U.S. Capitalism and The Multinationals
excerpted from the book
Cry of the People
The struggle for human rights
in Latin America
and the Catholic Church in conflict with US policy
by Penny Lernoux
Penguin Books, 1980, paper
p204
... what most Latin Americans take for granted [is] that U.S.
foreign policy is run by corporate business.
Thanks largely to United States congressional
investigations of the past eight years, that assumption has been
amply justified; it can now be seen that many of the men who approved
counterinsurgency training for the Latin-American military, assassination
courses for the police, and CIA activities against democratically
elected governments were also pillars of the U.S. business community.
For example, the majority of those responsible for the decisions
that helped scuttle Allende's government in Chile, including Treasury
Secretary John Connally, CIA Director William Colby, Kissinger,
and Nixon himself, were closely tied to corporate industry. With
few exceptions, the military coups of the past fifteen years in
Latin America have been related in some way to U.S. business,
the payoff after the coup-as in Brazil, Bolivia, and Chile-being
special concessions to U.S. companies.
Although the United States never hesitated
to use a big stick to protect its interests in Latin America,
it was only after World War II that government and business became
so interdependent as to be indistinguishable. The Dulles brothers'
connection with United Fruit, though a particularly blatant example
of the use of government power to benefit business interests,
typifies an era in which corporate presidents and lawyers use
their position in government to promote company goals. This is
not to suggest that all such people were, or are, guided solely
by selfish motives -a good many executives-cum-bureaucrats genuinely
believe that what is good for business is good for the United
States, and therefore for Latin America. The trouble with this
logic is that, just as the Defense Department's counterinsurgency
courses became ends in themselves, corporate growth is used to
justify every kind of villainy, including military dictatorship.
With such businessmen as the Dulles brothers
in charge of foreign policy, it is easy to understand why Washington
was persuaded that the only solution to Latin America's social
and economic problems was the infusion of foreign capital and
a sustained growth of the gross national products, and why these
imperatives shaped the Alliance for Progress and other attempts
at "development" that became so popular in the 1960s.
As things turned out, foreign investment and aid only compounded
the region's problems. GNP statistics may have looked good on
paper, but in most cases economic growth was achieved at the expense
of the people. Between 1958 and 1970, for example, the real wages
of Brazilian workers declined by 64.5 percent. Whatever U.S. taxpayers
may have believed, the Alliance for Progress was an excuse for
business to gouge Uncle Sam as well as the Latin-American treasuries.
Or as Senator Frank Church put it: "The present foreign aid
program has been turned into a grotesque money tree, sheltering
the foreign investments of our biggest corporations and furnishing
aid and comfort to repressive governments all over the world."
President Kennedy chose Peter Grace, the
archconservative chairman of W. R. Grace, to head a group of businessmen
from twenty-five major corporations who were to evaluate the Alliance
and recommend useful projects. They did their job so well that
by 1964 David Rockefeller detected a "marked change in the
attitude of those responsible for the Alliance" and could
praise the State Department for recognizing that the Alliance
"had had too much emphasis on social reform." AID orders
accounted for one third of all U.S. steel exports by 1969; the
following year, AID-financed fertilizer exports ran to just under
$100 million. According to AID officials, some $2 billion per
year in U.S. exports were financed by the foreign aid program.
U.S. aid buttressed corporate interests
in America in a host of ways. It was a marvelous stick to hold
over recalcitrant governments. Bolivia, for instance, was gradually
forced to abandon the reforms begun by its 1952 revolution as
the country fell increasingly into debt to the United States.
By 1967 AID could boast that "the adoption of reforms . .
. in the nationalized tin mines, a revised mining code favorable
to private investments . . . and a new investment code and a revised
and more equitable royalties schedule designed to encourage private
investment is largely attributable to AID assistance." AID
could also take credit for undermining Bolivia's attempts to become
self-sufficient in wheat and quinoa, a hardy grain grown since
pre-Columbian times in the high Andes. Under the P.L. 480 (Food
for Peace) program, which was a convenient way to dump surplus
U.S. commodities on the world market, Bolivian wheat and quinoa
were gradually replaced by cheaper U.S. flour. Of course, when
the market for U.S. wheat improved, there were no more handouts,
and wheat and flour now represent 43 percent of Bolivia's agricultural
imports. That is exactly what the proponents of P.L. 480 had in
mind. Said Senator Hubert Humphry, one of its most enthusiastic
supporters:
I have heard . . . that people may become
dependent on us for food. I know that was not supposed to be good
news. To me that was good news, because before people can do anything
they have got to eat. And if you am looking for a way to get people
to lean on you and to be dependent on you, in terms of their co-operation
with you, it seems to me that food dependence would be terrific.
p210
None of the high-sounding goals of the Alliance for Progress were
achieved, including income redistribution or tax reform- and not
just because the local elites opposed such reforms. Had the tax
loopholes been closed and the labor force been given a greater
share of national wealth, foreign companies could not possibly
have developed lucrative new markets in Latin America. During
the Alliance years, according to U. S. Department of Commerce
statistics, three dollars went back to the United States for every
dollar invested. Foreign subsidiaries compensated for the smallness
of the consumer market-in Brazil, for example, it was only a fourth
of the 110 million population-with enormous markups that gave
these companies twice the margin of profit they earned in the
United States. When the Alliance was finally buried at the end
of the 1960s, about the only thing the Latin-American countries
had to show for it was an enormous foreign debt-$19.3 billion,
compared to $8.8 billion in 1961, when the program was launched.
