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


... 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.

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.


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 ...

"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.

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.

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.

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.

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."

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."

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.

...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."

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.

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."

Cry of the People

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