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The Alianza: Troubles & Remedies

4 minute read

The Alliance for Progress got off to a disappointing start, and has never lacked critics to advertise the fact. Last week from all sides came a fresh flurry of criticism and thoughts on how to set it right. At a press conference in Santiago, Chile, where he was on a state visit, Brazil’s President Joao Goulart said that the Alliance “fulfills neither the objectives nor the high hopes raised when it was formulated two years ago.” Goulart, whose country is the program’s biggest beneficiary, called for a “cool and calm” reappraisal aimed at “remodeling” the Alliance’s machinery.

“Indispensable Step.” Many Latin American nations have not carried out the reforms that are to be their contribution to the Alliance, and the U.S. has not come through with the shower of wealth the Latin Americans hoped for. In a speech before the Economic Club of Chicago last week, David Rockefeller, president of Chase Manhattan Bank, got down to the fundamental role of private enterprise in the Alliance. “It is true, of course,” said Rockefeller, “that government can and should supply many of the facilities and services that are prerequisites to progress. I would not argue for a reduction in the aggregate government effort. But the fact is that if the Alliance is to succeed, it must build on the present private-enterprise base, which generates some 80% of Latin America’s income.” The first “indispensable step,” said Rockefeller, is a favorable investment climate: “Workable measures are needed to produce reasonable price stability, replace debilitating exchange controls with realistic exchange rates, remove those controls and regulations which restrict enterprise and sustain local high-cost monopolies. The forces of supply and demand, however imperfect, will remain more efficient regulators of priorities than a bureaucracy.”

Rockefeller urged the creation of “an overall Hemisphere Business Committee to advise on matters of broad policy. Then local committees could be set up in each nation to counsel government bodies. They would work with government planning offices to make sure that programs are realistic, and arrive at a satisfactory development effort between private and public activities.” This kind of mechanism, concluded Rockefeller, “could help redress the balance which has thus far been heavily weighted on the government side. And it could accelerate economic growth, the all-important objective on which the Alliance’s record has been least satisfactory.”

Forces for Confidence. A second U.S. businessman who has large interests in Latin America added some fascinating statistics to bolster Rockefeller’s case. He was John T. Connor, president of Merck & Co., Inc., which operates pharmaceutical plants in Argentina, Brazil, Colombia, Mexico, Peru and Venezuela. Talking to a New England trade group in Boston, Connor noted that U.S. companies account for one tenth of Latin America’s gross national product—and pay one fifth of all taxes, and produce one third of all exports. Yet, he continued, while the Alliance asks for an additional $300 million investment each year from U.S. business, U.S. companies during the first half of last year took out an estimated $29 million more than they put in. Why? “Would you invest in an atmosphere of rising anti-Americanism, unpredictable new taxes, revolutions that occur at the rate of two or three every few months, falling profits and runaway inflation?”

Connor called for joint government-industry task forces to recommend the legal and administrative measures necessary to restore business confidence in Latin America. Without that, concluded Connor, private enterprise—and the Alliance—is doomed. “Private enterprise requires order and a minimum of certainty. Disorder drives capital out of an area, not because it is timid, but because it is scarce. It is the product of work and savings, and it abhors irresponsibility, wastage and misuse. In the midst of the current chaos in Latin America, the U.S. corporation is about as much at home as a bishop in a poker game.”

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