1942: Pan-American Affairs

Third Meeting of Ministers of Foreign Affairs of the American Republics.

The Third Meeting of Ministers of Foreign Affairs of the American Republics, in Rio de Janeiro, January 15-28, produced more actual progress in effective cooperation than has any previous inter-American meeting. Its documentary output of forty conclusions concerned current political, strategic, juridical, economic, social, and ideological problems. After the conference, only two American republics still maintained diplomatic and commercial relations with the Axis, and all were bound to concerted defense of themselves and the Western Hemisphere. Two principal committees, economic and defense, conducted the real work of the meeting, which opened with President Vargas' statement about Brazil's attitude, followed by Sumner Welles' careful yet stirring presentation of the United States' position toward security and aid. In the course of intense debate the resolution calling for a complete rupture of all relations between the American states and the Axis (offered by Colombia, Mexico, and Venezuela) had to be softened to a recommendation that the states, conformable to their individual circumstances, break diplomatic relations with Japan, Germany, and Italy. Chile objected because of its long exposed coast, and Argentina maintained that steps already taken by it — aid to the United States as a 'non-belligerent,' control over Axis activities and funds — would prove a sufficiently real barrier against those states. At the end of the meeting it was hoped that both countries would soon join the others, but this has not yet occurred despite the powerful economic weapon which the United States is forced to use in granting priority to the needs of states that cooperate in hemisphere defense. Bolivia, Ecuador, Brazil, Paraguay, Peru, and Uruguay at once severed relations with the Axis, thus completing the list of American states except for Argentina and Chile. (Chile severed relations with the Axis in January 1943.)

The most important economic resolution of the conference recommended breaking off all commercial and financial intercourse with Axis states and territories dominated by them; others provided for accelerated production of strategic materials, mobilization of all means of transportation, maintenance of internal war economies, and the establishment of an inter-American stabilization fund.

Ecuador-Peru Boundary.

During the meeting the 120-year-old boundary dispute between Ecuador and Peru was successfully settled. Accordingly, the boundary, approximately that of 1936 before Peru's advance, is being demarcated by military experts from Argentina, Chile, and the United States; Ecuador receives a large tract in the Suzumbio zone and the right of navigation on the Amazon and its tributaries, while Peru adds some 7,700 square miles of territory to which it has long-standing claims. The settlement removes an impediment to stable relations in South America and gives each state rights to the important headwater regions east of the Amazon. This area, with its potential oil, gold, and other minerals, rather than the coastal district occupied by Peru, represents the real stake in the dispute.

Mexico and Brazil in the War.

Two more states declared war, making a total of 12 American states — 13, including Canada — at war and 8 others having broken relations with the Axis. Mexico did this May 30, following the sinking of two tankers by German submarines, and Brazil entered the war August 22, after a period of excitement caused by the sinking of six Brazilian ships off its coast. Mexico's chief contribution as a belligerent is economic, since it supplies the United States with much-needed raw materials, principally graphite, antimony, mercury and other metals, and fibers; but its belligerent status facilitates the work of the Joint (Mexico-United States) Defense Commission (announced February 27) in protecting its long Pacific coastline and Guatemala to the south; and it has manpower, from which it has already supplied several thousand agricultural workers to gather crops in the United States. The latter is aiding Mexico with loans for developing mines, steel mills, and guayule rubber, and for extending the Pan American Highway to the Guatemalan border and improving the overloaded Mexican railroad system. The United States and Mexico have concluded a lend-lease agreement and a new consular convention, and Mexico has begun its payments under the Claims Convention ratified April 2. In November an arrangement was announced for Mexico to resume payment on its foreign debt, mostly in default since 1914. The plan provides a substantial scaling-down of principal and interest until 1968, so that, with United States' assistance through silver purchases and currency stabilization, Mexico can pay its debt, thereby furthering its economic rehabilitation and generally improving its foreign relations.

Mexican Oil Controversy Settled.