Not only did the Latin-American people
fail to benefit from the generosity of the U.S. taxpayer; AID-and
CIA-money was also used to help destroy one of the few established
outlets of popular opinion, the free trade unions. Not content
with funneling Alliance funds into corporate industry, Peter Grace
promoted the American Institute for Free Labor Development (AIFLD),
a Trojan horse for the multinationals sponsored by the AFL-CIO.
Created in 1962 with the financial support of AID, the State Department,
W. R. Grace, IIT, Exxon, Shell, Kennecott, Anaconda, American
Smelting and Refining, IBM, Koppers, Gillette, and 85 other large
corporations with interests in Latin America, the AIFLD was organized,
ostensibly, to combat the threat of Castroite influence in Latin-American
labor unions; in reality it was a way for U.S. companies, working
in cahoots with repressive governments, to replace independent
unions with company ones. Explained Peter Grace, AIFLD's board
chairman, the Institute "teaches workers to increase their
company's business."
The AIFLD drew 92 percent of its annual
$6 million budget from AID and the State Department and was also
reported to have received sizable sums from the CIA. This money
was used to train 300,000 union members at the AIFLD's Front Royal
school in Virginia, where courses were, and are, heavily spiked
with pro-United States, anti-communist propaganda. AIFLD money
was also used to support the military coups in Guatemala, Brazil,
and Chile, and the terrorism and racial violence directed against
the leftist government of Cheddi Jagan in Guyana. AIFLD Executive
Director William C. Doherty, Jr., who has been identified as a
"CIA career agent,'' publicly boasted that AIFLD graduates
"were so active [in the Brazilian coup] that they became
intimately involved in some of the clandestine operations of the
revolution before it took place.'' When U. S. Marines invaded
the Dominican Republic, the AIFLD union was the only one to welcome
them. Although the governments of Brazil, Chile, and the Dominican
Republic arrested and murdered workers, and destroyed their unions
and bargaining power, the AIFLD could not praise them enough,
even going so far as to become their apologists at international
labor gatherings. The AIFLD's National Workers' Confederation
was the chief labor spokesman for Chile's junta.
Working through tame unions, the AIFLD
collected detailed information about Latin-American labor leaders,
the pretext being that such surveys were necessary for AID-financed
workers' housing projects. Though precious few houses were built,
and most that were proved too expensive for the average worker,
the AIFLD was able to obtain a personal and political history
of every union member, with addresses and photographs. Given the
AlFLD's close CIA connection and the CIA's documented role in
the Chilean, Uruguayan, and Brazilian coups, among others, it
is all too probable that this information was passed on to the
military regimes and their secret police.
The AIFLD also proved adept at smearing
as communist such democratic labor movements as the Christian
Democrats' Latin American Federation, in splitting the Dominican
Republic's labor movement, and in providing such backers as United
Brands and Standard Fruit with docile unions for their Honduran
banana plantations. As AIFLD Director Doherty explained, "We
welcome [the] co-operation [of management] not only financially
but in terms of establishing our policies.... The co-operation
between ourselves and the business community is getting warmer
day by day.'' Thanks to such "good" business-labor relations,
nineteenth-century sweatshops, complete with child labor, were
reintroduced in the textile mills of Brazil, and hundreds of workers
languished in the prisons of Chile. Still, it was in character-the
AFL's foreign department got its start by supporting Nazi collaborators
in the postwar unions of France. It was as a result of that work
that the CIA agreed to finance its activities, according to Thomas
Braden, director of the ClA's European operations from 1950 to
1954.
Trickle-up
As the AIFLD's career in Latin America
shows, the political costs of foreign aid and investment may be
higher than the economic benefits they bring. Indeed, many of
the arguments for corporate investment, while reasonable enough
in theory, do not apply in a region like Latin America, where
governments have neither the will nor the means to control or
guide a transnational empire of companies that comprises the world's
third-largest economy after the United States and the Soviet Union.
If the U. S. Internal Revenue Service, which employs some of the
world's best technicians, is hard put to control these companies,
what can be expected of poorly educated, grossly underpaid Latin-American
bureaucrats without access to typewriters, much less computers?
Thus some Latin Americans who a few years ago were enthusiastic
promoters of capitalist development now question the arguments
of big business. Said Argentine economist Rasl Prebish, one of
the fathers of the Alliance for Progress: "What is good for
the consumer society is not necessarily good for development."
A key argument of these critics is that,
whereas unemployment is among the most serious problems facing
Latin America, foreign investment creates very few jobs. A company
can hardly be blamed for wanting to reduce labor costs by increasing
automation, yet automation is the last thing needed by a continent
with 50 percent unemployment and underemployment 2' Petrochemical
plants may reduce a country's imports and add a few points to
the GNP, but they do not promote human development. On the contrary,
capital-intensive investments have checked the post-World War
II expansion of the labor base in Latin America. While industry's
share of Latin America's GNP has grown from 11 to 23 percent during
the past five decades, it employs exactly the same percentage
of workers today that it did in 1925, a mere 14 percent of the
labor force. In several countries, among them Chile and Peru,
the percentage has actually declined. Some of this can be attributed
to the population explosion, but the essential issue is the model
of development: Do you make refrigerators and air conditioners
or shirts and shoes? Do you build sophisticated hospitals or rural
clinics, universities or primary schools? By choosing to encourage
foreign investment in such technologically sophisticated industries
as television sets or computers, a Latin-American country may
actually be postponing any hope of real development.
