Document III-50

Joint Announcement Issued October 25, 1966 63

Colombian-United States Exchange of Notes Providing for a Sea-Level Canal Study

The Government of the Republic of Colombia and the Government of the United States of America today [October 25] exchanged notes providing for an investigation and study of the feasibility and desirability of constructing a sea-level canal in the region of the Atrato, Truando, and Curiche Rivers in Northwest Colombia. The announcement was made by His Excellency Germán Zea Hernández, Minister of Foreign Affairs, and the Honorable Reynold E. Carlson, United States Ambassador to the Republic of Colombia. Site surveys, mapping and other investigations and studies are scheduled to begin in the near future.

Commission, said that more than a hundred people living along the route will be employed to assist in the investigation and study. Trails and crude roads will be cleared as needed. The engineers will study the area topography and geology. A network of stream and rain measuring stations I will be installed in the river valleys along the route. These will collect data needed to develop a plan to control floods and sediment deposits which could interfere with the construction, operation and maintenance of a sealevel canal.

A medical team will study hazards to human health and safety along the study route and will develop a preventive medicine plan for the area. Weather stations will be built to make extensive observations including wind currents, cloud frequency and rainfall.

Data collected along the route will not only be used to study the feasibility of a sea-level canal but will be made available to Colombian and United States agencies. Valuable information about the natural resources of Northwest Colombia will become available to Colombian agencies to assist them in planning future development of the region.

Document III-51

Reply Made by the Secretary of State (Rusk) to a Question Asked at a News Conference, November 18, 1966*

United States Position on the Sale of Arms to Latin America

I think to a degree that [the Latin American] arms race is more on paper than on the ground. The countries of Latin America spend on the whole less on defense in relation to their gross national product than most countries in most places. That is, in terms of the world situation, they are among the lowest in the world.

As far as American aid is concerned, I think only about 7 percent of our aid to Latin America has been on the military side compared to economic and social aid.

66 Department of State Bulletin, Dec. 5, 1966, pp. 848-849.

Now, we do not take part in and we do not favor an arms race-as that word is generally interpreted. It is true that some of these countries are trying to modernize certain of their equipment. Some of it is World War II or previous, or prior to World War II in character. But the general trend has been not to build up large arms establishments there.

Now, we are not ourselves completely satisfied with the present situation. We have made that clear on more than one occasion. We would be glad to see some understanding among our friends in Latin America as to the level of arms and to the purpose to which those arms will be put. It may be that over time we could work toward better understandings in that field which would perhaps be related to closer coordination on a collective basis in case emergency military requirements arose. But these countries are not going pellmell into an arms race with each other. I think that issue has been considerably exaggerated."

Document III-52

Address by the Assistant Secretary of State for Inter-American Affairs (Gordon) Before the Pan American Society of the United States, New York, December 1, 1966 8

68

The Road Ahead in the Alliance for Progress

It has been stated-accurately, if repeatedly that Latin America is in ferment, that the continent is undergoing vast and sweeping transformations. This sense of dramatic change and movement can be felt almost everywhere: in the halls of government, in the universities, in the business and financial centers, in the homes and working places of the people.

Nor can there be doubt of the need for fundamental change. It is a felt and increasingly articulated need voiced by millions of restive individual Latin Americans, impatient to find solutions to conditions they find in

• See infra.

68 Department of State Bulletin, Dec. 26, 1966, pp. 946–952.

tolerable. It is a need reflected in political party platforms and programs of government throughout the hemisphere. And it is a need given formal intergovernmental recognition in the Charter of Punta del Este, which set in motion the Alliance for Progress 5 years ago.

To understand this need requires a clear view of conditions as they are and also an understanding of the processes of change which are at work. It calls for both a snapshot and a motion picture.

The thoughtful North American visitor who observes more than the modern city centers of Latin America is often, and rightly, shocked by what he sees and learns. There are the shantytowns-not rundown central residential districts of the kind we unfortunately possess in such large measure but recent agglomerations of squatters' shacks, fearfully overcrowded and receiving an apparently inexhaustible influx of impoverished migrants from the countryside.

Outside the cities the contrasts are even sharper. Although there are substantial areas of prosperous and quite productive agriculture and livestock raising, they are surrounded by thousands of square miles of isolated subsistence farms whose methods of production and marketing have scarcely changed in two centuries.

