Laying the Foundations 1945-50

excerpted from the book

Confronting the Third World

United States Foreign Policy 1945-1980

by Gabriel Kolko

Pantheon Books,1988


The Wartime Image of the Future
More than any other branch of the government, the State Department under Cordell Hull, who was its secretary from 1933 to 1944, defined the U.S. vision of the ideal relationship of the colonized and poorer nations to the world order. Hull was a disciple of Wilson and his "Open Door" concept of an integrated world based on free trade that Wilson took from the Democratic Party's traditional policies and raised to a higher level of abstraction. Hull was, as well, both an ideologue and a pragmatist, ready to confront aggressively America's allies, particularly Britain, but also not to press issues too far with them if something tangible could be gained in return. He regarded the breakup of the world economy into isolated trading blocs after the 1929-31 Depression as the single most important cause of the Second World War as well as the most likely source of future wars. Restrictive trade cartels, which had especially inflated the price of the United States' increasingly essential raw materials imports, were integral to this distorted world economy, and it was the British sterling bloc and empire that most epitomized these challenges to an open world economy based on free trade. From 1941 onward the United States never tired of stressing that "raw material supplies must be available to all nations without discrimination" after the war, and this in turn required complete access for U.S. capital to enter any nation to accelerate "the sound development of latent natural resources and productive capacity in relatively undeveloped areas."' But while there was a consensus on these essentially anticolonial objectives among key American decisionmakers during the war, they disagreed how and with what speed to apply them, especially because Britain, more than any other nation, was the object of the U.S. program, and the British after 1943 made no secret of their fears that America was trying to advance its interests in Asia and the Middle East at their expense.

But it was not only Washington's desire to keep Britain as an ally in Europe after the war that inhibited its pressing its anticolonial sentiments too far and too fast. The radical nature of many of the local political forces aspiring to replace the colonial powers especially disturbed American leaders, and particularly after 1945 they increasingly feared local Left parties that might presumably be friendlier to the Soviet Union or even aligned with it. But even in India, the United States supported British policy in repressing a thoroughly anti-Communist Mahatma Gandhi and the Congress Party because Gandhi was opposed to the war and because the British successfully demanded that the Americans respect their jurisdiction over India. In the Middle East, at least during the war, Washington retreated when Britain objected to its issuing a declaration favoring steps toward independence for Syria and Lebanon. The implicit recognition of British spheres of influence in the colonial world was extended to Africa also, where the United States kept silent on the future of mandated areas even though it insisted that it retained a residual right under the 1919 Treaty of Versailles to have its trade interests there protected.

The United States did not pursue its nominal anticolonial ideology too ardently also because it expected the British to support American claims for the transfer of Japanese-held Pacific trusteeships to the United States after the war. Indeed, as the Cold War intensified after 1945, keeping Britain firmly on the United States' side quickly submerged any latent doubts Washington felt about the continuation of its imperial power in various forms. Both the U.S. Navy and the War Department wished to establish permanent bases on the formerly Japanese-controlled islands. The State Department, too, sought bases, but with UN sanction and theoretically under UN control. Simply to annex the islands, as the military urged, would allow the British to claim the same right elsewhere, particularly in the Middle East, and endanger, as Secretary of the Interior Harold Ickes put it, "our great stake in Middle Eastern oil."

Whatever its political form, Washington unswervingly advocated an integrated world economy open to American interests. Independence, when and where it came, would be for states capable of playing a role in an integrated world order congenial to U.S. designs, a paternalist attitude that further subordinated anticolonialism to American needs. Self-determination as an absolute principle had no vocal spokesmen in Washington.

Precisely because the United States entered the postwar era with its earlier experiences and obsessions profoundly coloring its perceptions of the future, there was a continuity between its policies after 1945 and its earlier problems. Indeed, while its fear of the Left increased dramatically after 1944, culminating in its Cold War fixations, the United States prewar definitions of its goals and needs remained, so that it was not at all surprising that they later deeply influence its policies and action in various nations where the Left was either weak or nonexistent. And because it believed profoundly in the efficacy of its institutional proposals for an integrated postwar world economic and political structure, it assumed that the implementation of this program would prevent the growth of the radical Left everywhere in the world, the Third World included. If one looks at the plans for the World Bank or International Trade Organization (ITO) formulated and made public during 1945, one is immediately struck by the fact that they subordinated the problems of the Third World to the reconstruction of a world economy in which the United States and Western Europe are the principal partners, while the needs and problems of Asia, Latin America, and Africa were incidental and, implicitly, to be dealt with as a by-product of solving difficulties elsewhere.

For the United States, given its official belief in the allegedly complementary nature of national economies that are open to each other and trade freely, this indifference to developments in the poorest regions was logical. The United States was not, in reality, concerned chiefly with either the
economic or political problems there.