Because they identify with the Americans
and Europeans, Latin America's elites have chosen the industrialized
world's model of development-for example, it is a matter of intense
national pride with these people that their country has a steel
industry, though there may be no economic or social justification
for the expensive toy. The argument for promoting this model of
development is the trickle-down theory-that as countries become
richer, trade union organizations, rising food prices, and shortages
of certain types of labor begin to improve the conditions of some
of the poorest classes-small farmers, unskilled and semiskilled
industrial workers, and so on. Such was the case in nineteenth-century
England and in Japan. Of course, wealth takes a long time to trickle
down-even in Japan it took at least a century-and it is doubtful
that the Latin-American masses will wait that long. Indeed, it
may never happen at all if, as in the Latin-American military
regimes, trade unions are banned or severely limited, food prices
and agricultural production are controlled by the rich themselves,
and there is no possibility of political opposition or civic development.
Certainly there has been very little trickle-down since World
War I, when Latin America began to industrialize. The richest
man in Latin America earns over $550,000 a week; the poorest,
$90 a year ...
p229
"Consumer Democracy"
The Council of the Americas, spokesman
for U.S. corporate interests in Latin America, claims that "consumer
democracy" can and should replace political democracy. In
sharp opposition, the Catholic Church rejects that model of development
as a mask for privilege: so few Latin Americans can afford more
than one pair of shoes a year-much less refrigerators, cars, television
sets, and the other enticements of an affluent society-that talk
of consumer democracy is no more than mockery.
p236
The "Sugarization" of the Dominican Republic
A mountainous, semitropical land that
covers the eastern two thirds of the Caribbean island of Hispaniola
(Haiti occupies the rest), the Dominican Republic is crisscrossed
by four almost parallel mountain ranges that confine the arable
land to one third of the country's surface. The most fertile area
is in the southeast, where Gulf+Western Industries (G+W) has its
plantations. As the largest landowner, private sugar grower, and
foreign investor in the Dominican Republic, G+W is at the heart
of the struggle for agrarian reform and therefore the target of
Church criticism.
One of the largest corporations in the
United States, G+W came to the Dominican Republic two years after
the 1965 invasion by U. S. Marines during a period when Washington
was heavily involved in Dominican politics and for this reason
upheld artificially high U.S. prices for Dominican sugar. Expanding
its sugar and coffee interests, G+W purchased the South Puerto
Rico Sugar -Company (SPRS) owned by investors close to the Rockefeller
interests. SPRS had developed large sugar holdings in Puerto Rico
under the protection of the U. S. Government after the Spanish-American
War, and in 1917, a year after the U. S. Army occupied the Dominican
Republic, it expanded its operations to that country, acquiring
large tracts of land in the eastern part of the country through
the eviction of peasants by U.S. soldiers. When G+W bought the
company, SPRS owned 9 percent of the Dominican Republic's arable
land and one of the world's largest sugar mills.
G+W was aided in its expansion program
by Chase Manhattan, which made funds available and provided advice
and services, and by the Wall Street law firm of Simpson, Thacher
& Bartlett, of which G+W is a client. It was by working in
this law firm that Secretary of State Cyrus Vance got his start
in government -- his boss then, Edwin Weisl, was a confidant of
Lyndon Johnson, and Weisl introduced Vance to important government
and financial circles, including the Department of Defense, where
he was appointed Assistant Secretary in 1964 -- just in time to
help plan the Dominican Republic's invasion. Johnson later sent
Vance to arrange a provisional government in the Dominican Republic,
and about then G+W began acquiring SPRS shares. By 1976 G+W was
paying Simpson, Thacher fees of over a million dollars a year;
Simpson's senior partner, Donald Oresman, was a member of G+W's
board of directors. (The law firm had its ups and downs, however,
and was involved in a number of scandals, including a 1974 suit
by investors in Homestake Productions' oil tax-shelter scheme
on charges of a $100 million fraud.)
One of G+W's first acts on buying SPRS
was to break the union on its Dominican plantations. Cuban exile
Teobaldo Rosell, a self-styled "specialist in busting unions,"
was appointed vice-president and general administrator of G+W's
La Romana plantations. Police Colonel Simon Tadeo Guerrero Gonzalez,
an official in the Trujillo regime who had been transferred from
La Romana because of brutality to workers, was reassigned to the
plantations. On his arrival, Rosell denounced the workers' union,
Sindicato Unido (SU), as communist-controlled, and shortly thereafter
the union's lawyer, Guido Gil, was arrested. On releasing Gil,
Colonel Guerrero warned him, "We don't guarantee your life
here." The next day Gil was kidnapped by plainclothes police
while on his way to Santo Domingo and never seen again. Union
leaders claimed that Gil and another popular leader, Miguel Fortuna,
had been murdered. When the union protested the replacement of
a weekly pay system with a biweekly one, the company annulled
SU's contract, with the government's blessing, and fired eighty-three
union members, virtually the entire SU leadership, while police
occupied the company plant. Some $86,000 in SU funds was frozen,
and union documents were requisitioned by the police. G+W then
called in the AlFLD to form a new union, Sindicato Libre, which
government officials immediately recognized. One result of this
labor-management "consensus" was that cane cutters earned
less in 1975 than in 1964.
By destroying the SU, G+W effectively
eliminated any threat of labor militancy. Seventy percent of the
cane cutters employed during the harvest season are starving,
illiterate Haitians, people so desperate for work that they defy
organization. Most of them earn less than two hundred dollars
during the seven-month harvest, for which they are trucked across
the border to the eastern sugar plantations, but that is a small
fortune by the standards of the average Haitian, whose annual
income is one hundred dollars. The Haitian Government is perfectly
willing to go along with the arrangement, since the Dominican
Republic agreed that the dictatorship of Jean-Claude ("Baby
Doc") Duvalier be paid ten dollars for every Haitian wetback.
