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Colección: INTERAMER
Número: 66
Año: 1999
Autor: Christopher R. Thomas
Título: The Organization of American States in its 50th Year: Overview of a Regional Commitment

II. The Social and Economic Dimension

The processes of development are multifaceted and cannot be practically sectorized. This has been epitomized in the hemispheric experience of the Organization. The efforts to bring political stability to the Hemisphere were accordingly paralleled by the urgent and compelling need to ameliorate the social and economic problems of the Hemisphere. As early as the 1950s, and within one and a half decades of its establishment, the Organization embarked on a number of developmental initiatives in order to contain and redress the continuous and vexing socio-economic difficulties of the region. These were bold but necessary measures in the context of the political environment of the Hemisphere. A number of social and economic programs had to be developed in the interest of the stability of the region. The Organization, therefore, became involved in a number of major economic programs and a series of developmental mechanisms. These included Operation Pan America, the Atlantic Community Development Group for Latin America (ADELA), the Alliance for Progress, as well as funds for special programs made available by the Inter-American Development Bank in funding and soft loans, the Social Program Trust Fund, and the Fund for Special Operations.

Operation Pan America involved a multilateral mechanism promoted through the initiative of President Kubitschek, of Brazil in 1957. It was a reorientation of hemispheric policy intended to place Latin America, by a process of full appraisement, in a position to participate more effectively in the defense of the West, with a growing sense of vitality, and a greater development of its capacities. Thus, Operation Pan America was more than a program; it was an entire policy. In the context of the East/West conflict, Operation Pan America supported the democratic system of the West and advocated rapid economic development of Latin America in order to strengthen its position in the defense of the region.

The Atlantic Community Development Group for Latin America was launched in 1963 by the Economic Committee of the Community under the chairmanship of the United States. Its principal objectives were greater involvement by Europe and renewed overall thrust in respect of economic development in Latin America. The initiative was to be pursued under the joint jurisdiction of the Secretary General of the Organization of American States and the President of the Inter-American Development Bank through the mobilization of multinational private effort to assist the Latin-American private sector through equity capital development.

The Alliance for Progress was by far the most comprehensive initiative of the time. It was launched in 1961 pursuant to a study by the inter-American committee (CECE, 1957), through the Declaration to the Peoples of America and the Charter of Punta del Este and was established within the framework of Operation Pan America. There were twenty signatories to the Declaration. The Alliance was originally conceived as a ten-year program. In 1965 it was subsequently extended to indefinite duration at the Second Special Inter-American Conference in Rio de Janeiro. The Alliance was intended to be a multilateral program based primarily on regional self-reliance. It was all engaging in coverage involving all sectors of the economy. Its economic coverage extended to $100 billion over ten years: $80 billion to be raised by Latin American governments; $10 billion by the U.S. Government; $3 billion from U.S. private investment, and the remaining $7 billion from agencies such as the World Bank, the Inter-American Development Bank, the United Nations Special Fund, individual governments and private investors from Western Europe, Canada, and Japan. The Alliance for Progress was the initiative of President Kennedy who characterized it as:
A vast cooperative effort unparalleled in magnitude and nobility of purpose to satisfy the basic needs of the American people for home, work and land, health and schools.12
The original concepts of the Alliance would form the basic feature of the Enterprise for the Americas Initiative launched by U.S. President George Bush on June 27, 1990, and the proposal for a Free Trade Area of Area of the Americas for the year 2005 agreed to by the Heads of Government of the Hemisphere at the Miami Summit in 1994,on the initiative of President William Clinton. It is more than coincidental to note here that three of the major development endeavors in the region’s history were initiated by Presidents of the United States.

The overall aspects of the three earlier socio-economic programs were to provide for greater focus in the use of available resources; to address the problem of foreign debt which was beginning to assume unprecedented proportions; increasing capital inflow; and the structured utilization of external resources. These in turn would inform the requirements and characteristics of the programs. An overview of these requirements comprised:
  • Investment for finance and economic development;
  • Expansion of Trade;
  • Multilateralism;
  • Sustainable Development;
  • Private Sector Participation;
  • Economic Integration; and
  • Recognition of economic disparities within the region.
Essentially, therefore, the programs had the precursor effect of initiating a comprehensive socio-economic agenda for the region. Every aspect of the programs would, in one form or another, be refocused or reemphasized over the years as basic and fundamental objectives and imperatives for the development of the region.