Confronting Turbulent Asia
As America's only true colony in the twentieth century, the Philippines is the single best example of its impact on the political and economic life of any nation because only there could it freely impose its desires. And it is the one case ... to translate the ambiguities of American ideology and proclamations into realities that reveal best the complex interactions among local social forces and economic changes, U.S. interests, and the needs of the Filipino people.

It was in the Philippines, too, that America's colonial domination produced an economic and political structural legacy that was profoundly to define all of the important issues of Filipino life after 1945. The United States built upon the landed oligarchies it found in place after its conquest of the islands in 1899-1901. Regional politics, with its largely family-based local alliances, became the hallmark of the American-imposed political structure after 1907 as United States-style boss politics and patronage merged naturally with the existing social order, co-opting some new members into the local ruling class but leaving its basic institutional role unchanged. In most of the fifty-one provinces, many isolated by the sea and languages, oligarchies with economic and political power entrenched themselves permanently so that the only significant political party, the Nacionalistas, constituted little more than ever-shifting coalitions of regional political machines with scarcely any commitments save to their own immediate economic needs and the control of power. Patron-client relations mitigated some of the exploitive edges of such a system for the masses, as family and patronage ties or outright vote-buying provided for a few of the urgent economic needs of the politically loyal poor m a highly stratified social and economic structure; but while residues of this system persist even today, it began to break down in a number of strategic provinces during the 1930s.

The main factor eroding the paternalistic, oligarchical political order the United States chose to call democracy in the Philippines was the commercial transformation of the overwhelmingly dominant agricultural economy on which the oligarchy's power was largely based and that employed the vast majority of the nation. From 1909 onward the United States imposed reciprocal free trade on the Philippines and greatly stimulated the production of export-oriented commodities geared to the highly profitable American markets. To satisfy the demand for sugar, coconut products, and the like, capital investments transformed labor and land utilization in ways that made the new rural social conditions far more exploitive and eliminated many small farmers. In central Luzon, in particular, growing population pressures also produced land shortages, and the collapse of the U.S. market for Philippine commodities during the 1930s began to radicalize large sectors of the poor peasantry as purely commercial considerations replaced the agricultural system's paternalism. Usury, excessive dependence on cash crops with unstable prices rather than production for family consumption-all the typical forces that sharply reduce living standards and transform peasants from being acquiescent beasts of burden into angry activists-were already in motion before the Second World War.

These structural changes created increased mass pressures for social and economic reforms in the years prior to World War Two, when "with few exceptions," to quote a CIA report, the normally highly opportunistic economic and political elite chose to protect its interests by collaborating as loyally with the Japanese as they had with the Americans, thereby delegitimizing itself both in the eyes of the people with social grievances as well potentially, as those of their colonial masters.' The most important puppet the consummately ambitious Manuel A. Roxas, had been the chief prewar rival of President Manuel Quezon and Vice President Sergio Osmeha, both of whom went into exile. But a large majority of the Japanese-controlled National Assembly were former senior political figures, and Quezon's prewar cabinet simply continued to work for the new occupiers. While some collaborators also tried to hedge their interests by maintaining discreet contacts with the guerrillas who formed throughout the country under both U.S. and Communist leadership, most played their new roles loyally, made fortunes and survived as comfortably as possible the exceptional ravages the war and occupation imposed on the nation.

The question of how to treat these collaborators was, in essence, one that touched fundamentally the future of the traditional ruling class, the nature of those who might replace them, as well as the Philippines' postwar role as a bastion of American power in East Asia. General Douglas MacArthur, commander of the campaign to recapture the Philippines, had lived there for decades and knew the elite well. While he preferred initially to rely upon those who had worked with the guerrilla groups directly under U.S. control, they were too inexperienced and small in number, and he was determined above all to keep the Hukbalahap guerrillas, comprised of radicalized poor peasants concentrated in central Luzon and with important though not exclusive Communist leadership, out of power. Whatever official Washington's position for removing collaborators from authority, MacArthur ignored it when he disagreed with it, and he was allowed to define and implement the policy. As American forces began to retum to the islands after October 1944, they fired most collaborators, and eventually fifty-five hundred were charged, though wealthier ones were freed on bail, and their trials were to be the responsibility of the Philippines government, whose independence was then being negotiated. Meanwhile, at the beginning of 1945, the Americans used their local allies to attempt to disarm the Huks, and in February arrested their leaders.