Five percent of the workers' wages also goes to the Haitian Government,
and middlemen take another slice of their paltry pay. Because
of the poor wages and living conditions-the cane cutters are housed
in unhygienic, open-air camps-many Dominicans refuse to work on
the plantations. "The last time I worked in the harvest,
I spent six months cutting and I couldn't even buy a pair of pants,"
said one Dominican, who claimed he earned more in one day as a
woodcutter (ten dollars) than he could make all week in the cane
fields (cane cutters average seven to eight dollars per week).
G+W, producer of one third of the country's
sugar, was favored with a number of handsome concessions by the
Balaguer administration, including a twenty-year extension of
a tax exemption Trujillo had granted to La Romana. G+W also received
a twenty-year tax exemption on its Romana free port, the only
industrial free zone in the country under private control. The
free zone attracted eighteen U.S. companies, many of which had
left the United States for the lower wages of Puerto Rico, only
to "run away" again to the Dominican Republic because
of still cheaper labor-thirty cents an hour. According to an investment
analyst's report on Caribbean Leisurewear, a G+W tenant, the Dominican
Republic offers, in addition to low wages, a huge labor pool,
and "with four to five applicants for every company job in
the Dominican [Republic], the company has the opportunity to expand
rapidly within a framework of labor peace and dedication to work."
The report does not mention that such runaway shops reduce the
number of jobs available in the United States or that they exploit
cheap labor in the developing countries.
G+W also acquired substantial holdings
in the Dominican tourist industry and a huge cement factory that
supplies some 50 percent of the construction industry, in addition
to a controlling interest in the Pablo Duarte Olympic Center,
a new sports complex built for the Pan American Games. The latter
is tied into the Madison Square Garden Corporation, also controlled
by G+W, which in turn has reportedly attracted the interest of
persons in the gambling underworld.
G+W's tourist, sports, and gambling interests
in the Dominican Republic, its connection with organized crime
in the United States, and its cozy relationship with the admittedly
corrupt Balaguer government made the conglomerate the object of
various charges and rumors in the Dominican Republic. It was not
merely a question of bigness (with some $200 million at stake
in the Dominican Republic, G+W was the largest foreign investor
in the country). As London's Financial Times pointed out, the
Balaguer administration had "apparently done everything possible
to help G+W despite local objections," including the manipulation
of Dominican laws to further the corporation's interests, such
as an amendment of the industrial incentives law to exempt G+W's
free-zone operations from any exchange restrictions. But undoubtedly
the most serious accusations centered on G+W's sugar-growing operations.
The owner of 109,642 acres of prime Dominican
land, G+W also had contracts on nearly 50,000 acres under what
is known as the colonia system. This arrangement has become increasingly
popular with U.S. food conglomerates in Latin America because
it guarantees a regular supply through contract growers without
burdening the company with such potential political-economic liabilities
as land ownership or labor unions. At the same time, since the
company dominates processing and marketing, it retains control
of local production. In the Dominican Republic the contract system
became particularly attractive because the law prohibits foreigners
from buying more land to plant cane.
The only drawback of the colonia system
from the company's viewpoint is that the land must be relatively
near its sugar mill and loading stations, and not all farmers
on the perimeter of G+W's holdings want to plant sugar. That is
especially true of the smaller farmers, who prefer a modest income
from yucca, beans, fruit, and rice to the wild fluctuations of
the international sugar market. Moreover, a number of farmers
are reluctant to sign contracts that they say make them economic
vassals of G+W. According to Alberto Giraldo, who was president
of an association of four hundred colonos who sell their sugar
cane to La Romana, the company is "a state within a state
stronger than the government itself." The owner of a 1,500-acre
farm in the town of Pintado, near the Romana mill, Giraldo claimed
that two attempts had been made on his life because of his opposition
to G+W. (While president of the colonos, Giraldo tried unsuccessfully
to improve the contractors' bargaining power and persuade the
government to establish tighter controls over G+W.) Small farmers
in the town of La Otra Banda in the sugar cane belt also complained
of "heavy aerial spraying of herbicides that damage plants
and trees on land adjacent to cane fields, fences being mysteriously
broken at night, access being denied to certain roads, and the
company police force making sure that animals that stray into
the cane fields are either destroyed or taken to a distant police
station where the owner must pay a stiff fine to retrieve them.
The principal victim of "sugarization"
is not the small or medium-sized farmer like Giraldo but the landless
peasant, who has been sacrificed to the greed for land. Once a
landowner signs a contract with G+W, a whole way of life is destroyed.
Under the terms of the agreement all the acreage must be planted
in sugar, and the peasants who have worked on the estate in return
for the use of a small parcel of land lose not only their source
of food, but also the basis of their social relationship to the
landlord and society. Father Juan Miguel Perez, coordinator of
peasant affairs for the diocese of Higuey in the heart of the
sugar-growing region, describes this process as one of progressive
dehumanization:
Before he was consumed by the lust for
land, the landowner had a deep sense of dignity and honor in dealing
with the peasant. He was feared for his power, yes, but at the
same time he was respected for his honor and humanity. The senor
was a patriarch. You could turn to him, as the peasants did in
any crisis. He was the cement that held that semifeudal world
of the countryside together. Now, because he is so often absent,
but particularly because he is so land-hungry, the senor no longer
serves that integrating social function. In fact, he has become
the single most powerful force for social disintegration.
