UNIVERSIDAD DEL PACFICO

US-LATIN AMERICA FOREIGN RELATIONS, 1898-2000

GOOD NEIGHBOR POLICY (GNP)

BACKGROUND
Great Depression: economic crisis of the capitalist and underdeveloped countries
Latin American economy was decimated by the Depression Worst economic crisis in USA history

 The Latin American policy of the USA was determined by Europe

International instability and nationalist movements
Fascism and dictatorships: Hitler, Mussolini, and Stalin Imperial competition for markets and resources
Japan invasion of Manchuria, 1931 Italy invasion of Ethiopia, 1935 German remilitarization and Hitler expansionism German annexation of Austria, 1935 Spanish Civil War, 1936-1939

 Domestic debate: Isolationism vs. interventionism

Many Americans wanted to avoid the cost of an American intervention in Europe
World War One

 Fascism as threat to the US interests in LA

German, Italian, and Japanese communities in Brazil, Argentina, Peru, Costa Rica, and Guatemala German espionage activities in LA Fascism sympathies among Latin Americans

MEANINGS
For LA:
No American direct interventions in LA affairs

For the US:

An international counterpart of the New Deal: attacking the Great Depression effects
Promotion of commercial expansion

Hemispheric solidarity

 Hemispheric solidarity: defense and resistance against the Axis Powers

Effort to create an integrated hemispheric system Political, economic, and military cooperation

HOOVERS GNP
Herbert Hoovers Latin American policy
Advocate of non-intervention
He rejected TRs Big Stick policy
American withdraw the Marines from Nicaragua

Peaceful solutions to international problems

FDR, THE GOOD NEIGHBOR

 When Franklin Delano Roosevelt (FDR) became President (1933) his main concerns were in the domestic sphere: face the consequences of the Great Depression He proposed a foreign policy base on friendly relations with other countries; a good neighbor policy
Great influence of Sumner Wells, Under Secretary of State and personal friend of FDR

 Cooperation with LA Multilateral understanding of the Monroe Doctrine: group action, not unilateral enforcement of the MD

FDR believed in reciprocity: the LA countries will maintain order for promises of nonintervention
FDR preferred the carrot than the stick, but he would protect American interests

LATIN AMERICAN RESPONSE

Many people in LA saw the GNP as the end of American interventionism and the beginning of a new era in US-LA relations base on equality and respect of LA sovereignty Some criticism remained, but FDR won a lot of support among the Latin American countries
FDR in Argentina

CUBA AS A TEST CASE, 1933

 Serious economic problems because of the Great Depression

Because of the Hawley-Smoot Tariff Cuba lost 25% of US market Cuban sugar production dropped 60% Cuban exports declined 80% Unemployment, business bankruptcy, wages fell, etc.

 Cuba was under the dictatorship of Gerardo Machado and he became the target of Cuban dissidents
Because of the growing opposition and political instability, American investors became nervous and asked protection from their government Hoover did not intervene helping Machado to stay in power

Gerardo Machado
1871-1939

 FDRs approach
Non intervention, but diplomacy
Sumner Wells mission: FDR sent Wells to mediate and find a solution to the Cuban situation
Wells realized that Machado was a liability and proposed his resignation as the only way stop the political turmoil

Machado resisted but without the support of the Cuban Army he resigned in August 1933 Carlos Manuel de Cspedes three weeks presidency

Sumner Welles
1892-1961

 The Sergeants Revolution, September 1933

noncommissioned officers under the leadership of Sergeant Fulgencio Batista deposed Cspedes and proclaimed a Revolutionary Government

The Revolution of 1933

After the military coup Dr. Ramn Grau San Martn became president of Cuba
first president of Cuba without American recognition

 Cuba for the Cubans: nationalist reformism

Eight-our day, protection for workers (Ministry of Labor), abrogation of the Platt amendment, land reform, etc. Social and political conflict
These reforms alienated the old Cuban elite, the military, and the US.