On April 18, 1945, it was announced that a "liberated" Roxas had been released from prison while his colleagues remained behind bars. Restored to his prewar brigadier generalship in the United States-controlled army, the close friend of MacArthur now had his highly dubious wartime secret contacts with Americans used as an excuse to impose a United States-approved political solution on the dangerously fragmented and unstable struggle for power and legitimacy in the Philippines then taking place. Roxas won American approval because in 1945 he confided to key U.S. officials that he was not for the basic principle of independence. As Paul V. McNutt, who had been U.S. high commissioner during 1937-39 and who was reappointed in 1945 reported, "Roxas has indicated by word and deed his desire to follow American pattern of government and retain closest ties with us in all matters. ,, ,"2 Signs of America's benediction quickly won the ever-accommodating Roxas the support of ambitious politicians and members of the economic elite who regarded him as a winner, and soon he was restored to his position as president of the Senate. In April 1946 he was elected the first postwar president and, parenthetically, two years later was to grant amnesty to all accused collaborators. It was in this political context, so completely under U.S. control, that the United States negotiated the ostensible legal independence of the Philippines to which it had committed itself a decade earlier. These negotiations had to take into account the economic interests that had been built up by both sides during the entire colonial period. On one

With the Philippines nominally an independent state but in fact still economically and politically a U.S. colony, the Roxas coalition of opportunistic politicians and factions interested in the boodle essential to their machines' cohesion proceeded to reimpose the same exploitive politics that had marred the nation's political life consistently until then. The coalition was completely devoid of nationalist impulses or broader social goals in a war-torn nation plagued with vast human misery and now sinking more deeply into the vortex of civil war. Roxas' first years were characterized by the return to traditional vote-rigging and buying, which began with the Senate election of November 1947, and corruption in the allocation of all-too-scarce government funds. The Huks and its peasants' union were outlawed in March 1948. By the time Roxas died suddenly on April 15, 1948, the exclusion of the Left from the political process and the absence of any reforms to deal with massive poverty guaranteed the spread of civil conflict, and as many as ten thousand people took up arms with the Huks.

The new president, Elpidio Quirino, proved no better than Roxas, and his successful reelection effort in 1949 was the most fraudulent and expensive in the Philippines until then. While senior American officials in early 1948 had hoped that the Philippines would continue as a primary base in the region and take care of its own internal affairs, by 1949 the economic consequences of the existing political leadership as well as the terms of the Bell Act, which in order to tie up bilateral trade had also pegged the peso to the dollar and made them freely convertible at a rate the Filipinos could not alter, had produced economic chaos that threatened also to undermine U.S. security interests. With fully four-fifths of its imports coming from the United States and nearly that proportion of its exports directed to it, the Philippines was still as much of an economic colony as it had been before independence. Rampant inflation and rising unemployment, the excessive importation of U.S. goods, and then massive capital flight were too much to bear, and at the end of 1949 the United States was forced to concede Manila the right to impose exchange controls. "The center of this [Far Eastern] circle is the Philippines," an exasperated Dean Acheson told a closed meeting of senators in February 1950. "The Philippines are our particular interest and ward. We brought them up," but their behavior was still "childlike," their economic problems "very severe," the risks coming less from the Huks, which "I do not think started out" as Communists, than from "disintegration." With the men it selected implementing the policies it imposed, the United States' most ambitious venture in the Far East after 1945 and showcase for its ability to transfer the American way of life to a new nation was heading toward disaster.


Latin America: The Nationalist Challenge
The United States' main problems in Latin America from the end of World ~ War Two until 1960 differed dramatically from those in the other major Third World regions, for they involved not the alleged menace of Russia and communism but rather the emergence of conservative forms of nationalism-a challenge that has persisted in various guises since then. Precisely because this movement grew out of specific Latin American conditions and was unrelated to the United States' far greater preoccupations with communism, the Left, and the legacies of the demise of European power elsewhere, Washington preferred virtually to ignore its hemisphere during this period as much as possible.

What the United States confronted in Latin America was an alternative concept of national capitalist economic development that rejected fundamentally its historic objective of an integrated world economy based not simply on capitalism but also on unrestricted U.S. access to whatever wealth it desired-hegemony rather than cooperation. Nowhere else were the underlying bases and objectives of U.S. foreign policy revealed so starkly, without the obfuscating intercession of the problems of either communism or socialism. Rather than some amorphous concept of an Open Door accessible to all capitalist nations, power and gain for the United States in economic terms from the inception was the foundation of both its policies and its actions in the Western Hemisphere.

Of a number of Washington's efforts to reverse the trend toward nationalism, those involving oil were the most important. It was official policy that it would always "encourage and facilitate" U.S. firms' involvement in oil development "not merely because of the readier access which such participation would guarantee to us but also because . . . the technical and managerial skill of the American petroleum industry is preeminently competent to insure the prompt and efficient development of resources anywhere." Whatever the sovereign right of a state to nationalize, it was formally opposed to it in oil as being confiscatory in practice. In Mexico, where the government had nationalized U.S. firms in 1937, Washington persisted relentlessly in attempting to get American producers back into the country, systematically preventing loans or spare parts from reaching the state oil company. And in Brazil it actively opposed the creation of a national oil company.

