great importance, therefore, but it should be pursued in a manner that was in keeping with the views of the administration's leading figures. Here, Eisenhower's views were crucial. His economic views lay somewhere between New Deal liberalism and faith in the individual and the markets so redolent of conservatism. To put it another way, Eisenhower believed that to successfully manage economic progress – whether at home or abroad – required a prudent combination of limited state action and the transformative effects of the free market.²¹ It was a stance exemplified, in 1956, by his passing of the Interstate Highway Act, which used the financial and legislative power of the federal government to galvanise the creation of a national network of highways.²² He subsequently outlined his stance more clearly in his memoirs. ‘Our economic strength had developed, historically, freely and without artificial and arbitrary governmental controls’, he wrote. ‘In times of national emergency … controls had a role to play, but our whole system was based on the assumption that controls were not the answer.’²³ It was an approach that, in the coming years, would perfectly define his administration's policies in Latin America.

***

When US officials looked at the world in 1953 they were confronted by a range of problems. In Europe, simmering tensions with allies and enemies alike had prompted a situation that, while stable, was far from ideal; relations with the Soviets, especially in the wake of Stalin's death, were proving unpredictable; in the Middle East, meanwhile, difficulties were apparent in Egypt and Iran; and, in Asia, relations with the Chinese were increasingly troublesome while the looming French collapse in Indochina was about to compel the United States to assume the burden of opposing Ho Chi Minh's Communist nationalist forces.

Latin America, while far from placid, seemed to offer much more in the way of opportunity for US officials eager to bolster Washington's position in the Cold War. With Moscow posing no real threat, and with Communism only a minor political movement, the area seemed to be ripe for success. This was particularly true in the economic sphere. Whereas in other areas of the world any attempts to forge tighter economic relations would have to start from rather limited beginnings, there were already substantial intra-hemispheric financial links in place by 1953. These were outlined in a speech in Columbus, Ohio in late 1953 by John Moors Cabot – the administration's first assistant secretary of state for Inter-American affairs, who later fell out of favour with Dulles after pushing too hard for a change in policy and was reassigned to the embassy in Stockholm. ‘Our $7 billion of trade with our sister republics is greater than our commercial trade with Eur...

Table of contents

• Front Cover
• Title Page
• Copyright
• Dedication
• Contents
• Acknowledgements
• Introduction
• 1. Forging a Grand Strategy
• 2. Strategic and Economic Interventions from Guatemala to the Rio Conference
• 3. Confronting Moscow?
• 4. You Can’t Spit on a Foreign Policy
• 5. The Cuban Problem
• 6. The Failure of Modernisation
• Conclusion
• Notes
• Bibliography
• Back cover