LETTER OF TRANSMITTAL Hon. THOMAS E. MORGAN, HOUSE OF REPRESENTATIVES, Chairman, Committee on Foreign Affairs, DEAR MR. CHAIRMAN: I am submitting for consideration by the Committee on Foreign Affairs the report of the Special Study Mission to Chile, Peru, and the Dominican Republic in November 1965 As you will note, all members of the study mission visited Chile, and Representative Fraser and the undersigned continued on to Peru and the Dominican Republic, as indicated in the supplemental report. Although our mission was undertaken several months ago, we believe our observations and recommendations are timely. I hope that the report will be useful to the committee in its consideration of legislation relating to this area. EDWARD R. ROYBAL, Chairman, Special Study Mission to Chile, Peru, and the Dominican Republic. IV CONTENTS B. Recent Chilean political history. C. Programs of assistance in Chile: 3. Inter-American Development Bank. D. The rural revolution.... E. Summary and recommendations.. II. Peru and the Dominican Republic-Supplemental report. Page REPORT OF THE SPECIAL STUDY MISSION TO CHILE, PERU, AND THE DOMINICAN REPUBLIC I. CHILE A. INTRODUCTION Last November we undertook a special study mission to Chile. Our goal was to obtain as thorough as possible a view of the entire U.S. assistance effort. We chose Chile for a number of reasons. It is a nation in which we have been concentrating a significant portion of our aid for several years. Our aid program there appeared to be using a variety of tools to encourage effective development. And recent Chilean political history suggested that sufficient national consensus for a meaningful assault on national economic and social problems may have been achieved. During our stay in Chile, we had an opportunity for intensive discussions with U.S. Ambassador Ralph Dungan and US/AID Mission Chief John Robinson. We also talked at length with Peace Corps volunteers and other members of the U.S. country team in Chile. Perhaps most important of all, we were able to talk with Chilean officials and legislators and obtain their opinions about the effectiveness of our aid effort. While we spent much of our time in and around the capital in Santiago, we were also able to visit Concepción and travel south to the city of Temuco and the village of Chol-Chol where U.S. religious missionaries are working with the village Mapuches Indians. Thus, we obtained an interesting combination of United StatesChilean and public-private comments on the U.S. aid program. B. RECENT CHILEAN POLITICAL HISTORY In 1964, President Eduardo Frei was elected in Chile and became the first Chilean President in the 20th century to win an absolute majority of the vote. Frei was the candidate of the Christian Democratic Party and defeated Dr. Salvador Allende, who represented a coalition of Communist and Socialist parties, and two more conservative candidates. Both Frei and Allende called for economic and social reform and took their case to the people, but Allende was hurt by his Communist association. The Cuban missile crisis of 1962 had weakened the attraction of the Cuban example and cast doubts on the effectiveness of Soviet protection in the hemisphere. Frei had been a member of the Chilean Senate and a former Minister of Public Works. While a young lawyer, he was one of the ounders of the youth movement which became the predecessor of the Chilean Christian Democratic Party. In fact, his current program of reform for Chile reflects policy recommendations he first made in A book published in 1937. The President's own electoral triumph was followed by significant gains for the Christian Democrats in the March 1965 congressional elections. Despite these gains, however, the Christian Democrats do not control the Senate. An additional political problem is the relative weakness of the Christian Democrats in the rural areas. Although Frei captured 60.7 percent of the vote in the four major cities, he won only 51.4 percent in the small towns and rural areas. Traditionally, the Christian Democrats have had an urban base. It is the opinion of one recent analyst that "they have only just begun to take roots in the countryside and will not be firmly established there until a Christian Democratic government has implemented a real agrarian reform." Significantly, President Frei endorsed an agrarian reform bill for submission to the Congress of Chile on November 22, 1965. The Chilean Chamber of Deputies has agreed to legislate on the issue and a bill has already been approved by the Chamber's Agriculture and Finance Committees. It is now pending on the floor of the Chamber. 1. US/AID C. PROGRAMS OF ASSISTANCE IN CHILE The U.S. aid program in Chile now makes use of a variety of tools for the encouragement of development. Three large program loans have been made under the Alliance for Progress to help finance essential imports and to support the public investment budget in fields such as education, health, and housing. In addition, grants have been made for the improvement of tax and customs administration, the development of plans for transportation, agricultural development and industrial training, research in the social sciences, and for rural cooperative and cooperative education efforts. Loans have been made for feasibility studies, private sector development, fertilizer imports and savings and loan funds, as well as for specific additions to the infrastructure base, such as airport and port construction and development. There is also a Public Law 480 program. The escudo proceeds from the purchase of surplus foods under title I are going into lowcost housing, farm-to-market roads, and agricultural marketing facilities. The title IV proceeds go into public sector investment. Direct donations of food under title III go primarily to schoolchildren. U.S. voluntary organizations are working with their Chilean counterparts to implement the program. A degree of decentralized administration of the U.S. aid effort in Chile has been achieved through the Chile-California program of technical cooperation. The State of California, under contract with AID, is assisting in the planning and research of development projects. Since the beginning of the program in the spring of 1964, eight technical assistance project studies have been negotiated for a total U.S. cost of $1,367,000. These studies are being conducted both in Chile and at California educational institutions and include such problem areas as transportation, agricultural development and manpower training. We talked with the Chilean and California officials involved in the program and learned that responsiveness in Chile to the project was heightened by its decentralized character and by its identification 1 Halperin, "Nationalism and Communism in Chile," p. 194 (1965). : |