But it is not only because of his absenteeism
and his obsession with acquiring more land that the landowner
lost that social role. It is also because of his new concept of
private property, which today is exclusive, total, and unconditional.
Before, the peasants could get a good
number of the simple things they needed from the senor's largesse:
hand-me-downs, the odd jobs he would provide, etc. Today, all
that has changed: the fences are higher, and if a peasant's animal
strays onto the landowner's property, it will probably never get
home again. Before, peasants were free to help themselves to wild
mangos or oranges, to firewood, etc., on his property. But now
the peasants can be jailed for taking such things.
Thus heightening of the privateness and
exclusivity of the senor's notion of ownership has stifled his
humanity and paternal generosity. He would also flatly deny any
suggestion that private property has a social function.
Consequently, the peasant has lost his
regard for the senor, and any sense of dependence on him. Before,
social relations were vertical, from the person above to the one
below, from superior to inferior, and that was perhaps not ideal.
But now there are no interpersonal relations at all The landowner's
craving for self-sufficiency has grown so that he neither needs
nor wants the peasant's work or thanks. With his sense of autarchy,
he has lost all identification with the peasant.`
A green plague that has multiplied twenty
times since the turn of the century until it occupies one quarter
of the cultivated land in the Dominican Republic, sugar cane has
aggravated both social and economic divisions in the countryside.
Thus agriculture's per capita production of food for local consumption
has declined by 60 percent since 1961 because of the emphasis
on export crops, the growing concentration of land in a few estates,
and the population explosion; 64 percent of the island's food
production is exported, and of this three quarters goes to the
United States, mostly in the form of sugar. Because of malnutrition,
infant mortality is 10 percent of live-births. Of those who survive,
half are anemic and suffer chronic malnutrition, according to
a survey by New York's Columbia University. The average monthly
income of a Dominican family of five is less than fifty dollars
in rural areas, and two thirds of the population remains outside
the mainstream of the country's economic, cultural, and political
life. Because of the desperate situation in the countryside, 6
percent of the rural population migrates to city slums each year,
swelling the already high 22 percent unemployment rate, while
another four hundred thousand Dominicans have fled to New York
and New Jersey. One Dominican out of four depends on U.S. food
supplies distributed by CARE and other private agencies. Bishop
Roque Adames, whose diocese spans the country's central mountain
range, reported that were it not for the monthly remittances of
Dominicans in the United States, half the people in his diocese
would be starving to death. "For these poor farmers, the
country up north-which to them means New York-promises a job and
money for their families," he said. "As one peasant
told me, 'It may be hard there, but it can't be worse than this."'
The irony is that, while the United States consumes the Dominican
Republic's food, it also imports its poverty, and all because
of corporate profits and the greed of a few wealthy Dominicans.
It is pointless for U.S. officials to lament the failure of such
poor countries as the Dominican Republic to feed themselves when
most of the food grown goes, not to the people who live there,
but to the United States.
p248
When a CIA outlay of $20 million to opposition candidates in the
1962 state and congressional elections failed to achieve the desired
results, the U. S. Embassy began to conspire directly with military
leaders to overthrow Goulart. After the coup, the properly grateful
Brazilian generals repaid U.S. support by accepting an entire
package of U.S. demands, including a generous new profit remittance
law, an investment guarantee treaty covering U.S. subsidiaries,
and the return of the Hanna concession. So eager was the military
to show its appreciation for foreign intervention and investment
that, within two years of Goulart's overthrow, foreign companies
had gained control of 50 percent of Brazilian industry-often through
the expediency of what the Brazilian Finance Ministry called "constructive
bankruptcy," a combination of fiscal and monetary measures
that forced local firms to sell to foreign interests or go broke.
By 1971, fourteen of the country's twenty-seven largest companies
were in foreign hands; of the remainder, eight were state-owned
and only five were private Brazilian firms.
The military justified this heavy reliance
on foreign investment by claiming that Brazil could become an
industrial power only through exports and that the only companies
with the technology, money, and marketing skills to develop exports
on a large scale were the multinationals. But as the country's
balance of payments showed, there were major flaws in this thinking:
imports by these companies were higher than exports, and profit
remittances abroad were more than twice the original investment.
Moreover, in order to pay for the technology, services, and industrial
development-as usual, most of the money for the multinationals'
expansion came from local sources-Brazil ran up the highest debt
in the developing world, some $50 billion (compared to $3 billion
under Goulart). Two fifths of Brazil's export earnings go to service
this debt. Yet the government wanted to borrow another $50 billion
over the next decade to finance its development programs.
Perhaps the biggest flaw in the military's
scheme was social, though the generals would hardly entertain
that sort of objection. Other countries could offer foreign companies
political stability and attractive investment terms. And the Brazilian
market, while large by Latin-American standards, could not compare
with the riches available in Europe, the United States, or Japan.
But the military regime could and did offer foreign capital one
undeniably competitive commodity: a huge pool of cheap labor,
30 million posseiros. Wages were frozen or progressively reduced
in terms of real purchasing power, with the result that half the
country's 38 million workers earn less than the government's own
minimum monthly wage of $70. Strikes were outlawed and job security
legislation abolished, thereby encouraging many companies to adopt
a job rotation policy, laying off workers in the first three to
four months of the year when corporations are obliged to increase
wages, albeit at a rate that lags behind inflation, and hiring
new ones to replace them at lower wages. General Motors, for example,
fired 1,792 workers in the first quarter of 1974 while hiring
1,970 new ones. Many of these workers came from GM's competitors
at Volkswagen, Toyota, or Pord; they, too, had been laid off in
the rotation game. In a 1974 study of labor rotation, Sao Paulo's
Department of Statistics and Social Economic Studies reported
that "the Brazilian subsidiaries of the multinational corporations
mainly owe their expansion to a more intense exploitation of labor,
employing workers at wages lower than the level required by the
government's present wage policy." Thanks to such low labor
costs, Volkswagen President Rudolf Leiding could report in 1974.