The way for this more substantial collaboration was facilitated by the announcement, April 18, that the oil controversy had been settled on the basis of the November 19, 1941, agreement. An expert from each country fixed the sum of $23,995,991 as the value for which Mexico is to compensate the American oil companies for the properties expropriated in 1938. It is implied in the settlement that the companies possessed no subsoil rights, an admission which they have hitherto refused to make and which may well become a precedent in case other foreign properties are expropriated by Latin American states. Nevertheless a final settlement will have substantial results in more oil production, more funds for use by Mexico, and better collaboration in developing resources, as well as encouraging the spirit of cooperation in Latin America.

United States and Brazil.

Relations between the United States and Brazil have become increasingly close — traditionally friendly and economically compatible although ideologically apart, harmonious at the Rio conference, and joined in the war effort when Brazil became a belligerent in August. Following the Rio conference the two countries signed, March 3, an important series of economic agreements of mutual assistance which in general provide the basis for greater Brazilian production of strategic materials, such as rubber and iron ore, in return for increased assistance to its rearmament program under the Lend-Lease Act. Expanded production is made possible also through new and larger credits from the Export-Import Bank and the agencies of the Rubber Reserve Company and the Metals Reserve Company. In July the five-year-old stabilization agreement was extended to 1947 and the amount increased. Other later United States-Brazil arrangements, made during September, include sending industrial engineers to Brazil to extend its industrialization, an agreement for developing food production in the Amazon valley, and an Export-Import Bank credit of $14,000,000 for constructing a railway to open up iron mines.

Although Brazil's entrance into the war means larger responsibility upon the Allies for the country's defense, and its economy is already linked with that of the United States, the advantages offset any burden: ideologically the effect upon the rest of Latin America is valuable; but more especially its geographical situation, across from Dakar and only 1,800 miles from Africa, makes it an extremely useful base for both aircraft and submarine chasers. Argentina, Bolivia, Chile, Paraguay, Peru, and Uruguay have granted Brazil the right to use their facilities as though it were not at war, and Uruguay has coordinated its defense with that of Brazil.

United States-Latin American Defense Program.

With other Latin American countries the United States has continued its program of aiding in common defense. In the early spring it made new lend-lease agreements with Costa Rica, El Salvador, Peru, Uruguay, and Venezuela; and in the summer rubber agreements were signed with Costa Rica, Colombia, Bolivia, Ecuador, Honduras, and Trinidad, and British Guiana. In addition, it has agreed with Bolivia to send a military mission, to purchase the entire copper output, and to finance a $25,000,000 development program. With Peru the United States arranged for further development of Peru's natural resources for war materials, and for the purchase of 200,000 bales of Peruvian cotton yearly during the war. By the new reciprocal trade pact Peru will benefit from a fifty per cent reduction in the tariff on cotton and sugar. A new trade pact with Uruguay comes into force January 1, 1943, by which the United States gets concessions on agricultural and industrial products and in return reduces the tariff on flaxseed, canned beef, hides and skins, and coarse wool. In addition to various agreements for military, naval and air purposes, the United States by September was using naval bases in Ecuador on its westernmost point and on the Galapagos Islands, and had similar projects under way with Venezuela, Peru, Colombia, Brazil, and Uruguay.

Inter-American Boards and Commissions.

The many boards and commissions set up from time to time under inter-American authority have continued their work. The Rio Meeting took action regarding some of them: it proposed that the Inter-American Development Commission make a study of any country's natural resources if requested by a country; it urged the Inter-American Statistical Institute to set up a service for the interchange of statistical information and standards; it requested the Inter-American Conference on the Coördination of Police and Judicial Measures to establish an Inter-American Registry of Police Records for use particularly in international offenses and subversive activities against American countries; it recommended changing the Inter-American Neutrality Committee of 1939 into a Juridical Committee to study various joint legal problems and to work towards codifying international law. The first meeting of the Inter-American Defense Board was held March 30 in Washington; the board consists of a permanent staff of high military officers to plan military defense and the control and protection of shipping; its emergency committee met in Montevideo April 15. At the meeting of the Inter-American Conference on Systems of Economic and Financial Control, June 30-July 10, it was unanimously agreed to bar the export or import of dollars, except to the United States, to keep American money out of Axis hands.

