Democracy by Applause

excerpted from the book

In the Name of Democracy

U.S. Policy Toward Latin America in the Reagan Years

by Thomas Carothers

University of California Press, 1991



During the 1970s, most of South America was under military rule. In many South American countries leftist guerrilla movements arising in the late 1960s had been defeated through brutal force in the early and mid-1970s, scarring societies with a legacy of deep political divisions and harsh repression. In the first half of the 1970s, U.S. relations with South America were generally positive, resting on common anticommunist sympathies and a tradition of close U.S. relations with the military elites of the region. During the Carter years, however, relations with a number of South American countries soured. Carter was unsympathetic to the South American military governments and made human rights an important issue in U.S. policy toward the entire region, most notably toward Brazil, Argentina, and Chile. The South American military leaders, accustomed to uncritical friendship from the United States, were greatly annoyed by the criticisms of their domestic behavior emanating from the State Department and White House. Trade issues also produced conflicts.

As political and economic relations deteriorated, military cooperation diminished as well. Formal and informal military ties, including training, assistance, and reciprocal visits, declined in the 1970s. The United States fell from being the largest supplier of arms to South America in 1974 to the fifth largest in 1980...

The incoming Reagan administration was determined to rebuild relations with South America, particularly with Brazil, Argentina, and Chile, three of the most important countries of the region and three countries with which U.S. relations had distinctly worsened in the Carter years. The impetus for rapprochement was rooted in the administration's fervent anticommunist outlook, in particular its acceptance of Jeane Kirkpatrick's arguments regarding the necessity of supporting anticommunist, authoritarian governments in developing countries as alternatives to leftist totalitarian rule. For the early Reagan team, the military leaders of Argentina, Brazil, Chile, Uruguay, and other South American countries were prime examples of the sort of moderate authoritarians who merited United States backing.

Underlying this view of a necessary choice between authoritarians and totalitarians was the notion of a worldwide communist or totalitarian threat. Kirkpatrick and the early Reagan team believed that the entire Third World was a target of Soviet expansionism. Although the Reagan administration saw Central America as the immediate target of Soviet-Cuban expansionism, it also believed that South America (and in fact the whole world) was in danger.

The Reagan administration's rapprochement with the military governments of South America got underway in early 1981 and quickly took shape as a multifaceted effort involving the upgrading of diplomatic contacts, the adoption of "quiet diplomacy" on human rights, and an attempt to reinvigorate U.S.-South American military assistance and cooperation.

The Reagan administration's abandonment of Carter's high-profile human rights policy and the adoption of a policy of quiet diplomacy on human rights eased the path of rapprochement. President Reagan and his foreign policy advisers strongly disliked Carter's human rights policy; they were convinced that high-visibility human rights criticism of friendly anticommunist governments was counterproductive to U.S. security interests and of minimal utility in obtaining improvements in human rights. The administration quickly substituted what it called a policy of "quiet diplomacy" on human rights. In principle this policy was to consist of low-key, behind-the-scenes advocacy on human rights issues. In practice, at least in the early 1980s, it meant that human rights issues were essentially dropped from the agenda of U.S. relations with Brazil, Argentina, Chile, and other countries led by right-wing military governments.

The Reagan administration's later policy of support for democracy in South America was notable more for what it lacked than what it contained. The main challenge facing emerging democratic governments of South America in the 1980s was improving their stagnant economies. The recession that hit South America in the early 1980s proved to be not only of unprecedented severity but also unexpected persistence. Although the recession in the industrialized countries that had begun in 1979 eventually lifted, almost all of the South American countries remained plagued by low to nonexistent growth, high inflation, rising unemployment, and a steady decapitalization resulting from elevated levels of debt service payments and a decline in foreign investment. The calamitous economic situation created strong pressures on the newly democratic governments of the region. Although these governments generally had much initial domestic support, their ability to consolidate and keep that support depended on their economic achievements. Just as economic problems had been instrumental in the downfall of many of the military governments of the region, so economic performance would be one of the principal criteria by which the new governments were judged.

The negative political effects of this economic stagnation | mounted steadily. The problems of unemployment, inflation, and chronic shortages of government funds eroded public confidence in the new democratic governments of the region and sowed the seeds of heightened civil tension and conflict. Many South Americans, particularly the younger generation, many of whom had never lived under democratic rule before, began to associate democracy with economic chaos and decline...

As the political strains generated by the economic situation in South America increased, South American leaders pressed the Reagan administration to adopt a more forthcoming economic policy, particularly with regard to the debt crisis. Their general argument was that the Reagan administration was failing to recognize or acknowledge the political effects of the economic crisis in South America and they urged the administration to back up its stated commitment to democracy in the region with real economic deeds...

