ROBERT ARMSTRONG-Are the Reagan Admin- istration's actions in Central America a model for the rest of the Third World? Or are they a sui generis reaction to the problems of the Caribbean Basin? JORGE SOL-Let's look first at what the adminis- tration has done in its first four years. There has been a tremendous increase in the U.S. presence and influence in all spheres. All the Central American countries have seen a major effort by Washington and embassy officials to influence and approve vir- tually all important government decisions. Second, the military presence through advisers and maneuv- ers, especially in Honduras, hardly needs to be des- cribed here. Third, all kinds of economic pressures are being exerted, both in connection with bilateral aid programs and multilateral lending agencies like the World Bank, the IMF and the Inter-American Development Bank. Of course there has been a reaction to this in each country. This has come not only from the Left-- where the revolutionary groups define their fight as a second war of national independence-but also from the Right. The Right in El Salvador finds it in- tolerable for the U.S. ambassador to make all the key decisions. The rightist government in Guatemala is anxious to safeguard its sovereignty and has even been reluctant to support the United States on Contadora. We have seen problems in the Honduran Army and problems in the Liberaci6n government in Costa Rica in response to the role that the United States is demanding of them. In terms of the Reagan Administration's ideas for reshaping the region in its second term, let's look at two main programs: the Caribbean Basin Initiative (CBI) and the Kissinger Commission report, or "Jackson Plan."* They have a common philoso- phy, which is to have Central America and the Caribbean developed by the multinationals and turned into an extension of the U.S. mainland econ- omy. With that goes a process of what some call "neo-imperialism," to influence the process of de- cision-making in the target countries. The CBI does not contemplate regional integration but sees all the countries of the Basin as the fingers on a hand: all of them have to converge to the arm-the United States. ALLAN NAIRN-Clearly the CBI and the Kis- singer/Jackson Plan arose as a specific political re- sponse to the crisis in Central America. They *named for the late Sen. Henry M. "Scoop" Jackson, to whom the Kissinger Commission report is dedicated. brought in economic tools in the broadest sense, but with a political purpose. I wonder what the inherent economic potential is for the multinational investor. Because the traditional investment programs that have attracted the TNCs--say, the later stages of Operation Bootstrap in Puerto Rico--offered specif- ic tax advantages that can't be easily produced in other countries. Don't you think, Jorge, that the ability to attract investment is the key to how much gets implemented? The political rationale alone will not sustain such a large-scale program. SOL-The CBI is designed to create a paradise for the multinationals, although they did not initiate the program. They were called in by the administration to help out. In return, the administration would create ideal investment conditions. But the CBI has been in effect for more than a year, and most econ- omists in Central America believe that it is not working. Very little investment has taken place, ap- parently because the corporations understand that there is a latent situation of conflict throughout the region. After Cuba, Nicaragua and Grenada, they see it as too risky. This does not mean that some investment won't come. I believe that in a few countries which are re- latively stable and have adequate infrastructure and communications, we may soon witness the kind of investments that could be amortized within, say, three to five years. This might happen in Jamaica and Barbados, or Costa Rica and Panama-pre- cisely the countries least exposed to revolution. But the CBI idea of creating a wave of investment and generalized prosperity as a result within two to three years does not seem to be on the horizon. RICHARD FEINBERG-The overall view of the administration is that the Caribbean Basin has been in chronic economic decline for at least five years- in some countries for ten. That leads to widespread anxiety that weak underlying economic conditions always carry the danger of political instability. At the same time, in the short term, there is the percep- tion of a general move to the Right in the region, which leads the administration to see a window of opportunity. They feel they have a period in which they can work with friendly governments, both in Central America and in the islands, to head off the economic decline before it generates further political instability. This may be either in terms of the CBI or of military aid. SOL-The CBI philosophy is complemented by the Jackson Plan, which aims at turning Central Ameri- JANUARY/FEBRUARY 1985 I 17Four More AmYears Four More Years Chronic economic decline ca into a kind of nominally independent Puerto Rico. In the wake of economic dependency would come a whole series of mechanisms to shape the re- gion in the image desired by Washington, all of which will take an appropriation of $8.8 billion for a five to seven year period. Central to the plan is the creation of CADO-the Central American Develop- ment Organization-a supranational body which would clearly be dominated by the United States. For instance, its chairman would be the administra- tor of AID, ex officio. If Congress approves the plan, we would see in- creased pressures for intervention in Central Ameri- ca, because CADO would work with local govern- ments at every level: the organization of elections, legal systems, educational, health and agricultural programs, a massive expansion of Peace Corps ac- tivities, 10,000 scholarships a year to bring students to the United States. Over and above the surge of nationalism this would trigger, both the CBI and the Jackson Plan share