WORLD

Trade winds from Washington

Michael Posner March 8 1982
WORLD

Trade winds from Washington

Michael Posner March 8 1982

Trade winds from Washington

WORLD

Michael Posner

One year ago-to the week-table talk in Washington swirled around the mounting Communist

menace in Latin America. The newly installed Reagan administration, exercising its hard-line rhetoric, declared its willingness to “go to the source”— Cuba—of its growing problems in the region. The state department issued a White Paper purporting to document the flow of arms from Cuban Premier Fidel Castro to Nicaragua to El Salvador. The last, charged Secretary of State Alexander Haig, was a textbook case of Soviet-inspired subversion. The president’s counsellor, Ed Meese, warned that a naval blockade of Cuba was one option being considered.

One year later, the bombast is largely unchanged. The president’s men still regularly take the opportunity to fire off threatening salvos at the MarxistLeninist peril to the south. But in the economic deed, if not word, the Reagan team seems to have arrived at a more

realistic understanding of the options available to it. That, at least, was how most observers viewed last week’s Caribbean Basin Initiative, the administration’s much-touted package of aid, trade and tax credits for the region. Although it falls short of the ambitious Marshall Plan originally envisioned, the program may ultimately do more to prop up the sagging economies of Central America than any of the military scenarios still on the Pentagon’s drafting boards.

As outlined in Reagan’s address last week to the Organization of American States, the basic intent of the plan is catalytic. Many Caribbean nations have been victims of crippling levels of inflation and unemployment. Many are running staggering balance-of-trade deficits. The U.S. effort, like similar aid programs now being undertaken by Canada, Mexico and Venezuela, is based on the notion that producing a healthy economy is the optimum method of encouraging political stability. “If we do not act promptly and decisively,”

the president claimed, “new Cubas will arise from the ruins of today’s conflicts.”

As a result, the United States proposed to eliminate its general system of trade preferences and to allow every Caribbean product—except textiles—to enter without tariffs for 12 years. It is rare for Washington to offer preferential trade terms to any specific region of the globe, and it is expected to boost revenues substantially for hard-pressed Caribbean exporters. As well, a hatful of yet-to-be-determined tax incentives will be put in place, designed to lure U.S. industry to the 20 nations that comprise the Basin zone. And, Congress permitting, Reagan hopes to boost direct economic aid by some $350 million in the current fiscal year, with another $664 million to follow in the next. These sums, in turn, would undoubtedly be used by Caribbean central banks to generate still higher levels of grants and loans to the private sector.

There is also a military aid component: $60 million in new allocations,

most of it targeted to war-torn El Salvador. Indeed, despite the advice of several advisers, the president’s speech stressed security issues almost as much as economic ones. The United States, he pledged, would do whatever was “prudent and necessary” to halt the leftward drift in El Salvador (box) and elsewhere. Reagan also cited America’s reciprocal defence responsibilities under a 1947 treaty—raising the posibility of joint military action in the hemisphere.

By coincidence, the Reagan formula was unveiled a mere two days after Third World nations, meeting in New Delhi to review progress since last year’s Cancún conference, had severely criticized the United States. Indian

Prime Minister Indira Gandhi, in a thinly veiled reference, said “major developed countries” had cut aid, raised protectionist fences and imposed damaging interest rates.

Reaction among those more intimately concerned, after the president’s announcement, ranged from the positively giddy to the bluntly cynical. The governments of countries likely to receive the most benefit—Jamaica, Costa Rica, Honduras and El Salvador—were predictably euphoric. “A bold, farreaching and historic initiative,” declared Jamaican Prime Minister Edward Seaga. “Transcendental,” echoed Costa Rica’s recently defeated president, Rodrigo Carazo Odio. Such potential recipients as Nicaragua—pointedly excluded from even a sliver of the aid pie—gave the plan a cautious endorse-

ment. Radio Havana called it

simply “a mixture of lies, cynicism and threats.”