At the first three International Conferences in 1889-1890, 1902, and 1906 respectively, the idea of a regional bank for the Hemisphere had been launched. Initially it was thought that such a bank could facilitate trade promotion and subsequent expanded economic cooperation generally. Negotiations over the establishment of the bank became somewhat protracted and when the bank finally came into operation in January 1960 it was structured outside of the mainstream of the Organization of American States. This mechanism was perceived to afford the financial institution flexibility, independence of action, and freedom from political interference. The Bank’s initial capital of $850 million (made up of 85,000 shares of $10,000.00 each) was allocated as follows: $400 million in actual capital and $450 million in callable capital. Two funds were also established: an initial $150 million in the Special Operations Fund to be used for soft loans, and the Special Program Trust Fund of upwards of $390 million as an initial grant from the United States to be administered on its behalf by the Bank.

The Special Program Trust Fund would cover a wide range of programs such as those related to land settlement and improved land use, housing for low income groups, community water supply, and supplementary financing for education. The Preinvestment Fund for Latin American Integration was introduced in 1966, at a time when integration was increasingly seen as the answer to persistent economic problems in Latin America. In its programs the Inter-American Development Bank prioritized those which would contribute to the economic growth of member countries, as a complement to, not a replacement of, national capital. In the Inter-American Development Bank, the inter-American system found a way of responding to the economic development needs of member countries. Together with the OAS, it offered the hope that the hemispheric family was finally in a position to assume an identity as the foremost institution in the hemisphere to which member states could have recourse in seeking solutions to their development problems.

Notwithstanding the well-intentioned objectives of the programs and initiatives of the 1950s and 1960s, their results in overall regional development terms were not very encouraging. With few and isolated exceptions, no major changes have been recorded either in the structural economic relations of the region or in its macro-economic configuration. The programs had established a target per capita growth rate of 2.5 percent for the region. Growth per capita over the period 1961-1970 registered, however, 2.4 percent as compared with 2 percent for the period 1950-1960. The process of industrialization improved but remained uneven and all indicators revealed that overall unemployment continued without significant change. Agriculture showed no appreciable improvement. Exports of goods and services registered an annual growth rate of 4.7 percent over the period 1960-1969 as compared with 4.1 percent per year over the period 1950-1960. Domestic and national savings recorded very moderate growth. External private capital growth in relation to national and regional capital formation increased but was not significant as a function of economic development. There was limited diversification but no appreciable improvement in income distribution. Within the region in 1960, 40 percent of the population received only 9 percent of total income while 5 percent of the population received 31 percent of the total. Partial studies of ECLA indicate that in 1965, 50 percent received 13.4 percent of national income and 5 percent received 33.4 percent of national income. Overall, the programs’ impact on regional economic integration was not considerable. Indeed, of the $20 billion targeted through external financing, effective net inflows were recorded at less than 50 percent ($9.600 billion).

Two decades in the life of an organization constitute more of a formative than substantive period of being. The experiences of most organizations reflect an initial and extended period of stresses and challenges as to motivation, purpose, and commitment. In the case of Latin America, which as a region and a grouping of national governments had undergone protracted and extended political turbulence and uneven patterns of political development after independence, the architecture of a functional rather than titular regional organization would undoubtedly be both challenging and transcendental. The introduction of socio-economic programs in a historically and continuing restive political and social environment could be only experimental and, at best, transitional.

Economic advancement is fundamental to the sustaining of a democratic culture. Massive injection of development capital, however useful, does not provide for instant social transformation. Such programs sometimes also generate waste, corruption, and distortion. They do, however, establish a useful point of departure for institutional focus, direction, and thrust. For a nascent organization, this constituted a basic requirement. It is in this context that the early economic initiatives should be evaluated. It is in this context also that Operation Pan America, ADELA and the Alliance for Progress must be accorded prescient and enduring value in the unfolding of the regional organization and the evolution of the inter-American system.

Critics have pointed to a fundamental weakness of the Alliance for Progress in that it sought to configure a multilateral mechanism prematurely in the engagement of twenty-one national sovereign governments. It is important however, not to disassociate the spirit and commitment of the Alliance from the other related developmental initiatives of the period. All earlier initiatives formed part of the effort and thrust toward Latin American political stability, development, and socio-economic advancement. The Alliance was indeed the foremost and most comprehensive structural initiative of the earlier era of the Organization. Its feature of multilateralism was indeed ambitious but not inconsistent with the basic function of regional cooperation. What seemed, however, to have emerged most clearly from these early initiatives, is that a machinery for multilateral action, however well conceived, cannot be implemented from a top down approach but must of necessity be constructed from the individual client beneficiaries. In this regard, the historic socio-economic asymmetries of the region and the increasing culture of national sovereignties resulted in continuing inhibitions and constraints to the construction and promotion of generally prescribed or conceptualized hemispheric developmental action. This has been a common feature of all earlier socio-economic programs, and perhaps best exemplified in the development of the Alliance for Progress. In this regard, the single major challenge of the Organization in the area of socio-economic development was the adaptation of the inter-American system to the dynamics of the Alliance. In the existing circumstances that prospect was clearly more ideal than practical.