The general message about the inevitable connection between the economic problems and the future of democracy was usually accompanied by specific urgings that the administration adopt a debt policy aimed at debt reduction rather than just increased lending and economic growth...

The Reagan administration resisted these pressures, however, and stuck to its noninterventionist approach. It was only with the departure of the Reagan administration and the arrival of the Bush administration that a new policy appeared. In 1989 Bush's Treasury Secretary, Nicholas Brady, launched a new debt policy, known as the Brady Plan, which incorporated a debt reduction element.

It is interesting to examine why the Reagan administration remained steadfastly attached to its noninterventionist approach to the economic crisis in South America in the face of the rather obvious failure of the policy and the broad-based criticism it received. The main reason the administration did not adopt a more responsive policy was that most high-level administration officials (though certainly not all the career staff within the Treasury Department and State Department) were sincerely convinced that debt relief would have harmful consequences for the debtor countries (by hurting their long-term creditworthiness) and that the essentially free market approach of renewed lending and structural reform would eventually succeed. The policy also reflected the administration's tendency to separate the economic and political aspects of the situation in South America and not formulate economic policy on the basis of political considerations. The question of economic adjustment measures by South American governments, for example, was seen by the administration as an almost purely economic issue. For the South American leaders confronted with the task of trying to cut budgets and reduce public sector employment, however, it was almost a purely political issue. The U.S. officials behind the debt policy often did not seem aware of the degree to which austerity measures were politically difficult for the new democratic governments of South America. Instead they shook their heads over what seemed to them to be the stubborn ignorance of the South American leaders and despaired of ever seeing the prescribed structural reforms carried out.

More generally, the administration showed little appreciation of the damaging effects of the endless economic crisis in South America on the recently revived democratic political life of the region. Among some officials there was a strong, somewhat self-righteous sense that the debtor nations had made their bed (by borrowing so heavily in the 1970s) and would just have to lie in it. Often combined with that was the belief that some of the South American nations (particularly in the Southern Cone) were not as bad as they let on and that another few notches worth of belt-tightening would not really hurt them.

When confronted with the charge that the administration's debt policy was jeopardizing the democratic gains, U.S. officials tended to respond by pointing out that no military coups had occurred. This response reflected a short-term "quarterly report" style of political analysis that unfortunately characterized the administration's attitude about democracy in South America. As long as the Reagan administration could make it to January 1989 with no coups or sharp political reversals occurring in South America, it could claim that its prodemocracy policies were successful. Missing from this outlook was any sophisticated consideration of the longer-term political consequences of the decapitalization of South America and the recognition that consolidating democracy was not simply a matter of getting these first democratic governments through to the next election but a generation-long effort of building the necessary economic and political foundations for stable democratic societies.

The administration's unwillingness to let political considerations intrude into its economic policy toward South America was also the result of relative priorities. The administration's debt policy was rooted both in the administration's policy convictions and its strongly held desire to protect U.S. lender banks. The political interest in question-the well-being of the nascent democratic systems of South America-was simply not that important to the administration. Despite its numerous statements of support for the return of democracy to South America, the administration had little real interest in South America's political situation. As a general matter, the Reagan administration's only really strong interest in Latin America was preventing the spread of leftism in the region. That interest led to a high level of involvement in Central America for the duration of the Reagan years, owing to the presence of a leftist government in Nicaragua and of leftist rebels in El Salvador. In South America it led to an initial attempt to rebuild relations on the foundation of shared U.S.-South American anticommunist concerns. After that effort failed ... the administration had no real impetus for paying much attention to South America.

The administration did welcome the democratic trend in South America but largely as a spectator applauding a distant occurrence. The dominant characteristic of Reagan's South America policy was the remarkably low level of attention to the region that it entailed. Despite the fact that South America contains the bulk of Latin America's territory, population, and wealth, the Reagan administration essentially ignored it, devoting what interest it had in Latin America to Central America, particularly Nicaragua. It is difficult to quantify this lack of interest in South America. It is evident, however, if one looks at any measure, such as the number of speeches given about the region, the time and energy the policy-making apparatus devoted to it, or the U.S. government funds committed to it. President Reagan gave more speeches about Nicaragua in one year (1986) than he gave about any or all of the South America countries in his entire presidency. Possibly only Africa and a few parts of Asia were of less interest to President Reagan and his foreign policy advisers than was South America.

