The Sword of Damocles: U.S. Financial Hegemony in Colombia and Chile, 1950-1970
Abstract
Focusing on Chile and Colombia during the 1950s and 1960s, Kofas examines the impact of IMF, World Bank, and U.S. foreign policy on the economies and social and political institutions of Latin America. Far from fostering democracy and social justice, foreign loans and aid were major impediments to these ideals. Symptomatic of systematic underdevelopment, cyclical Third World foreign borrowing and debt crises have been responsible for maintaining the debtor nations integrated into the global market economy, perpetuating their dependency, and maintaining low living standards. Comparing Colombia and Chile, the book examines the complex factors of domestic and international forces that account for structural underdevelopment in the Third World.
A study on the historical antecedents of globalism and its impact on the Third World, this book analyzes the interplay between IMF, World Bank, and U.S. foreign policy in shaping the economies of the Third World through loans that are the catalyst to global integration. Through its in-depth look at a complex topic, this book will prove provocative and valuable reading to students of globalization, inter-American relations, international finance, Latin American History, and U.S. diplomatic history.
... O selo de "bom comportamento" atribuído pelo Banco (e também pelo FMI) acompanhou a construção da relação dessas entidades com os Estados clientes, a partir das visões e prioridades estabelecidas pelos EUA (cf. Kirk, 2010;Heras, 2008;Toussaint, 2006;Kofas, 2005Kofas, , 2002Kofas, , 2001Kofas, , 1999Kofas, , 1995. No auge do planejamento econômico centralizado, os relatórios anuais do Banco Mundial (p. ...
Com mais de 75 anos de história, o Banco Mundial tem evidenciado notável capacidade de crescer de maneira incremental, adaptando-se às mudanças da economia política internacional. Este artigo analisa a construção do Banco Mundial como ator político, intelectual e financeiro do desenvolvimento capitalista internacional, discutindo as formas pelas quais se deu essa construção, que meios principais foram utilizados, que contradições ele enfrentou e a quais pressões e interesses respondeu. A despeito da fachada técnica, o Banco sempre atuou, ainda que de diferentes formas, na interface dos campos político, econômico e intelectual, em função da sua condição singular de emprestador, formulador de políticas e indutor de ideias e prescrições sobre o que fazer em matéria de desenvolvimento capitalista. Nessa trajetória sinuosa, mas ascendente, o Banco assumiu um lugar central entre as demais agências de desenvolvimento nascidas após a Segunda Guerra Mundial. O texto se baseia em documentação primária e vasta bibliografia. O argumento central é o de que o Banco Mundial somente se consolida como agência de desenvolvimento com a gestão de McNamara (1968-81).
... This vision shaped an orthodoxy, in the face of which distinct visions about other possibilities and paths for capitalist development were abandoned (Alacevich, 2009). It is true that when political questions were in play, this obligation did not prevent the Bank from camouflaging credit to fund imports and relieve crises in balances of payments as if they were loans for specific projects; nor did it prevent the denial of loans to countries whose governments were considered hostile, or inundating with soft loans of countries whose governmental loyalty was seen as vital for the economic or security interests of the US (see Gwin, 1997;Hudson, 2003;Kapur et al., 1997: 123, 136;Kofas, 2001Kofas, , 2002Kofas, , 2005Payer, 1982). However, generally speaking, only loans for productive projects were allowed. ...
This article analyses the actions of the World Bank between 1968 and 1981, under the presidency of Robert McNamara, in the context of the Cold War and the directions of US foreign aid policy. It discusses the reasons for, and the means by which the World Bank led, the ‘assault on poverty’, with an emphasis on rural poverty. It problematizes the theory which supported this initiative, analysing its operationalization in the countryside; it discusses the principal format that it assumed, the reasons which propelled it, the political calculation which guided it, the interests at play, and the results that were reached. Finally, the article argues that the ‘assault on poverty’ slogan expresses the disposition and the willingness of the World Bank to intervene in domestic questions, aiming to alter, in a selective and focused manner, the condition of particular social groups in client countries, rather than improving the general conditions of economies. This in turn demanded the strengthening of its advisory, technical assistance and economic research functions. If McNamara's policy of fighting poverty can be considered a failure in economic and social terms (a diagnosis widely accepted in the literature), this article argues that, politically, it was successful by constructing the foundations for the neoliberal‐type focused social policies that were in vogue in the following decades.