Although illiteracy is still shockingly high, there are not enough schools or teachers to accommodate the vast requirement for primary schooling, to say nothing of secondary and higher education. Especially in rural areas, health services are woefully inadequate or nonexistent. And in the explosively growing cities there is much open unemployment and even more semiemployment with little economic value and little return.

If there is poverty, however, there is generally not apathy, resignation, or hopelessness. On the contrary, there is a growing conviction among leadership groups and the people generally that economic growth, broader opportunities, and a steady advance in living standards can be achieved through their concerted efforts and can be achieved without sacrifice to human rights, civil liberties, or democratic institutions.

Text in American Foreign Policy: Current Documents, 1961, pp. 395-409.

Of course, there are extremist leftwing minorities dedicated to the violent seizure of power and eager to uproot the existing social order even though they have little notion what to build upon its ruins. There are also vested interests who admit the need for change in principle but do what they can to make sure that no changes affect them.

But the increasingly dominant attitude holds that social and economic progress and reform can be achieved by peaceful means, institutions can be modernized, science and technology brought to bear, middle classes expanded, and industrial and agricultural workers given a fair share of the growing national product and full participation in national life. These are the goals embodied in the Alliance for Progress, and the consensus around them is growing because such developments are visibly taking place.

All over the hemisphere, new roads are bringing hitherto isolated areas into contact with the wider national communities. Spreading electric power systems are opening new opportunities for local industries and mechanization on the farms. Only in the last 5 years, water supply systems have been developed to serve almost 50 million people, thus attacking at its root the largest single cause of infant mortality.

Thousands of small farmers for the first time have access to credit for farm machinery, breeding stock, and technical advice to help increase their output. I have seen cases where a simple irrigation system has permitted two crops a year instead of one, while hybrid seeds have doubled the yield per acre thus multiplying fourfold the previous production. New schools in rural areas where none before existed, and hundreds of other examples, could be added to this roster.

While known by different slogans in different countries, these are becoming increasingly the goals and methods through which Latin American leadership is transforming the southern part of this continent. For this reason, while the snapshot of Latin American conditions may well be disheartening, the motion picture of attitudes and processes and directions of change gives reason for real optimism and challenges our own best efforts, public and private, to help speed those efforts forward.

For several reasons, this has been a year of sober reappraisal of Latin America's development prospects and needs. In August we passed the fifth anniversary of the Charter of Punta del Este "-the halfway point in the Alliance for Progress as originally conceived.

In late September, when the foreign ministers of the hemisphere met informally here in New York, they agreed unanimously that we should work toward an early inter-American meeting of Presidents to take the political decisions at the highest level required to give our national and cooperative efforts a new impetus." In recent days, a group of nine distinguished Latin American international civil servants has been working to develop specific proposals for consideration of governments and presentation to the projected presidential meeting."

Broadly speaking, the experience of the last 5 years shows substantial overall economic growth, especially in 1964 and 1965, when on the average it passed the minimum target of 22 percent per capita. This year that level may not be reached, mainly because bad weather reduced the agricultural output in several countries. Gross inflows of capital to Latin America from abroad have also increased, even though levels of private foreign investment are still disappointing.

Internally, much has been done to improve tax structures and tax administration, to fight inflation, and to strengthen institutions required for more productive private enterprise. A start has been made in many countries on agricultural reform and modernization. Savings and loan institutions have been established to mobilize funds for new housing. Everywhere there is a new drive for expansion in educational and public health services.

Externally, some headway has been made toward diversification of Latin America's exports, but foreign exchange earnings are still far from sufficient to support self-sustaining

TO For a speech by President Johnson on Aug. 17, 1966, the fifth anniversary, see ante, doc. III-48.

1 Press release issued Sept. 23, 1966; see The OAS Chronicle (Dec. 1966), p. 1.

72 The Committee on Preparations, provided for by the Sept. 19 resolution of the OAS (ante, doc. III-49), was installed and began its work on Oct. 11, 1966. See The OAS Chronicle (Dec. 1966), pp. 1-2.

growth at an adequate rate. And, most important of all, it is clear that the growth targets themselves must be raised if productive employment is to be found for the growing labor force, agricultural production raised so that Latin America can feed itself and secure new sources of export earnings, and the essential process of industrialization pushed forward.