the same basic mistake, which is to entrust the development of the region to the multinationals. The Reagan Administration forgets that the first multina- tional was the United Fruit Company, the epitome of an imperialist company, which gave rise to the con- cept of the banana republic. Of course not all multi- nationals are like that-there are also the modern in- dustrial ones, but we have had experience of those too during the first two decades of the Central Amer- ican Common Market. We indeed saw prosperity, in the sense of increased productivity and a growing GNP, but it remained in the hands of a tiny elite and a small middle class. The great majority of Central Americans remained outside that process of multina- tional-stimulated growth. GEORGE BLACK-The program that Jorge has outlined has no parallel in any other part of the Third World. It suggests that the Reagan Administration does have very special intentions in the Caribbean Basin. We have often said that this administration is the first since World War II to go beyond contain- ment and contemplate the idea of rollback. Some of its spokesmen have even talked of "freeing the cap- tive territories"-rollback in the Socialist Bloc it- self, though that is out of the question as serious pol- icy. In other parts of the Third World, Angola and Mozambique and even areas of greater strategic sig- nificance like the Persian Gulf, the administration has shown a certain flexibility. But its actions in Central America and the Caribbean suggest that here at least it is determined to prevail and put the neces- sary economic resources behind its political inten- tions. There is nothing new in its obsession with the Caribbean Basin, which is historically where the United States practised its military interventions through the early part of this century. What is perhaps novel is the more integrated approach it takes to the whole region. It uses the term "Carib- bean Basin," which until recently was not even widespread among geographers, very aggressively, and its programs, both for the Caribbean islands and the Central American mainland, seem to be shaped by the sense of the Basin as a national security thea- ter. SOL-There are important nuances between the CBI and the Jackson Plan. The CBI responds very ideologically to Reaganomics; it urges an export- oriented model along the lines of Taiwan or South Korea. The engines of growth under the CBI would be unlimited duty-free access to the U.S. market, and huge investments from the TNCs. Aid doesn't 18 REPORT ON THE AMERICAS 1 18 REPORT ON THE AMERICAS0 0 E play much of a role in the CBI, except at the begin- ning, when an initial allocation of $350 million was approved by Congress. But the Jackson Plan is very pragmatic. In that sense it reflects the personality of Kissinger. In con- trast to the CBI, the Kissinger Commission says that the import substitution model has worked before in Central America and it can work again. The CBI also envisions no funds to government, whereas the Jackson Plan allocates something like two-thirds of its $8.8 billion to local governments. That contrast has made the countries of the Carib- bean somewhat jealous. Together they have pro- tested that they only get the CBI. Why can't the Caribbean have its own Jackson Plan? It shows that the power elites of all these countries have very similar interests and would have no objection to in- tegrating their countries fully into the U.S. econo- my. It seems unlikely that the Reagan Administra- tion will propose another Jackson Plan for the Carib- bean, but something will probably be done through the foreign aid bill, in addition to the CBI. RICARDO STEIN-While rollback may well be the underlying ideological premise of Reagan's whole foreign policy, Central America is a case apart from the rest of the Third World. On the economic level, the Jackson Plan moves from very ideological ori- gins to a very pragmatic approach to the region, which is by no means disconnected from events in the rest of the world. I almost see it as an attempt to parcel out a new industrial reserve labor army, on the assumption that some Asian countries are begin- ning to present problems for the multinationals. My impression is that this economic plan requires a new political schema, and that the concept of "democratization" involves a withdrawal from pol- itical life by the military, which leaves a vacuum. That is filled with a substantially increased U.S. presence-the hordes of gringos that Jorge Sol was talking about. This fits a historical pattern: when- ever the army has withdrawn to the barracks, there has tended to be a corresponding increase in the U.S. presence as a means of maintaining stability and control. Is this by coincidence or by design? The demo- cratization of the Southern Cone is taking place in- dependent of the Reagan Administration. Washing- ton deserves no credit for the process, but it has taken it into account in formulating its Latin Ameri- can policies. The problems of the hemisphere, in- cluding the debt crisis, are different from those the administration faces elsewhere in the Third World, and I sense that a long-range response is beginning to take shape. That strategy will involve a substan- tial amount of direct U.S. management at a conti- nental level, and the administration may well see its current role in Central America as a pilot study. MARC EDELMAN-For many years, U.S. global strategy relied on a tier of middle-level regional powers, the classic one being Iran. But that reliance on regional policemen has become less feasible, and that is one explanation for the current U.S. impulse to police the world and build rapid deployment forces. As for Latin America, security planners are concerned that U.S. hegemony in much of the world has rested on having a secure strategic rearguard to the south. That is now called into question, and it sets off a tremor of fear about other Third World hot-spots. I agree Central America and the Carib- bean is a special case, but it does need