Alaska-Argentina Highway.

The Inter-American Highway Commission on July 28 announced arrangements with the five Central American countries and Panama for constructing a pioneer road, to be replaced later by the contemplated highway. For military reasons work on the unfinished sections of the highway from Alaska to Argentina is being rushed for completion before the end of 1943. The Alaskan ('Alcan') highway, opened December first, runs from Dawson Creek, British Columbia, to Fairbanks, Alaska, and connects with railways and highways at both ends; it was built by army engineers under the Joint Board of Defense of the United States and Canada.

Conference on Social Security.

The First Inter-American Conference on Social Security, held in Santiago, Chile, in September, with the cooperation of the International Labor Office, was attended by officials of the United States, Canada, and eighteen Latin American states. The conference agreed on a comprehensive program for social security in the Americas and on plans for permanent cooperation in carrying it out. For this it was agreed that the whole gainfully-occupied population in each country, with their families, must be brought within the scope of contributory social insurance and must be provided with a fully-equipped health service. The conference recommended also that representatives of employers and workers collaborate in administering social security.

Chile's War Policies.

Naturally, Argentina and Chile have been watched with unabated interest, especially after August 22, when it was thought that Brazil's declaration of war might influence both, but especially Chile, to sever relations with the Axis. However, neither state has yet acted. Both remain centers for Axis espionage and propaganda in spite of attempts to curb these activities. In democratic Chile a large popular majority sympathizes with the United Nations, but a smaller number favors not breaking relations with the Axis at the risk of an attack upon the 2,600 miles of unprotected coast in the South Pacific, off which few Nazi incidents have occurred. Chileans emphasize their present usefulness to the United States through shipments of copper and nitrates and insist that in policy they are non-belligerent rather than neutral. Parties have split on the issue, except the Communists and Socialists, who favor a break, and the extreme right or nationalists, who do not. The cautious President Rios, elected by the left center parties, states that he waits for a clear 'popular mandate'; but both he and his foreign minister appear willing to wait. On October 8 Undersecretary of State Sumner Welles, speaking in Boston, charged both Chile and Argentina with tolerating Axis espionage and therewith provoked official and popular resentment and a 'protest' postponement of President Rios' proposed visit to Washington. In the reshuffling of cabinet ministers following this upset, the new foreign minister and other appointees appear as much divided on the question of a break as were their predecessors. Earlier Allied reverses in the war, and Axis warnings about United States' imperialistic designs have buttressed the government's determination to maintain its policy but to take action against any aggression or attack off the coast. On November 26 an agreement with the United States was reported to have been made at the Rio meeting by which Chile would receive armed aid in the event of being attacked. In the meantime Axis diplomats continued their functions until Chile broke diplomatic relations with the Axis in January 1943.

Argentina and International Affairs.

In Argentina the political situation is clear-cut. Anti-democratic forces are in control: President Castillo and the Senate strongly favor 'prudent neutrality,' while the Chamber of Deputies and the majority of the politically-conscious part of the people are pro-Ally and democratic; the presence of a strong and determined leader with broad powers, on the one hand, and the lack of good leaders and organization on the other, gives advantage to the administration. Other determining factors include Argentina's traditional jealousy and suspicion of the United States and its constant economic difficulties with that country, its position as the strongest military power in South America, its independent stand against its greatest rival, Brazil, and the presence of large numbers of German and Italian nationals and agents. During the year foreign policy has continued to take first place in all Argentina's activities. Strict censorship of the press, radio, and assembly restricts all news, and the state of siege initiated in December 1941, continues in spite of determined opposition; the Chamber of Deputies' vote of 77 to 56 for immediate suspension of the siege had no more results than its vote for an immediate break with Germany, Italy, and Japan. Investigations of anti-Argentine activities of German agents by a special committee of the Chamber of Deputies and by the Public Prosecutor resulted during December in charging the German Embassy with extensive espionage and in Supreme Court action against thirty-eight persons, along with vigorous steps to prevent further misbehavior. A connection between this move and Sumner Welles' charges in October undoubtedly exists despite Argentine resentment at being prodded by a high official of the United States. Earlier attempts against such doings had insignificant results except for the dissolution by government decree of the important German Federation of Cultural and Welfare Societies.