... A key question is to what extent the borrower's type of regime influences the chances of receiving multilateral lending and/or loan conditions. Schultz and 5 For works on WB-Latin America prior to the Washington Consensus, see, among others: García Heras (2008), Kedar (2010Kedar ( , 2012, Kofas (2002), Urzúa (1997). 6 For works on the Third Peronism's economy, see, among others: Di Tella (1989), Leyba (2003), Rougier and Fiszbein (2006), Sidicaro (2011). ...
Through the analysis of Argentina-World Bank (WB) relations between 1971 and 1976, this article examines how democracies and dictatorships, as well as political and economic constraints did (or did not) impact WB lending to Latin America. This period is especially revealing. Between May 1971 and September 1976, the WB did not grant any new loans to Argentina, thereby generating an exceptional and unusually long break in WB lending to the country. Drawing on previously undisclosed files from the WB Archives and additional primary sources from Argentina and the United States, this article unveils the actual mechanisms, criteria and justification that stood behind the decision to lend or not to lend to Argentina. It maintains that the WB’s self-imposed principle of «neutrality» played a crucial role in facilitating the WB’s relations with Argentina during the politically and economically unstable early 1970s.
Between June 1959 and March 1964, the democratic governments of Brazilian presidents Juscelino Kubitschek (January 1956 – January 1961), Janio Quadros (January–August 1961), Ranieri Mazzilli (August–September 1961) and João ‘Jango’ Goulart (September 1961 – April 1964) received no support from the World Bank (WB), which refused to fund even a single new project during this period. During this same period, and, more specifically, between July 1958 and January 1965, the International Monetary Fund (IMF), the WB's twin institution, granted financial assistance to Brazil only twice: a controversial and highly conditional Stand-By Arrangement (SBA) signed in May 1961; and a non-conditional and automatically approved Compensatory Financial Facility (CFF), granted in May 1963 to compensate Brazil for the decrease in coffee prices on the international market.
This attitude towards Brazil changed significantly following the military coup of March 1964. Money flowed into the country and by 1970 Brazil had become the largest receiver of WB funds and a chronic borrower from the IMF, signing two SBAs in 1965, and one per year between 1966 and 1972. We use recently disclosed material from the International Monetary Fund and the World Bank archives to analyse the relationship of these two institutions with Brazil and to foster the debate on their political neutrality, arguing that the difference in the IMF's and especially the WB's relations with the military regime reflected, more than anything else, the existence of an ideological affinity between the parties with regards to the ‘right’ economic policy.
This chapter hones in on the relationship that unfolded between international businesses and the dictatorship of Gustavo Rojas Pinilla from 1953 to 1957. The sale of Canadair jet fighters to Colombia is used as a case study to illustrate the views and perspectives of international businesses interested in capitalizing on the military regime’s effort to open up the national market to the international business community. The case study reveals how the military regime became the gateway to Colombia’s modernization, an economic development initiative that was heavily dependent on foreign direct investment as a strategy to jumpstart the Colombian economy. Ultimately, it sheds light on how Canadian-Colombian relations evolved during the second half of the twentieth century.
This chapter studies the type of community development programs and projects in South America before and after the arrival of the Peace Corps in the 1960s. This discussion complicates the unidirectional North-South narratives around development and sheds light on the challenges that the Peace Corps volunteers encountered. The young Americans often confronted unexpected contexts in which the ideological visions and partisan politics, as well as the changing political scenarios during the decade, compelled them to adapt and negotiate their own social intervention paradigms. To this end, the chapter discusses experiences in Chile, Colombia, and Peru. It also provides a succinct view of programs promoted by the Catholic Church in South America. These programs organized by the church and other actors working from within South American did not run parallel to the Peace Corps’ efforts. On the contrary, volunteers collaborated precisely in these local programs and dialogued with the plans, paradigms, and local visions of community development.
The colonial heritage and its renewed aftermaths – expressed in the inter-American experiences of slavery, indigeneity, dependence, and freedom movements, to mention only a few aspects – form a common ground of experience in the Western Hemisphere. The flow of peoples, goods, knowledge, and finances have promoted interdependence and integration that cut across borders and link the countries of North and South America together. The nature of this transversally related and multiply interconnected region can only be captured through a transnational, multidisciplinary, and comprehensive approach.
The Routledge Handbook to the History and Society of the Americas explores the history and society of the Americas, placing particular emphasis on collective and intertwined experiences. Forty-four entries cover a range of concepts and dynamics in the Americas from the colonial period until the present century:
• The shared histories and dynamics of inter-American relationships are considered through pre-Hispanic empires, colonization, European hegemony, migration, multiculturalism, and political and economic interdependences.
• Key concepts are selected and explored from different geopolitical, disciplinary, and epistemo-logical perspectives.