"The situation of our corporation had worsened because of
a reduction of almost 30 percent in exports to the U.S.A. and
of 17 percent in sales in the German market, [but] in 1973 profits
coming from our Brazilian subsidiary were so high that [they]
covered losses from our other productive units."
One result of this wage policy is that
Brazilian laborers now work twice as many hours as they did a
decade ago to buy the same minimum necessities. They do so by
working overtime-110 hours per month on top of 240 normal working
hours in the construction industry-or by finding jobs for other
members of the family.
p252
Unwilling to attempt any alteration in the pattern of land tenure,
though 50 percent of the land on the large estates is uncultivated,
the regime put all its hopes on exports, half of them food. While
the large landowners remained untouched by agrarian reform, the
government encouraged the multinationals to develop huge agribusinesses
on the country's remaining unoccupied land, particularly the Amazon.
These companies were also allowed to take control of Brazil's
food-processing industry as well as the marketing of some of its
most important agricultural exports, such as soybeans.
The results were the same as those in
the Dominican Republic, only on a much larger scale. Rural migration
to the cities accelerated with the increasing concentration of
land, either in large Brazilian ranches or in foreign-owned agribusinesses.
Because of government emphasis on export commodities, farmers
abandoned traditional crops that earn no foreign exchange. For
the export of meat and soybeans all sorts of government incentives
were available, while black beans, milk, manioc, potatoes, and
other agricultural produce for the internal market were officially
downgraded. Not only was there no economic incentive to produce
for local consumption, but also many of the poorer farmers who
grew these crops were squeezed off their land, sometimes forcibly,
by the export growers. Thus black-bean production fell 17 percent
in 1976, causing normally docile slum housewives in Rio de Janeiro
to riot. In another demonstration of popular discontent, the write-in
"Black Beans" won two hundred thousand votes in the
1976 Rio municipal elections. The decline in milk production forced
Brazil to import powdered milk from the industrialized countries
where dairy farmers are subsidized. Although Brazil boasts the
fourth-largest cattle herd in the world, few of its people can
afford meat or imported powdered milk. Such are the looking-glass
economics of Brazil's agriculture that, while it exports 97 percent
of its orange crop to such companies as Coca-Cola, the government
gave the major U.S. soft-drink manufacturers a 50 percent tax
reduction so that they might increase their sales of zero-nutrition
drinks in a country where half the people are suffering from a
vitamin C deficiency!
Although Brazil's annual agricultural
growth rates of 5 percent and more outstripped those of other
Latin-American countries, the government could hardly claim that
the people had benefited when 75 percent of the population was
suffering from malnutrition.
p257
In the Northeast alone, there are 28 million undernourished people
whose annual per capita income is less than one hundred dollars.
Infant mortality is eight times that of the United States, and
20 percent of the children suffer from such severe malnutrition
that it has permanently damaged their brains. Yet the government
talks of nothing but efficiency and productivity. Brazilian agriculture
must be "modernized," insists the government, and those
who cannot meet this challenge "must stop being small farmers
and become workers for the large rural enterprises," even
if the National Institute of Colonization and Agrarian Reform
(INCRA) has to tax them out of existence. Brazil does not want
posseiros, or marginal farmers, said the Interior Minister, explaining
the government's preference for large agribusinesses. Thus 3.1
percent of the landowners control 80 percent of the arable land,
and the multinational corporations are establishing ranches of
500,000 acres and more in the Amazon.
But are these rural enterprises really
any better than the feudal latifundio? Brazil's bishops think
not. "Some people say the rural enterprises are not latifundio
because latifundio are large areas of uncultivated land, while
the rural enterprise exploits the land," wrote the bishops
in "Marginalization of a People." "This may be
true for students of economics who see things from the viewpoint
of production and profit. But for us, the people, latifundio means
only one thing-a large piece of land. It can be cultivated or
uncultivated, productive or unproductive, but it's all the same
because it does not produce for us. So rural enterprise is the
same old latifundio with another name.
"The difference lies in the rural
enterprise's commitment to a project, a plan of production or
cultivation. But a commitment to whom? To the government that
finances these programs. But if that is so, it must be asked whether
these rural enterprises are going to resolve the problems of the
peasant, or really help [the government] to achieve peace in the
countryside, or 'regional security.'
"A study carried out in the Amazon
shows that none of these three objectives is achieved by rural
enterprises. On the contrary, they lessen employment opportunities,
agricultural production is reduced to a few large cattle ranches,
and this in turn engenders discontent and tensions between a people
without jobs or land and the large landowners, not to mention
the fact that many of these new latifundio are foreign-owned."
p261
The world's last surviving huge natural park, the Amazon extends
over 3 million square miles, an I area equal to 83 percent of
the United States, and covering half of Brazil as well as smaller
portions of Colombia, Ecuador, Peru, Bolivia, Venezuela, Guyana,
Surinam, and French Guiana. When foreigners speak of the Amazon,
they always resort to superlatives -the largest tropical forest
and river system in the world, the hemisphere's longest river,
the world's largest iron and tin reserves. Yet most of the people
who live in the Amazon know nothing but misery, eking out an existence
in a thatch-roofed lean-to on the muddy banks of some river, a
prey to every imaginable plague, from malaria to piranhas. Still,
for all the hardships of life in the Amazon, it has had one overriding
attraction-hope -for if the peasant could not find land anywhere
else, he could always migrate to the vast, untouched reserves
of the Amazon, hoping that one day he might own his own farm.