In sum, the administration's Latin American debt policy remained an economic policy rooted in economic interests external to the region; concern over South America's political fate was not sufficiently great to constitute a major factor in the policy. To the extent that the Reagan administration did draw a connection between its economic policy toward South America and the political situation there, it believed that its advocacy of free market policies would actually strengthen the cause of democracy in South America. This outlook was based on the notion of a natural link between free market economics and democracy, or in the terms often used by administration officials, between "economic freedom" and political freedom. High-level administration officials, such as Secretary of State Shultz and Deputy Secretary of State John Whitehead, frequently lectured South American leaders on the value of adopting free market policies, arguing that such policies would not only lead to rapid development but would also contribute to the strengthening of democracy. As Shultz put it on one occasion:

I believe freedom and economic development go hand in hand.... Our support for democracy complements our support for economic development and free markets-and vice versa.

This credo regarding the natural complementarity of free market economic policies and democratic development was adopted by AID, which in the early 1980s had adopted an emphasis on private sector development in U.S. economic assistance and in the mid-1980s sought to connect this economic approach to the sweeping democratic trend in the region. If the administration had simply been arguing that democratic political systems are almost always associated with capitalist economic systems broadly defined, there would be little to question.' In fact, however, what administration officials were telling Latin American governments was that a particular type of capitalism, the Reagan administration's free market version, is more compatible with democracy than any other kind of economic system. This argument was more ideological and much less well-founded. In Western Europe, many variations of capitalism, including social-democratic ones, have combined quite well with democratic political systems. Given that many Latin Americans look to Western Europe more than to the United States for political and sociocultural models, the Reagan administration's argument was not particularly persuasive. Furthermore, administration officials were not merely asserting that democracy and a certain type of capitalism usually occur together, but that free market capitalism will tend to promote democratic development. This argument entails a considerable empirical leap of faith. The historical record is that democracies are almost always capitalistic, not that capitalistic countries are almost always democratic. There are no solid grounds for arguing that countries with a weak or absent tradition of democracy will tend to become democratic if they adopt free market policies. Free market policies have proven to be fully compatible with highly authoritarian governments in many developing countries, such as in many Asian countries since World War II.

The administration's argument was weak not only in general theoretical terms but also in relation to the specific historical experience of Latin America. Free market economic policies in Latin America have traditionally been associated with dictatorships, not democracies. The private sectors of many Latin American countries bear little resemblance to the mythical ideal of hard-working, hardheaded entrepreneurs that Reagan administration officials subscribed to. They are usually economic elites, often quite antidemocratic in conviction and in practice, usually held together by class affiliations and often enmeshed in deeply corrupted cooptive relations with the state. In the past at least, free market policies in Latin American countries have often meant allowing these dubious private sectors a free rein to exploit their structural advantages in order to enrich themselves further at the expense of a working class that is confined to a subsistence level existence. Free market policies have also meant reducing the already minimal protective net for the working class, which, when combined with the additional hardships and dislocations produced by free market policies, has greatly aggravated existing sociopolitical tensions. In the past, only dictatorships have been able to control those tensions-through violent repression.

A recent major study of economic development strategies in Latin America highlights this troubled relationship between free market capitalism and democracy:

This more modern kind of repression [South American authoritarian governments of the 1970s] has very special characteristics: it combines free-market economics with destruction of democratic institutions and systematic use of terror to paralyze opposition. At the very least, the combination suggests that democracy and capitalism do not easily go together in contemporary Latin America. To put it more strongly, the fundamental issue may be that informed majorities given the chance to express their preferences can usually be expected to vote for promises to control markets, shut off international competition and foreign investment, and use government rather than private enterprise as the main force shaping economic development.

In the late 1980s a trend arose in which Latin American majorities did vote for political leaders promising free market policies, a phenomenon that may be interpreted either as an evolution of Latin American societies or simply the result of desperate populaces frustrated with all other solutions to their economic plight. In any case, in arguing for a simplistic equation of free market policies and democracy in Latin America, the Reagan administration displayed considerable ignorance of the troubled reality of that issue in Latin American history.

Despite its low level of interest in South America, the Reagan administration did not shy from taking credit for the resurgence of democracy there. In 1985, for example, Assistant Secretary of State Abrams asserted that the Reagan administration's policy was one of the principal causes of the redemocratization of South America. This claim was repeated in later years as part of the administration's general claim to having played a key role in the resurgence of democracy throughout Latin America. Administration officials did not explain exactly how U.S. policy toward South America had fostered the democratic trend; their arguments about a U.S. role seemed to rest on the vague notion that frequent expressions of support by the administration for the democratic trend somehow translated into a powerful assist.

In the Name of Democracy

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