Argentina's Foreign Commerce.

In its trade Argentina must import both civilian goods and war materials, and it must export as much meat, wheat, corn, and hides as possible. In the spring an agreement with Spain was reported (later said to be signed on September 5) by which, in return for credits for Spanish purchase of cereals and some frozen meat, Spain would build five or six merchant ships for Argentina and would furnish some war materials; establishment of a shipping company and an airline between the two states was also rumored. About twelve Spanish ships a month are said to arrive in Argentine ports. Figures published in October showed increased German exports to Argentina, entering in Spanish and Portuguese vessels through navicerts issued for contracts made before war broke out, through leaks in the blockade, and through illegal overland traffic. The goods comprised war materials, drugs, and chemicals; and the proceeds from their sale provide Axis propagandists with funds. However, war conditions prevent practically all exporting to Germany. With other South American countries Argentina seeks trade; and with Chile, the natural partner in its situation, it has made barter and transportation arrangements.

However, it is trade with the United States that matters to Argentina, and it has become part of the former's over-all policy to import only the most-needed materials and to control all exports as to both nature and destination. Before the Rio conference the United States treated all South American states on a basis of equality; since then, preference in the shipment of war materials is given to those countries in danger from the Axis through cooperation in American defense. Application of this policy to Argentina was seen when in March its military and naval mission to Washington was refused the privilege of buying war goods. Not reprisals against Argentina but justice to other states forms the basis of this action. Large quantities of commodities for civilian needs continue to be sent as far as is possible, but, obviously, since Argentina needs much — especially agricultural machinery and automobiles — a large gap exists between demand and supply. From Argentina to the United States go large amounts of vital strategic materials, such as its entire output of tungsten, most of its mica and beryl; other exports to the United States, especially used for the armed forces, are hides, wool, and canned beef. A possible relief (suggested in the United States at the end of November) for Argentina's large surpluses of cereals is to give it a large share in the sale and shipment of wheat and corn for the 500,000,000 persons in the areas that may ultimately be recovered from the Axis.

United States Responsibilities for Distributing Commodities.

To carry out successfully the responsibilities of its rôle of distributor of commodities for both war and civilian use in the Americas, enormous difficulties exist for the United States. These have been increased by complications inevitable in a system of control exercised by the several government agencies created in the country for that purpose. Delays and bottlenecks have been unavoidable under the circumstances, and changes have been instituted to prevent this working at cross-purposes. Since July 2 the War Production Board has had over-all control of imports to insure that all vessels entering United States' ports should carry only cargoes of the most-needed materials. In the matter of exports to Latin America after November 13, partial control of priorities and export licenses was transferred to new offices in the other republics. The offices are in charge of career diplomats, new officials called 'counselors of embassy for economic affairs,' who represent the various purchasing agencies, such as the Board of Economic Warfare, the War Production Board, the State Department's American Hemisphere Exports Office. Thus the major part of allotting exports is being shifted from Washington to the various capitals, where can be worked out with the native governmental agencies the work of matching as closely as possible future essential requirements with supplies available. This arrangement was applied to Brazil on November 25. A further easing of the civilian situation will result from the plan to transfer to suitable South American countries about five hundred small industrial plants either idle or threatened; these would include industries making shoes, paper and pulp, paint and varnish, fire brick, cement, textiles, and refrigerator plants. Thus shipping space would be saved and civilian needs better filled.