• Highlighting the contested character of key concepts that are usually defined in strict disciplinary terms, the Handbook provides the basis for a better and deeper understanding of inter-American entanglements.
This multidisciplinary approach will be of interest to a broad array of academic scholars and students in history, sociology, political science, cultural, postcolonial, gender, literary, and globalization studies.
This article analyzes the history of the World Bank during its first fifty years. It is
argued that since its beginnings the Bank has used credit as a lever to expand its influence
and institutionalize economic ideas, concepts of the world, and political prescriptions
in client states. Behind its technical façade, the Bank has always acted, albeit in
different forms, in the interface of the political, economic, and intellectual fields at the
international level, due to its singular condition as a lender, political actor, and inductor
of ideas and prescriptions about what to do in questions of capitalist development, from
an Anglo-Saxon perspective. Based on a wide and varied international literature and the
sources of the institution itself, the text approaches the theme taking into account the US
policy towards the institution, changes in international economic policy, and the principal
decisions of the Bank’s board.
Historians of John F. Kennedy's Latin American policies face a broad conundrum. Kennedy and his advisers pledged themselves, publicly and privately, to transforming hemispheric relationships. They promised to end the quasi-imperialistic and heavy-handed (though occasionally neglectful) policies that they believed marred the long history of US–Latin American relations. However, a consensus has emerged that Kennedy administration approaches were similar in intent to, and possibly even worse than, the regional domination of earlier administrations. The hope for a new kind of relationship between the United States and Latin America never really went away, but short-term concerns, and a shortsighted vision about extant threats, drove Kennedy administration officials to try to micromanage Latin American politics.
This article unveils the continuous and productive relationship that developed between Chile and the IMF during Salvador Allende's presidency (1970–73). This counter-intuitive relationship was made possible by the systematic
depoliticisation
and
technocratisation
of the ties between them. By downplaying ideological discrepancies and keeping a high degree of autonomy, the IMF and Chilean technocrats blurred rigid Cold War divides and circumvented the US-imposed embargo against Allende's regime. The examination of this relationship sheds new light on Allende's positioning in the international arena and provides a unique prism to reconsider dichotomist perceptions of the Cold War in Latin America.
Financial liberalization programs have been adopted by many countries in Latin
America during the past twenty years. Opening the economy to inflows and outflows of
capital – ‘opening the capital account’ – has been a key part of these programs. Many
economists have heralded capital account liberalization as a ‘fast track’ to economic
growth and efficiency in developing countries, partly due to the way that it tightens the
constraints on governments and disciplines them to avoid ‘bad’ policies. Others,
however, have emphasized the dangers of capital account openness, such as its close
relationship with financial crises and the substantial risks it poses for macroeconomic
stability.
While some governments have sustained the opening of their capital account over
decades, others have reversed course after only a short time. The existing literature has
focused on the adoption of capital account liberalization, but has neglected to consider
the reasons for its durability or fragility. My dissertation addresses the question of why
different countries have sustained their opening of the capital account to different
degrees and for different periods. The central argument is that the sustainability of
capital account openness is determined by domestic informal institutions. By informal
institutions I refer to the shared understandings or rules among a country’s
policymaking and business elites about legitimate economic policies. Whether capital
account openness is sustained over time depends on the extent of domestic agreement as
to whether capital controls continue to be effective and legitimate, or whether they have
lost their effectiveness and legitimacy as instruments of macroeconomic policymaking.
Not only is my dissertation the first study of the sustainability of capital account
openness, it is the first to emphasize the importance of informal institutions as distinct
from formal ones.
The next question refers to the factors that determine the content of domestic informal
institutions, such that they favor capital account openness in some countries, and are
much more equivocal in others. My answer emphasizes the legacy of pre-liberalization
state-business relations. Capital account openness is unlikely to be sustained over time
if the export-oriented sector of the economy – concerned about a stable and competitive
exchange rate – preserves its leverage over national policymaking. Conversely, capital
account openness tends to become a durable policy if economic actors benefitting from
capital mobility and largely unaffected by exchange-rate issues dominate state-business
relations.
After the introduction, Chapter 2 describes the essential elements of capital account
policy and explains the methodological approach of the dissertation. Chapter 3 provides
an overview of the literature to explain capital account policy. It distinguishes between
interest-based, institutionalist, and ideas-based approaches located at different levels of
analysis. This review highlights a notable gap in the literature. Analyses of the role of
informal institutions at the domestic level are conspicuously lacking. My dissertation
seeks to fill this analytical lacuna.