At home, the response was generally laudatory as well, although some observers noted that real payoffs for the Basin initiatives are years away; hence this successor to Roosevelt’s Good Neighbor Policy and John Kennedy’s Alliance for Progress fails to address Washington’s principal and urgent dilemma in Central America—preserving the junta headed by President José Napoleón Duarte in El Salvador.

Domestic opinion seems no more pliable. On the right, the president’s conservative friends decry the administration’s reluctance to extend anything but rhetorical muscle. For their part, his critics on the left say Washington has become a witting accomplice to the gross human rights violations now occurring in El Salvador. The debate intensifies daily. A significant body of Americans—74 per cent according to a recent Newsweek poll—fear the arc of

crisis in Central America may produce another Vietnam, with U.S. troops committed to another unwinnable war.

But the probability of unilateral U.S. action is remote. There is no consensus in the country for wholesale military involvement. The Newsweek poll reported 89 per cent of those questioned are against providing troops to the Duarte regime. Under the 1973 War Powers Act, congressional approval would be needed for direct armed intervention, and there is little chance that Congress would assent. In fact, the House of Representatives is threatening to cut off the arms flow if it finds that—contrary to the president’s certification —the Duarte government is not improving its human

rights performance.

At hearings in a House foreign affairs subcommittee last week, Robert White, the Carter administration’s ambassador to El Salvador, observed sadly that not a single senior state department policymaker for Central America had ever served in the region. That experience gap, he implied, lies at the root of Reagan’s misjudgments. White challenged the administration’s public suggestion that democratic stability will emerge from the March 28 elections. “The election is a charade,” he said. “The left is not participating because they would certainly be shot. What I fear is that the Christian Democrats will lose, the parties on the right will unite in majority, and Duarte—of whom I have a high opinion—will head for the nearest embassy.”

One possible solution to the crisis was hinted at last week by would-be mediator José López Portillo. On a state visit to Nicaragua, the Mexican president

said that a compromise could be found that would satisfy U.S. concerns about a negotiated settlement. López Portillo declined to cite specific proposals, but Washington will almost certainly give him a private forum for spelling them out.

Constrained by foreign and domestic considerations, Reagan—like Carter before him—has been forced to seek diplomatic, trade and political solutions. But these, when adopted, may be too little or too late to arrest the guerrillas’ clear momentum in El Salvador. For the president’s conservative loyalists, this is an occasion for despair. Writing in the American Spectator this month, former National Security Council staffer Peter Rodman concludes: “The

prospects are ominous. El Salvador is a tiny country, in our own hemisphere, with a short coastline, a leader with democratic credentials and a program of land reform and free elections that is worthy of broad support. If we cannot contain a Communist power grab there, we are in deep trouble.”

However, many analysts, while agreeing that Moscow is quick to exploit social unrest in Latin America, reject the assumption that the Soviet Union is necessarily the root cause. To that extent, Soviet arms shipments to Cuba that end up with guerrillas in El Salvador—the arms traffic from Nicaragua is at record proportions, Assistant Secretary of State Thomas

charged last week-are zon 1 y a symptom, not the disease

'^ftiSitself. Or, as Rev. Bryan Hehir of the U.S. Catholic Conference put

it recently: “The conflict in El

Salvador is rooted in long-standing patterns of injustice and denial of fundamental rights for the majority.” Nor is it clear, in López Portillo’s carefully chosen words, that the wind blowing through Central America represents “an intolerable danger for the fundamental interests and national security of the United States.”

Suspicious of such assurances, the Reagan administration has nonetheless produced an economic alternative to allout military containment. Apart from alienating world opinion, a small naval blockade of Cuba would likely be ineffective. A larger operation would risk a wider conflict and leave American forces vulnerable elsewhere. And that leaves Washington no choice but to pursue containment by playing at diplomacy—with a fervent prayer that it will somehow work.

With John Hay in Otttawa and Penny Symon in New Delhi.