For a good many years this illusion was
shared by Brazilian governments, which saw the Amazon territory,
with its minuscule 5 million population, as a natural overflow
basin for the country's peasant population, particularly from
the Northeast. Thus it was that President Emilio Garrastazu Medici
embarked on a crash program to populate the Amazon in the early
1 970s by constructing roads, the most ambitious of which was
the 3,400-mile Transamazonian Highway stretching from the Atlantic
Coast to Brazil's frontier with Peru. An additional 6,000 miles
of roads were to crisscross the Amazon basin, many passing through
Indian lands. To support this scheme, the government created the
Superintendency of Amazon Development (SUDAM), which was supposed
to plan, execute, and coordinate the development of the Amazon,
and the Bank of the Amazon, to finance this development. Never
given to thinking small, the Brazilian Government envisioned the
resettlement of 30 million peasants in the Amazon, mostly in the
regions where roads were under construction. Some eight thousand
colonists were actually moved into the region, given seeds, six
months' minimum wages, a rough wooden house and-what most of them
had never had-a 250-acre plot to call their own. There were several
drawbacks to the grandiose scheme, however, including lack of
sufficient money and the danger to the environment. As one prominent
Brazilian agronomist pointed out, "To put primitive labor
into the Amazon is to create a desert. The government does not
allow anyone to say the soil is no good for farming, but it is
no good. [The Transamazonian Highway] is the most stupid project
in Brazil-up to now."
p263
The size of some of the ranches boggles the imagination: the Italian
conglomerate Liquigas has carved out a 1.4-million-acre spread
in the Mato Grosso between two tributaries of the Amazon, yet
that is nothing compared to the holdings of the U.S. multimillionaire
Daniel Keith Ludwig, who owns 3.7 million acres of Amazon land
along the Jari and Paru rivers, an area equivalent to half of
Belgium. Altogether, foreign firms own some 50 million acres in
the Amazon territory, according to a survey by the Brazilian Congress.
Nearly 250 million acres of jungle forest have been cut down for
cattle pasture.
The Amazon has always excited foreign
interest, particularly during the rubber boom in the early part
of the century, but only since the 1964 military coup have foreign
companies moved into the region in a big way, thanks to changes
in the mining code and land legislation that encourage foreign
ownership, and tax exemptions for up to fifteen years. Some of
the world's biggest mining and metals conglomerates have obtained
concessions in the Amazon, including Kaiser Industries, Royal
Dutch Shell, National Bulk Carriers, Rio Tinto Zinc, Hanna Mining,
Nippon Steel, the Aluminum Company of Canada, Reynolds Metals,
Alcoa Aluminum, Falconbridge Nickel Mines, Canada's BRASCAN, U.
S. Steel, Bethlehem Steel, and Gulf+Western. An equally impressive
roster of twenty-nine multinationals is involved in cattle ranching,
the United States leading with fifteen companies.
p264
...the Amazon Indian has no defense whatsoever against the land
greed of foreigners, since the government's Indian institute,
FUNAI, which is supposed to protect the aboriginal population,
has repeatedly stated, "The Indian cannot stand in the way
of progress." Or as the governor of the Amazon territory
of Roraima put it, "I am of the opinion that an area as rich
as this-with gold, diamonds, and uranium-is not able to afford
the luxury of conserving a half-dozen Indian tribes who are holding
back development.'' Accordingly, Brazil's Indian population declined
from 2 million Indians at the beginning of the century to 200,000
in 1963 and to a mere 100,000 by 1978. At the current rate of
attrition, predict Brazilian anthropologists, the Indians will
be extinct within a decade. That bleak forecast is shared by the
military governor of the Amazon center at Boa Vista, who said
that the Indians would never survive the Amazon road construction
program.
A number of multinationals, European,
Canadian, and U.S., have been accused of contributing to the Indians'
plight. Dr. Jean Chiappino, a French doctor, charged that seven
large companies which had been given permission to prospect on
an Indian sanctuary in the territory of Rondonia were responsible
for a 1972 epidemic that decimated the Cintas Largas Indians.
Three of the companies named were owned by the Bolivian tin magnate
Antenor Patino, known in Bolivia as the "Metal Devil"
for his company's exploitation of workers in the Patino tin mines,
which were nationalized by the Bolivian Government in the early
fifties. According to a study by the World Council of Churches,
the meat packing company Swift Armour, which is now a subsidiary
of the Canadian conglomerate BRASCAN, and its partner, King Ranch
of Texas, carved out a 180,000-acre ranch in the state of Maranhao
that had been set aside as a reservation for the Urubu Kaapor
and Tembe tribes. Thanks to the intervention of the Brazilian
Interior Minister, FlJNAI's objections to the purchase were overruled
and jurisdiction transferred to state officials, who approved
the deal with Swift and King. King Ranch Brazil's director, Guilherme
Cardoso, defended the ranching project on the ground that "there
are no Indians in the region,'' but a 1973 study by the Aborigines
Protection Society of London confirmed the World Council of Churches'
report that the land had indeed belonged to the Indians.
Part of Daniel Keith Ludwig's vast Amazon
empire occupies land that once belonged to the Apalai tribe, and
Volkswagen's 287,000-acre cattle ranch in the Araguaia region
includes the territory of the Northern Cayapo tribes. According
to Camilo Martin Vianna, president of the Brazilian Society for
the Preservation of Natural Resources, Ludwig's employees are
clearing large areas of Amazon forest with chemicals identical
to those used by U.S. troops to destroy jungle areas in Vietnam.