Clearly the efforts must be reinforced both at the national level and in various aspects of international cooperation. At the national level, in addition to pushing forward with roads and power and communications and with institutional reforms to promote more rapid industrialization, the two major sectors of agriculture and education have been singled out for special attention. This is because continued lack of adequate progress in those fields threatens to undermine the entire development effort.

On the international side, in addition to efforts to improve Latin America's trading opportunities, the key topic of concentrated attention is the economic integration of Latin America. This is because-in the considered judgment of the most thoughtful Latin American economists, joined in increasing measure by business and political leaders from all over the continent-rapid progress toward economic integration offers the best hope of a major breakthrough in the pace of economic development.

In the eyes of these Latin American leaders, economic integration could create conditions for a major advance in industrialization with high productivity and efficiency-raising domestic living standards, broadening job opportunities, and permitting export diversification on a basis which can compete in world markets for products enjoying a rapidly increasing world demand.

This will not be an easy process to bring about. It raises not only hopes but also a variety of fears within Latin America. There is, indeed, a certain analogy between those fears and some which accompanied the evolution of our own trade policy during the past three decades.

This audience will recall the high tariffs and restrictive trade policies which characterized our own country during the 1920's and early 1930's. Under the Trade Agreements Act of

with reasonable protection from outside, they should develop rapidly the potential to compete fully in world markets.

In thinking about the possibilities and propects of Latin American integration, it is important to avoid false analogies with the European Common Market. When Western Europe began the process of formal integration, it already possessed an advanced degree of industrialization, a high level of regional trade, and a dense network of transportation and communications. Latin America is a much larger area with much more diverse economic conditions. It also suffers from many physical obstacles to the regional flow of goods and services.

To attack this aspect of the problem, the Alliance for Progress is now giving special attention to the development of what we call multinational projects. They include continental road projects, interconnection of electric power systems, telecommunications, and joint investment in air transport and such basic industries as fertilizers, pulp and paper, iron and steel, and petrochemicals.

The Inter-American Development Bank is taking a strong lead in this field. Their first study of projects to be explored in detail points to potential hydroelectric development on the tributaries of the River Plate, the interconnection of the Central American power system, road development on the eastern slope of the Andes, a continental telecommunications grid, and other highway and river-basin development projects. For anyone who knows the scarcely untouched frontiers of Latin America, such projects offer breathtaking possibilities.

On the side of commercial policy, Latin America has made a good start toward integration during the last 5 years through the organization of the Central American Common Market 75 and the Latin American Free Trade Association.

In Central America, intrazonal exports have expanded from $33 million in 1960 to $140 million in 1965. Among these five countries, 922 percent of all trade is now free of restrictions, and the proportion of their intraregional trade has grown from 7.2 to 18.7 percent.

75 See ante, doc. III-9.

In the larger Latin American Free Trade Association, which now includes Mexico and all of South America except Bolivia, progress has been slower toward the elimination of regional trade restrictions. There too, however, exports have shown a marked increase, from $775 million in 1962 to $1.4 billion in 1965, or from 6 to 11.3 percent of the total trade of the member nations. Some 9,000 tariff concessions have been negotiated during five annual conferences, and more are expected to come out of the conference now in session in Montevideo."

The goal which Latin American governments have stated as their ultimate objective is a single Latin American Common Market. How rapidly and through precisely what measures this goal can best be attained is, of course, for Latin America itself to determine.

The difficult questions which must be resolved include such matters as automatic reduction of intra-Latin American tariffs and nontariff barriers to trade, reasonable external tariff levels to promote competitiveness in the world as a whole, investment policies to promote more rapid industrial expansion and higher agricultural productivity, and the establishment of an improved institutional framework to guide the overall integration effort. These questions are actively under debate in capitals throughout the hemisphere.

Where does the United States stand in relation to this movement? We have endorsed it strongly. We are already providing substantial support for the Central American Common Market through CABEI, the Central American Bank for Economic Integration. As President Johnson said on August 17,

"We are ready . . to work in close cooperation toward an integrated Latin America.

"To my fellow Presidents, I pledge: Move boldly along this path and the United States will be at your side."

Why do we take this stand? Will not more rapid Latin American industrialization based on a protected regional market curtail some of our own export markets? As Latin Amer

76 The Sixth LAFTA Conference met in Montevideo, Uruguay, from Oct. 24-Dec. 18, 1966.