Chapter 4 analyzes the international campaign for capital freedom, personified by the
International Monetary Fund. How did the push for capital account liberalization come
into being at the international level, and how has the capital account policy discourse
within the IMF evolved until the present time? Ultimately, the attempt to transform capital freedom into an international norm was not successful. The effects of the Asian
financial crisis in 1997-98 within and outside the IMF undermined the international
norm campaign, symbolized by the failure of the attempt to change the IMF’s Articles
of Agreement in order to give the organization the legal mandate over member-states’
capital account policies. However, the IMF still subscribes to the idea that the free
movement of capital is a desirable policy for all countries.
Yet country responses have been very different. Chapters 5 and 6 examine the link
between IMF prescriptions and domestic policy outcomes, fleshing out the central
argument with case studies of Peru and Colombia, respectively, in the time period from
1990 to the present day. Both countries shared similar economic challenges, a national
community of elite economists convinced of free-market principles, and outside
pressure from the IMF. At the start of the liberalization period in the early 1990s, both
switched from a largely closed to a largely open capital account. However, due to the
effect of different informal institutions based on different state-business relations, Peru
and Colombia then followed different paths. The two cases serve to illustrate that, in the
broader context of financial liberalization, socially shared understandings about
legitimate economic policies reinforce or constrain the impact of international norms,
thus making – or breaking – attempts at economic reform.
Scholars interested in explaining the sustainability of neoliberal economic reforms and
the impact of international norms and ideas on domestic policy choices ignore the role
of domestic informal institutions at their peril. Traditional approaches focused on
material interests, formal political and economic institutions, and global norms and
ideas fail to account for the variation of capital account policy in an age of mobile
capital. Paying heed to the change and continuity of shared understandings about
legitimate economic policies is key to understanding both the influence of international
norms on domestic policy, and the durability or fragility of economic reforms. In order
to become institutionalized in the domestic political economy, international norms
setting out to diffuse free-market policies must encounter a social context in which
alternative development strategies have lost their legitimacy.
This article examines the work of Peace Corps volunteers in South America during the 1960s. It argues that through their training in impoverished communities in the United States and their intervention in similar contexts in South America, these volunteers connected diverse visions of community action aimed at eradicating poverty. This allows an inclusion of a historical comprehension of the Peace Corps within the scenario of a Global War on Poverty. The argument derives from the analysis of letters and testimonies, press items, and official documents found in archives and libraries both in the United States and South America.
En los últimos cincuenta años, la presencia dominante de Estados Unidos en América Latina ha sido reemplazada por patrones variados y complejos de interdependencia, cooperación y conflicto. Tras el gran dominio estadounidense durante las décadas de 1950 y 1960, comenzó un periodo de declive interrumpido sólo por breves episodios intervencionistas. Actores nuevos, en especial los no gubernamentales, han ganado peso en las relaciones hemisféricas. En general, la política de Washington hacia América Latina se ha definido por la dinámica política interna (ciclos electorales, cabildeo) y por consideraciones extra regionales (Guerra Fría, conflictos en otras latitudes). Las respuestas de los sucesivos gobiernos han sido variadas (en ocasiones contradictorias), pero en general siguen sin darle su lugar a los intereses estratégicos latinoamericanos. In the past fifty years, the dominant presence of the United States in Latin America has been replaced by varied and complex patterns of interdependence, cooperation and conflict. The predominance of the US during the 1950s and 1960s was followed by a period of decline, interrupted only by brief interventionist episodes. New actors, particularly non-governmental ones, have gained influence in hemispheric relations. In general, Washington's policy towards Latin America has been defined by the dynamics of its internal politics (electoral cycles, lobbying) and by extra-regional considerations (Cold War, conflicts in other latitudes). The responses of successive governments have been diverse, but in general they continue without giving Latin American strategic interests their place. Au cours des cinquante dernières années, la présence dominante des États-Unis en Amérique Latine a cédé sa place à des rapports variés et complexes d'interdépendance, de coopération et de conflit. Le pouvoir américain, après son apogée dans les décennies de 1950 et 1960, a connu un déclin par la suite, malgré quelques épisodes d'intervention dans les pays sous son influence. Des nouveaux acteurs, en particulier les non gouvernementaux, ont gagné du poids. En général, la politique de Washington vis-à-vis de l'Amérique Latine a répondu à des circonstances internes de la puissance (élections, lobbying) et à des considérations qui n'ont rien à voir avec la région (guerre froide, conflits dans d'autres continents). On a souvent vu des contradictions entre les mesures des gouvernements américains successifs, mais leur trait constant est la tendance à ne pas reconnaître les intérêts stratégiques de l'Amérique Latine même.
ResearchGate has not been able to resolve any references for this publication.