(Known as "agent orange," these toxic 2, 4-D and 2,
4, 5-T herbicides are considered by U.S. scientists to be 700
times more dangerous to human beings than thalidomide. Both the
Brazilian forestry institute and Brazil's leading landscape designer,
Robert Burle Marx, denounced Volkswagen for burning 7.5 million
trees in a 23,500-acre area, a charge substantiated by the Skylab
satellite. Company officials claimed that the trees' destruction
was part of the contract they had signed with SUDAM and added
that they intended to clear another 172,500 acres of trees in
1976.
But perhaps the worst example of the multinationals'
slash-and-burn methods in the Amazon is provided by the Italian
conglomerate Liquigas, which purchased 1.4 million acres in the
heart of the Xavante Indians' territory. Sixty Indians died when
the military forced them to move from their land, and now only
a few charred stumps remain of the forests where the Xavantes
once hunted, the land having been seeded in grass. Like most Amazon
cattle ranches, the Liquigas project produces only for the export
market, using an airstrip big enough to accommodate chartered
707s that fly direct to Italy with the meat packaged in supermarket
cuts and the price stamped in lire.
However much U.S. and European consumers
may benefit from such exports, there can be little doubt that
the cattle and lumber enterprises in the Amazon are producing
the same mass poverty already evident in the Northeast. Even some
government officials, such as the head of the National Housing
Bank, are predicting disaster, for most of the 120,000 laborers
who now work on the multinationals' estates have no assured jobs,
no land, and almost no purchasing power. It is unlikely that the
highly mechanized rural enterprises will employ more than 20,000
of these workers permanently, and the remainder can end up only
in new slums on the edges of the estates or in the Amazon's towns.
And 10 million landless peasant families in other parts of the
country are already considered "surplus population."
p277
Ralph Nader spoke as follows at a conference on Brazil's Indian
policy at Washington's Brookings Institute:
The word genocide is often used a little
too liberally in other areas of the world, but if anybody wants
to know what the definition of it is in a contemporary way, then
you need to look at the documented trends of destruction over
the last few decades in the Amazon basin. While almost every day,
students in the United States recoil with horror when they read
about the destruction of the Carib Indians in the Caribbean centuries
ago . . . exactly the same thing is going on in the Amazon areas
with very, very little attention being paid thereof.
Now, what American companies do in other
countries is clearly of interest to U.S. citizens, and there's
been an amazing neglect of multinational corporate activity in
South America generally in the last decade. I think that this
area has got to be probed by one or more of the following agencies:
the U. S. Senate Foreign Relations Committee, the House Foreign
Relations Subcommittee, and the Subcommittee on Multinational
Corporations, looking directly for activities pursuant to multinational
effects in foreign lands and how they affect U.S. policy.
Second, there needs to be an inquiry into
the funding role by U.S. agencies. The taxpayer, unwittinglybut
the military ignores them."what is being done in the Amazon
area through government lending agencies, through the AID program,
and through other protective U.S. agencies, such as the government
insurance program.
When U.S. corporations interfere in the
internal affairs of Brazil, that is a U. S. Government concern.
And when taxpayers are funding activities, lending activities,
surveillance activities of the Amazon basin, that is a U. S. Government
concern.
Nader is correct when he says that very
little is known about the activities of U.S. corporate giants
in Latin America. The little that is known is due almost entirely
to probings by -the U. S. Congress, whose various committees and
subcommittees have investigated some of the multinationals' more
notorious ventures south of the border, such as ITT's attempt
to prevent Salvador Allende from assuming the presidency in Chile.
And some information has filtered out because of investigations
by the Securities and Exchange Commission, which exposed many
recent cases of bribery by U.S. corporations, and because of lobbying
by religious pressure groups.
p279
Quite apart from the moral issues of whether one wants to buy
a car or a steak from a company that is responsible for the suffering
and death of defenseless Indians and peasants in the Amazon basin,
there is the practical question of law. When an American buys
shares in a U.S. company, he does not expect that company to be
involved, even indirectly, in the murder of innocent people or
the overthrow of a legitimately constituted government, since
that is against the law. Or are there two sets of laws, one for
the foreign subsidiaries and another for the parent companies
in the United States? It is a question that must concern the shareholder
when many of these companies are earning half their profits abroad.
Whatever the multinationals may believe, there must come a day
of reckoning ... Nationalization with compensation is the mildest
form of retribution. And then who will explain to the stockholders
why a company had to write off its investment in Latin America?
For religious institutions such as the
Catholic Church, the issue goes much deeper, for if a Christian
acknowledges a code of moral behavior, it cannot condone, even
by default, the unethical practices of U.S. executives or government
officials in the poorer countries that are most in need of justice
and real charity-not handouts, but an attempt at understanding.
The business of making money should not be an end in itself, wrote
the Vatican's Secretary of State Cardinal Jean Villot, in a letter
of support to the Church for its opposition to the military regime's
ruthless free-market economic policies. What is needed, said the
cardinal, is an economy with a human objective that satisfies
the real needs of the community. and not an unbridled capitalism
that creates artificial desires and mere consumerism in a small,
privileged minority. "We are not denying the legitimate right
to property," said the cardinal. "But it must be clearly
understood that property rights are subject to the needs of the
community and that it is not possible to accept a society divided
between a selfish, privileged minority and a mass of people deprived
of life's essentials."
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