Section 11. Situation in the Americas
1. North America
(1) General situation
The year 1971 was an epoch-making year in American history and also an eventful year for the Nixon administration in the domestic and diplomatic fields. The events worthy of attention in the diplomatic field included President Nixon's announcement of his plan to visit China, which put an end to the age of confrontation between the U.S. and the People's Republic of China. In the domestic field, the U.S. adopted a new economic policy in order to solve at a stroke the three vexing problems of the U.S. economy-the slow recovery of business, tenacious inflation and the chronically adverse international payments position-and, related to these, the currency realignment in December which included a devaluation of the U.S. dollar.
(2) Domestic administration
(A) The U.S. Government at first estimated that the U.S. economy would grow in 1971 at an annual (nominal) rate of about 12 per cent. But the recovery of business was slower than expected with unemployment remaining at a high level of about six per cent, and the situation did not improve.
As regards efforts to check inflation, wages continued to rise at a high rate, although the rate of price increases began to taper off. The margin of deficit in the balance of international payments of the United States rapidly increased in 1971. With this situation as the background, the U.S. Government on August 15 announced a new economic policy which won the overwhelming support of 'the American people and produced considerable results in helping business to recover.
(B) As for social problems, measures were taken to tighten control of narcotics and crime, to further integrate black and white in schools and improve the welfare of old people, and a law to provide financial aid for urban traffic ills was legislated. Riots by blacks and campus disputes disappeared, and the anti-Vietnam war movement did not pose a serious social problem.
(C) As regards relations between the administration and the Congress, President Nixon succeeded in forestalling criticism by the Democratic Party against the administration by announcing his plan to visit China and the Soviet Union and his handling of the Congress in which his party is in the minority was a fair success. Legislation for most of the measures in six major target fields proposed by President Nixon at the start of 1971 had to be deferred to 1972. Despite this failure, the Nixon administration almost achieved the expected results so far as they concerned the support of the people and the Congress for the enforcement of the new economic policy-the biggest problem in domestic administration-the extension. of the conscription system, the ABM research and development budget and the appointments of Supreme Court justices.
(D) The year 1972 is a presidential election year, and primary elections as forerunners of the election were held in New Hampshire (March 7), Florida (March 14), and Illinois (March 21). It seems that President Nixon is likely to get the Republican nomination uncontested. In the Democratic Party, the contest seems to be in a state of confusion partly because of the poor performance of Senator Muskie, who was originally regarded as the leading candidate.
(3) Diplomacy
(A) President Nixon endeavored to realize the basic idea of the Nixon Doctrine, namely, "from confrontation to dialogue." He announced on July 15, 1971, his plan to visit the People's Republic of China. He visited Peking, Shang-hai and Hangchow for one week from February 21, 1972. During the visit, he held talks with Mao Tse-tung and Chou En-lai and issued a Sino-American Joint Communique on February 27. It can be said that Sino-American relations entered a new stage as a result of President Nixon's visit to China.
(B) Following the announcement of his planned visit to the People's Republic of China, President Nixon on October 12 announced that he would visit the Soviet Union in the latter half of May 1972. In its relations with the Soviet Union, the two countries saw progress in the SALT talks and the conclusion of the agreement on Berlin and discussed promotion of bilateral economic and trade relations by taking advantage of U.S. Secretary of Commerce Stans's visit to the Soviet Union.
(C) While trying to promote its diplomacy toward the socialist countries, the United States adjusted the international currency problem with its allies and held a series of summit talks from the end of 1971 through the early part of 1972, and endeavored to improve its relations with its allies, which had been characterized by a strong dependence on the U.S., into a better-balanced relationship of cooperation.
(D) As for Vietnam, the United States in 1971 reduced the level of troops to below a third of the force level which existed at the time of President Nixon's inauguration, and made an eight-point proposal for peace (January 27, 1972).
Concerning the Middle East, although a partial settlement of the Middle East issue leading to the reopening of the Suez Canal could not be realized, Secretary of State Rogers visited countries of the Middle East early in May and made mediation efforts, and the de facto cease-fire continued.
2. Central and South America
(1) General situation
Since the revolution in Peru in October 1968, the rise of nationalism has exerted a great influence on the countries of Central and South America. However, there was a political change in Bolivia (August 1971), and the leftist people's front suffered a defeat in the presidential election in Uruguay, and the situation did not develop in the way the leftists had expected.
The two major trends in the foreign relations of the Central and South American countries in 1971 were, firstly, the relative decline of American influence in Central and South America and, secondly, a change in public opinion in Latin America over Cuba.