In order to maintain respect for national sovereignties, the Alliance was vested in the Inter-American Economic and Social Council (CIES)—at the time an organ of the Council of the Organization. The CIES, under the Charter of the Organization, had as its principal purpose the promotion of the economic and social welfare of the member states through cooperative action of the membership. The increasing array of committees, groups, joint programs, and advisory bodies that were established, pursuant to the Charter of Punta del Este, created an unmanageable situation in respect of the development function as regards direction, coordination, and joint action, both within the Organization as well as in the wider inter-American system. In order to provide a structural framework for the coordination of the proliferation of developmental bodies and agents, the CIES at its Ministerial Meeting in Brazil, in 1963 created the Inter-American Committee on the Alliance for Progress (CIAP). Essentially, CIAP was intended to be a directional mechanism for the Alliance for Progress, which was emerging as the centerpiece of the hemispheric development program.

The creation of CIAP was followed by an overhaul of the entire Inter-American Economic and Social Cooperation, through the rationalization and elimination of existing committees, working groups, and advisory and expert groups. The functions assigned to CIAP by the resolution of 1963, comprised representation, promotion, coordination, examination, and review and policy formulation. Through CIAP, the outreach to other international organizations and nonmembers of the Organization was functionally institutionalized in the promotion of hemispheric development. The Executive Secretary of ECLAC, the President of the IDB and the Secretary General of the Organization of American States were designated as advisors to CIAP as the Organ set about cohering the activities of the wider inter-American system and deepening its outreach to the Western European nations. Beginning with the establishment of the Inter-agency Advisory Group (IAAG), CIAP, in the pursuit of its functions, developed a mechanism that involved effective functional relationships with the United Nations and some of its related agencies, United Nations Development Program and sub-regional agencies and organizations within the Hemisphere.

In the spirit and thrust of CIAP, CIES also created in 1963 the Special Committee for Latin American Coordination (CECLA). CECLA’s function was to be specific as a coordinating organ among Latin American countries for the future meetings of the United Nations Committee on Trade and Development. Latin American countries had begun to perceive the value and need to act as one bloc in overall trade matters and CECLA was assigned this specific regional function. At its meeting in 1969 in Chile, CECLA formulated the consensus of Viña del Mar, which was later to become the cornerstone instrument for the coherence and coordination of inter-American and international cooperation in the hemisphere’s economic and social development. The overwhelming support for the consensus of Viña del Mar led to the Declaration of Buenos Aires in 1970, which engaged the then European Economic Community (EEC) in structural relations of dialogue in respect of cooperation with Latin America. This constituted one of the earliest recorded attempts at institutional cooperative relations with the Western European countries.

The consensus of Viña del Mar also created a consciousness and awareness on the part of member states of the Organization that a prerequisite to external negotiation must be internal structural adjustment. Accordingly, in 1969, (June 14-23), at the Sixth Annual Meeting of CIES in Port of Spain, Trinidad and Tobago, member states issued the Declaration of Port of Spain, which emphasized a common position on regional development and established a special committee to determine a new basis for inter-American cooperation in the economic and social field. The Special Committee met in Washington, November 17-29,1969 and in Caracas, January 26-31, 1970.

Out of the meeting in 1970, a Special Committee for Consultation and Negotiation (CECON) was established. CECON was to be an organ of indefinite duration within the inter-American system under CIES, and its main purpose was to serve as the basis of internal discussion and negotiation between the United States of America and other member countries of the Organization on regional development. CECLA would serve as a mechanism for en bloc negotiations of the region with the outside world. CECON would provide the other members of the Organization a bloc machinery for internal negotiations with its largest member state, the United States of America. In this regard, CECON, in wider consultation within the system, would give priority to the functions of trade, transportation, and tourism. More than two decades later, these three identical functions would form the initial agenda of a new intra hemispheric body, the Association of Caribbean States (ACS). It may be more than coincidental therefore, that the agenda of CECON, which was conceptually initiated by the Declaration of Port of Spain in Trinidad and Tobago, in 1969, should form the agenda of the Association of Caribbean States (1995), whose establishment was at the initiative of Trinidad and Tobago, and whose initial agenda was formulated and adopted in Port of Spain, Trinidad and Tobago, at the Organization’s first inaugural meeting in 1995.