But it was in Venezuela, whose oil output far exceeded that of the entire continent, that Washington's efforts to protect its oil firms brought to the fore the larger issue of the possible role of the region's military in attaining U.S. objectives and protecting its interests. The Accion Democratica party of moderate liberals had taken power there in late 1945 with the cooperation of junior officers, and it overwhelmingly won the fair December 1947 elections. While thoroughly anti-Communist, it also had a reform program that threatened the U.S.-owned oil companies, the traditional oligarchy, and the army. In November 1948 a junta, with oil companies' support, overthrew the government, and U.S. producers continued to profit handsomely under a dictatorship that was to last ten years. Despite the fact that the State Department had in December expressed concern about military coups against democratically elected regimes, the following month it recognized the new junta.

The relationship of the United States to the Latin American military in this period was made more complex by the fact that in many nations the military was frequently a crucial supporter of nationalist economic strategies, as in Brazil and Argentina. In such cases nationalism and the absence of basic democratic rights frequently were synonymous. The United States issued declarations against oppressive regimes in the hemisphere and even opposed an Argentine suggestion in August 1947 to make anti-Communist agreements for fear they would be used as a justification by quasi-fascist governments not only to squelch internal dissent and retain power but also to pursue their economic programs. With officers found in both the pro- and anti-U.S. camps, it was inevitable that U.S. policies appear tortured as Washington began to explore after 1946 the possibility of gaining the maximum possible from the Latin American military's growing role as a political mediator as well as its potential for becoming the dominant force throughout the hemisphere.

The issue of relating to the Latin American officers corps could not be delayed indefinitely because the military's importance led many of these nations also to seek to modernize their armies' equipment, and in the period after 1945 the United States was the only possible source. The War Department in 1946 favored allowing such purchases, while the State Department thought most Latin American nations could not afford them. But the War Department argued that if the United States did not supply the arms these states would eventually turn to Europe, which would then send military training missions and would only further undermine existing U.S. influence. Keeping these armies standardized to its equipment and advisers was justified also because it would neutralize a transmission belt for European ideas- ideas that had in the past included, among other things, fascism. More to the point, as a War Department representative explained to a secret hearing of Congress, "In those cases where the army or the navy does not actually run the government, they come so close to it that any influence on them has great national importance to those countries. Our military missions there are working with the most influential people in those governments." And at the very least they were good anti-Communists. Immediately after the so-called Greek-Turkey crisis of March 1947, Acheson reversed the State Department's opposition, and the strategy of integrating and wooing the Latin American military was initiated. While the State Department developed disingenuous justifications for its convoluted recognition policy and de facto support for military dictators, real or incipient, Washington's most senior leaders assiduously avoided thinking about the problems of the region and the paradoxes of their assorted policies. , -

Latin America was closest to the United States and of far greater economic importance than any other Third World region, but senior U.S. officials increasingly dismissed it as an aberrant, benighted area inhabited by helpless, essentially childish peoples. When George Kennan was sent to review what he described as the "unhappy and hopeless" background there, he penned the most acerbic dispatch of his entire career. Not even the Communists seemed viable "because their Latin American character inclines them to individualism [and] to undiscipline," and he was certain that Moscow regarded them, as he himself did all Latin Americans, "with a mixture of amusement, contempt, and anxiety." In the end, he advised, where popular governments could not cope with the Communists, "then we must concede that harsh governmental measures of repression may be the only answer" from authoritarian regimes, and the United States would have "to be satisfied if the results are on balance favorable to our purposes." While Kennan's brutal analysis caused the department to bury his report, his successor as head of State Department policy planning, Louis Halle, at the same time published an anonymous essay in Foreign Affairs arguing for an attitude of noblesse oblige. Pursuing the motif of the "childish" nature of the area, he condescendingly argued that if the United States treated the Latin Americans like adults, then perhaps they would learn to behave like them.

Whether Washington's increasingly petulant mood toward Latin America would be translated into policy remained to be seen, depending as it did on what other issues it had to consider elsewhere in the world. Implied in it, however, was that the hegemony the United States exercised over the economic domain would also have to apply to politics in order to protect the most critical aspect of the U.S. relationship to the hemisphere. In brief, during the first postwar years Washington opposed the main thrust of hemispheric political life toward nationalism, which as yet possessed only a minor leftist, much less Communist, dimension. The fact that large sectors of both the Center and Right especially disturbed the United States and challenged its interests revealed most about its hegemonic objectives in the Third World where neither geopolitical considerations nor nominal European allies constrained it.

Confronting the Third World

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