The first point is closely related to the reconstruction of those countries, including the conquest of inflation, and economic independence which are common problems for them all, irrespective of their political coloring. The new U.S. economic policy announced by the Nixon administration in August 1971 caused various Latin American countries to evidence discontent for the following reasons:
(1) The imposition of the import surcharge dealt a heavy blow to sectors in Latin America that had the possibility of increasing exports to the United States over a along period of time, thereby killing the hopes of Latin American countries pinned on President Nixon's policy of "trade rather than aid,"
(2) Latin America was a region with which the United States enjoyed a big trade surplus, and
(3) The Latin American countries had not been consulted about the measures in advance.
Although the U.S. import surcharge was eliminated after the international currency realignment in December, the conflict between the United States and Latin American countries over the surcharge, together with the problems common to the Latin American countries mentioned above, apparently caused the Latin American countries to try more to reduce the degree of their political and economic dependence on the United States. As a result, the Latin American countries made moves to try to settle various problems through the United Nations and other forums instead of solving them through the Organization of American States (OAS). It is believed that their positive approach to Japan and the EC is not unrelated to such new moves and the relative decline in the influence of the United States.
The second point concerns the change in Latin American public opinion toward Cuba. OAS Secretary-General Galo Plaza Lasso's address in Panama (September 18) drew forth comment as a move to endorse the growing feelings of various Latin American countries in favor of readmitting Cuba to the OAS. In the speech, the Secretary-General called for the removal of economic and diplomatic sanctions against Cuba taken by the OAS seven years before and stated that, in his opinion, the policy of isolating Cuba was no longer constructive or effective. Despite the change of attitude of some Latin American countries toward Cuba, Cuban Premier Fidel Castro, contrary to their expectations, declared around the time of his visit to Chile (November 10 through December 4) that Cuba absolutely would not return to the OAS. On the other hand, the United States made an official statement to the effect that there had been no change at all in its Cuba policy. Thus there was no change seen in the international current over Cuba contrary to the expectations of some countries.
Other moves in the external relations of Latin American countries included Brazil's declaration that its territorial waters extend for 200 nautical miles from its coast and the introduction by the Caribbean countries of "patrimonial sea," a new concept of fishery zones, which was apparently intended to solidify the stand of Latin America on territorial waters before the convening of the United Nations Conference on the Law of the Sea in 1973.
(2) Moves in various countries
Major domestic moves in Latin American countries in 1971 were as follows:
(A) Nationalization of copper mines in Chile
The Chilean National Assembly unanimously approved at an extraordinary session a partial amendment of the constitution to nationalize copper mines (July 11). This enabled the Chilean Government to take over five copper mining companies immediately and undertake their management. Compensation for the nationalized companies was the biggest problem in the nationalization. Although the Chilean Government decided on the amounts of compensation to be paid for the five companies (October), the American enterprises concerned said that they would take every legal action against the decision, and U.S. Secretary of State Rogers expressed deep disappointment at the decision and pointed out that the "serious violation" of "international practice" could possibly bring damage not only to Chile but also to all other developing countries (October 13). Chilean Foreign Minister Clodimiro Almeyda Medina immediately rebutted these remarks on the same day, saying it was surprising that the United States would not recognize the decision on the amount of compensation based on the exercise of sovereignty under the constitution. He also stated to the effect that it should be noted that, simultaneously with the nationalization, the Chilean Government assumed responsibility for the debts of the companies concerned totaling over $700 million. It is expected that the views of the Chilean Government and the copper mining companies concerned will be clarified in a special court established under the Chilean constitution.
(B) Change of government in Bolivia
A sense of crisis prevailed among the people as the Torres regime rapidly inclined to the left, and the two major political parties of MNR (Revolutionary Nationalist Movement) and FSB (Bolivian Socialist Phalanx) joined forces in a joint struggle against the government. The Torres regime collapsed on August 21 as a result of an uprising by a group of soldiers opposed to Torres.
On August 22, the Hugo Banzer regime was established, based on anticommunism and advocating a moderate leftist policy line. It is undertaking domestic development through cooperation with foreign capital. The new regime reportedly needs to adjust relations between the MNR and FSB in their joint struggle setup and also adjust cooperative relations between the two parties and the military, as well as to cope with the resistance movement by radical leftist forces. The political situation will develop around these problems.
(C) Change of Government in Ecuador
The fifth dictatorial regime of President Jose Maria Velasco Ibarra collapsed when the President was arrested by the military at midnight of February 15, 1972 and immediately sent into exile to Panama by military plane.
On February 16, representatives of the three services organized the Council of Government made up of the supreme commanders of the Army, Navy and Air Force and proclaimed martial law throughout the country. It also appointed Brigadier-General Guillermo Rodriguez Lara as the new President. New domestic measures were taken one after another in the name of the new President. The measures included the inauguration of the new President, the cancellation of the presidential election in June 1972, the suspension of the constitution and the issuance of ordinances concerning the revival and enforcement of the 1945 constitution.
The political situation as of the end of March, about one month and a half after the change of government, remains quiet, and there has been no particular change in the new regime's external policy line.