Batista and Grau, 1933

 Historical conflict: Latin American nationalist reformism vs. American and local, economics, ideological and geopolitics interests
Communist threat

 Wells became afraid of the communist influence behind Grau San Martn and asked for an intervention, but FDR did not approve it
Defense of American economic interests in Cuba that were under San Martin menace The US sent clear signs to Batista and Wells encouraged him to deposed Grau San Martn In January 1934, Grau San Martn was deposed and a new government under Carlos Mendieta was organized with the US government approval and official recognition

 In 1934, the US government abrogated the Platt Amendment, passed a favorable tariff concessions, and provided loans to the Cuban government

 Although the way the US dealt with the problems with Cuba was a victory for the GNP, the defeat of Grau San Martin and his reforms laid the basis for challenges to American dominance almost twenty years later
The Cuban interpretation of what happened with the Revolution of 1933 was completely different from the American interpretation
Cuban nationalism Fidel Castro: Cuban Revolution

GNP ECONOMIC DIPLOMACY

 Revitalization of LAs economy

In 1929, LA imports reached more than $1billion and exports $911 million; by 1932, LA exports had fallen to $323 million and exports to $195 million
Economic stagnation Social and political problems

Gross Domestic Produtc (GDP) Argentina Brazil Chile Colombia Mxico Per Venezuela Latin America USA World

1928-1935 -13.7 -4.4 -30.0 -1.5 -20.8 -25.8 -22.6 -17.8

-28.5 -4-4

 Latin American economic problems: reliance on exportations and the Great Depression, dependency in external markets
Reduction of international demand of Latin American products and fell of the exportation Tariffs and barriers: Hawley-Smoot Tariff, 1930 Financial and credit problems: no capital surplus, no loans

 Social and political problems

Centralization, nationalism, and authoritarianism
Dictatorships: Trujillo, Gmez, Ubico, Somoza, etc.

Strikes, public protests, etc. Great political instability

Military coups d'tat Between February and December, 1930: Peru, Brazil, Dominican Republic, Argentina, Bolivia, and Guatemala Failed in Ecuador (1930), El Salvador (1931), Chile (1932), and Uruguay (1933)

 GNP as an extension of the New Deal, a new Dollar Diplomacy

Secretary of State, Cordell Hull, though that that the US needed to stimulate trade to get out of the Depression; for him, international trade was the solution not only to US problems, but also for the world economic problems

 Reciprocal trade agreements as diplomatic and economic tools

Trade Agreement Act, 1934
Fast track reduction of tariffs up to 50%

1934-1942: reciprocal trade agreements with 15 LA countries Quotas of importation: sugar Export-Import Bank, 1934
Credits to LA countries to buy US goods

 Consequences
Strengthen US-Latin American economic relations
American exports to LA:
$363 million in 1933 $548 in 1939

American imports form LA

$316 in 1933, $493 in 1939

American trade deficit with LA: from $142,000,000 (1931) to $13,000,000 (1939)

World War Two (WWII) would continue strengthening US-LA economic relations

THE MEXICAN OIL CRISIS, 1938

 On march 18, 1938, President of Mexico Lzaro Crdenas expropriated the Dutch, British, and US petroleum companies
$500 million $260 American investment

 Crdenas was a nationalist and hero from the Mexican Revolution

Land reform
rural cooperatives (ejidos)

Better wages and working conditions Literacy

 Expropriation
Mexican oil workers strike, May 1937, demanding better wages and better working conditions, etc. The oil companies lost an arbitration decision and a Mexican Supreme Court decision, and rejected the outcome challenging Mexican sovereignty Cardenas could not allow the companies to that and expropriated the oil companies on March 18, 1938

 After four years of negotiation, the Mexican and US government get an agreement in 1942: American companies get $42 million compensation from Mexico
Good timing for Mexico: European turmoil and WWII
US used economic and diplomatic pressure against Mexico, but avoid damage US-Mexican relations American strategic interests and hemispheric defense over oil companies property rights

 Norberto Barreto Velzquez, PhD

Barreto_n@up.edu.pe norbertobarreto.wordpress.com

3/9/2013

GOOD NEIGHBOR POLICY