In the context of hemispheric economic and social development, CECON occupies a fundamental position. It introduced, albeit implicitly, the concept of maturity and partnership in the regional relations between the United States of America and the other members of the Organization. In so doing, it served to establish the recognition of the asymmetries of the regional membership to the extent that cooperation and development initiatives and programs must be customized, and it heralded the advent and involvement of a Caribbean element in the formulation, perspective and development of hemispheric planning configuration. As the Organization pursued its historic mission over the years, these three functions -maturity through partnership -the customizing of development engagement -and the effective involvement and participation of the Caribbean member states, would assume increasing vital constants within the variables of our prescriptions and objectives for hemispheric integration.

It is necessary to recall here three other development initiatives of this early period: The Pan American Development Foundation (PADF) 1962, The Special Development Assistance Fund (SDAF) (1963) and the Inter-American Emergency Aid Fund (FONDEM) (1969).

The PADF was established in 1962 as a private voluntary agency formed in 1962 for the purpose of channeling tax deductible funds into the Alliance for Progress. Under Article 2 of the agreement between the General Secretariat of the OAS and the Pan American Development Foundation, both bodies “agree to cooperate with each other in the fields of cultural, scientific, educational, economic and social development, and disaster relief.” This special relationship with the Secretariat did not prevent the proliferation of area specific foundations. This, in turn, has led to some competition between the OAS and the PADF for funding from private institutions. More generally, the activities of the PADF have not always met the expectations of member states of the Organization. This lack of overall satisfaction resulted in the technical areas of the OAS Secretariat further establishing a variety of specialized private foundations to assist them in capturing resources for their specific programs. By the early 1990s, these included specialized foundations in the areas of culture, the handicapped, human rights, and sustainable development.

In January of 1997, the OAS Trust for the Americas was established for the purpose of attracting tax deductible donations to the General Secretariat of the OAS programs and activities from corporate individual donors, public corporations, and institutions. Through this foundation the OAS hopes to enlarge its cooperative arrangements in the pursuit of realizing its objectives for the Hemisphere —particularly in the area of partnership for integral development.

The SDAF was constituted as a special multilateral fund, to be administered through CIES on the basis of voluntary contributions. It began operating in 1965 and subsequently evolved into a very useful complementary element in the overall thrust of the Alliance for Progress. The SDAF also gave a new boost to technical cooperation, which had been earlier structured in the 1950s consequent on the heads of government meeting in Panama in 1956.

FONDEM had its origins at the Second Special Inter-American Conference in Rio de Janeiro, in 1965 and was intended to be a humanitarian assistance program at the initiative of the Government of Mexico. The fund was expected to be system-wide and to provide emergency assistance to member states through voluntary assistance in situations arising from natural or manmade causes. The competing development priorities of the time considerably overshadowed the thrust of FONDEM, which over the years evolved into ad hoc responses to emergency relief requests. It has endured over the years as a regional mechanism of emergency aid, but has declined in value and benefit as a result of intrinsic shortcomings. Its appeal and function as an adjunct in development assistance has been addressed in many ways through individual initiatives, without significant success.

More recently an interesting and constructive variant of the program was introduced by the Government of Argentina under the White Helmets initiative, for emergency assistance and rehabilitation in respect of disaster situations. This latter initiative is being pursued through the Organization of American States and the United Nations. The White Helmets program has already recorded notable successes and has the potential for bringing great benefits to the region if constructively pursued. Its coverage is global rather than regional and would, of necessity, require structured coordination for effective and sustained delivery.

Within the developmental initiatives of the period from 1948 to the 1960s, the Alliance for Progress became the central regional vehicle for economic and social development. The pace of its development, which was conditioned by the nature of regional interaction and competing internal priorities was, however, slow and uneven. Dissatisfaction among member states led to a meeting of Heads of State in Punta del Este, Uruguay, in 1967. This is the second recorded meeting of Heads of State of the Organization. The first recorded meeting of heads of state of the Organization took place in Panama in 1956. The Meeting of Heads of State, in Punta del Este, produced a Declaration of the Presidents of America. The Declaration primarily committed the region to economic integration by 1985, through an ultimate merger of the Latin American Free Trade Area (LAFTA) and the Central American Common Market, the two major developmental sub-regional agencies at the time within the membership of the Organization.

The Declaration of the Presidents of America raised expectations, which would not be realized for many years. In that regard, it brought into sharp focus the dichotomy in the regional leadership between commitment and engagement and, at the same time, highlighted a very important development within the region. The Organization had begun to develop its own identity and personality within the Hemisphere and had begun to assume a maturity and vanguard position in signaling and pointing the regional leadership in the direction of developmental change. The spirit and thrust of the Alliance would thereafter be transformed and channeled through a refocused and restructured machinery for economic and social advancement.