to be placed in this broader context of how the United States seeks to resolve crises in the Third World. SOL-Is U.S. policy in the Caribbean Basin a model for other regions? I would say definitely not, because of the special relationship the U.S. has with the region. When the Jackson Plan and CBI were first discussed, there were suggestions that they should be like the Lome Convention, in which all the former metropolitan powers of Europe joined to- gether to aid the former colonies of Africa and the Caribbean, through a multilateral program of liberalized trade and foreign assistance. The attitude of the Reagan Administration was, "Nothing doing: this has to be an American plan." The CBI is under- mining the influence of the Western European pow- ers and Canada in the Caribbean. As far as Central America is concerned, the spe- cial relationship is embedded in U.S. feelings and JANUARY/FEBRUARY 1985 Kissinger in Managua: A pragmatic personality -1 19Four Mor e Years Four More Years history; it goes back to the annexation of California in 1848, when Americans moving to the West Coast discovered the strategic importance of Central America as the narrowest passage between the At- lantic and Pacific Oceans. This eventually led to the construction of the Panama Canal. Since the middle of the nineteenth century, many generations of Americans have grown up believing that there are special economic and strategic interests in the re- gion. Even the relationship with the rest of the conti- nent is different-the United States has never de- ployed troops south of Panama. National pride is also at stake to an unusual degree in the Caribbean Basin. If the United States is challenged in this spe- cial region, its credibility suffers worldwide. The "loss" of Cuba continues to be an open wound. So I don't think there will be a CBI or a Jackson Plan for any other part of the developing world, at least not in the same form. FEINBERG-These are also very small countries, so it is a question of leverage as well as geographical proximity. The larger countries of the region-Mex- ico or Venezuela or Colombia-are not susceptible to this kind of control. If you travel in the rest of the world, you will find no other place where U.S. am- bassadors play the proconsular role they do in Cen- tral America. One or two small caveats: there are hints that suc- cessful aspects of the Central America policy may be extended elsewhere, if not on an integrated scale. The National Endowment for Democracy has a worldwide mandate, and it points to Central Ameri- ca as the model. MacFarlane has talked about "globalizing the Kissinger Plan" with massive in- creases in aid to the Third World combining eco- nomic and security assistance. You hear some talk of the trade portion of the CBI as a Third World model-perhaps for the ASEAN states. ARMSTRONG-Do you want to comment on Marc's notion of securing the southern flank? FEINBERG-Diplomatically, the administration has found the situation to be manageable. It has been either hostile or indifferent to the process of democ- ratization of the Southern Cone. Indeed, some mem- bers of the administration are afraid that the opening may move too far to the Left. This is because all current hemispheric policy revolves around Central America. That strategic concern pushes the adminis- tration to the right in the way it views internal politi- cal developments in the rest of Latin America. The administration is concerned to have governments throughout the continent that will not oppose its Central America policy, and that tends to make it hostile to even moderately social democratic cur- rents in the hemisphere. Its limits of tolerance are very narrow. In the last few years there has also been a decline in the power of the region vis-a-vis Washington. The United States is riding high economically, and the bottom has been knocked out of the Latin Ameri- can economies. The psychological effect of that has been devastating. In Mexico and Brazil, for exam- ple, you can sense a reluctance to cross Washington on Central America, a fear that Reagan may use the debt weapon against them-a linkage which I think, incidentally, they overestimate. The banks would be down Reagan's throat in a moment. ROBERT MATTHEWS-The key actors in Con- tadora are less likely than even the Europeans to do anything that affects the economic balance in Cen- tral America. With the exception of Mexico, the Contadora nations are fundamentally hostile to the Sandinistas. Venezuela has not supplied Nicaragua with oil since 1981. To talk about either Panama or Colombia providing significant aid is just silly. Mexico may continue to supply some oil to Nica- ragua at preferential rates, but like Venezuela, it has economic problems of its own at home and is not likely to risk antagonizing the United States. FEINBERG-Politically, the administration is also managing the situation pretty well. The Lusinchi government in Venezuela is a traditional conserva- tive regime, both in regard to international finance and in its view of the Sandinistas. When Barletta, the new Panamanian president, was at the World Bank, he didn't balk at carrying out the wishes of the Reagan Administration. The Mexicans, for all their nice public positions, are none too enthusiastic about the Sandinistas in private. The reason why the Contadora nations were so eager for an agreement in the last few months was that they wanted to squeeze it in before the Reagan re-election. They also sensed a slippage within the group and a negative trend within each country away from confronting the United States. The administra- tion also managed to stop its smaller Central Ameri- can allies, with the partial exception of Guatemala, from accepting the draft Contadora treaty as it stood. Washington has tremendous influence over these small states. In terms of automatic alignment with the United States, El Salvador's voting record in the U.N. is surpassed only by that of Haiti. Jorge is right, increasingly we're talking about client states.
