Mike Austin

The immeasurable pain and violence of our history are the result of age-old inequities and untold bitterness, and not a conspiracy plotted 3000 leagues from our homes.

1. The twin curses of modern Latin American history are politics and militarism, and Argentina, Chile and Brazil have had both in abundance. Each of these countries is still recovering from the effects of a political culture gone mad. Their stories are numbingly similar: chaos, dictatorship, terror, repression. In each instance the army sought to completely re-order society and to eliminate the old political order. Whatever democratic institutions the countries had were altered or destroyed in the maelstrom that ensued after the military entered the arena of politics. We today call Argentina, Chile and Brazil democracies, and so they are, more or less. Our task here is to examine the causes of their political decay and the intervention that followed, and to learn how popular governments managed to emerge from military rule.

Argentina is today almost ungovernable, and the reason is Juan Domingo Perón. He ruined the economy, set class against class and vastly increased the power and size of the state. Argentina’s history since Perón — the violence, the economic devastation, the class warfare, the poisoned political culture, the military intervention — is his legacy.[1]

The destruction of modern-day Argentina began in 1943 when the recently installed military government appointed Perón as Minister of Labor.[2] Perón used this inconspicuous post as a power base to bring the disenfranchised urban industrial proletariat under his control and influence. He was helped immensely in this by his wife, Eva,[3] who used government funds to dispense largesse to those she favored.[4] Before Perón labor leaders had been bribed separately; now the entire movement was bought. A huge social welfare apparatus was created: the public sector share of the GNP went from 19.5 percent in 1945 to 29.5 percent five years later.[5] To the detriment of agriculture — and to expand his political foundation — Perón poured money into the industrial sector of the economy. Perón paid for all this by looting the treasury, but by 1951 the money was gone. Argentina had been de-capitalized, her balance of payments were in deficit and inflation was rising to 100 percent. Perón looked for “enemies” to blame, and he found them: North America, capitalism, democracy, communism, the rich, the Church, the Military, the press: so many enemies! By 1955 Argentina had tired of Perón, and the military, in one of its few popular measures, put him on a boat for Paraguay. Perón was gone, but not finished; he would return.

The history of Argentina from 1955 until 1976 was one of successive governments attempting to deal with the debris of Peronism. The military allowed elections in 1958, and the civilian Frondizi became president. He tried to cut a deal with the Peronists — now 35 percent of the electorate — but this was anathema to the army and in 1962 Frondizi found himself out of a job. The Peronists were then banned from political participation and Illía next held office, but economic failure and his own ineptitude lead to the end of his regime.[6] By 1966 Argentina was polarized between the Peronists and the supporters of the military, and the army had had enough: declaring an “Argentine Revolution” General Oganía seized the government and suppressed the Peronists and their labor supporters. Claiming that democracy had failed to govern — considering Argentina’s desperate straits, he had a point — he outlawed political parties and began the construction of a classic bureaucratic-authoritarian state.

Into this stew of Peronism, authoritarianism and militarism in 1968 arose another “-ism”: terrorism.[7] Calling themselves the Montoneros and dedicating themselves to the destruction of the Argentine state these terrorists embarked upon a program of kidnapping, bombing and calculated murder, all done of course in the name of “the people.” As expected, the state struck back with the tools it had at hand. Argentina now entered a period of strikes, political violence and state repression that by 1973 lead the military to seek some sort of accommodation with the despised Peronists. Only one thing would appease them: Perón’s return. He flew in from Spain in 1973 with his new wife and the embalmed corpse of his old wife, and re-entered Argentine political life.[8] All factions awaited the dictator’s next move; he surprised everyone by turning on the Left that had often acted in his name. The Army felt relieved, the Montoneros felt betrayed, and the civil agony of Argentina continued. The old tyrant died within the year, and the absurd Isabel became la presidente. Meanwhile, inflation was 335 percent, the Montoneros kept active and the Argentine state reeled from strikes, economic deterioration and civic violence.

Again, the military: but this time it was war to the death, an all-out offensive to forever crush the Montoneros. No quarter was asked, and none was given. Isabel was locked up, soldiers poured into the streets and Argentina commenced with the “Dirty War.” General Jorge Viola was out to eliminate the toxin of communist terror that had entered Argentine political life, and he did just that.[9] His methods were the usual ones: torture, “disappearances,” state-of-siege legislation and plain old murder. Perhaps 30,000 persons were killed, some innocent, some guilty, and the Montoneros were exterminated. During this orgy of violence the economy improved for a while, but by 1981 it was the same old story: ruinous inflation, bank failures and capital outflow — just as it was when Perón was sent packing a generation before. The military sought to shore up some needed credibility with a foreign policy success, and it invaded the Falkland Islands.[10] Like a narcotic, this invasion calmed the distress of the body politic; that is, until the Empire struck back. The game was up, and the Argentine Armed Forces knew it. Amidst huge demonstrations, military disaster, civic disorder and an economy brought to its knees, the Military prepared to hand over the government to civilians.

More nonsense has been written about post-1970 Chile than about any other country in South America. The reasons for this are easy to find: Salvador Allende was a hero of the International Left and so benefited from its world-wide propaganda machine; Allende was a friend of Castro and had good credentials as a socialist and an enemy of capitalism; Allende was defeated by the military — always the Left’s favorite whipping boy. The destruction wrought by Allende on Chile is ignored or denied or suppressed, never faced for what it was: an attempt to turn Chile by any means necessary into a Marxist-totalitarian state. That Chile survived to tell the tale is due to Augusto Pinochet who, like Ronald Reagan, is anathema to “progressives” around the world; but had there been no Allende, there would have been no need for a Pinochet.

The 1964 election was the prelude to the coming disaster. Eduardo Frei, representing the democratic sectors of Chilean society won the presidency with 56 percent of the vote.[11] He had portrayed his opponent Allende as an agent of Moscow and said that he would turn Chile into “another Cuba.” Allende and his political organization, the FRAP (Frente de Acción Popular ) did little to allay these fears: they depicted capitalism, landlords and the copper companies as “arch-villains” and vowed a sweeping transformation of Chilean society along socialist lines.[12] Even with this radical program Allende received 39 percent of the vote, more than he had received in 1958.

Frei was faced with two overriding issues during his term of office: land and copper. Chile had an archaic rural structure that begged redress; even a land reform act (1967) did little to provide for the rural masses. But it was the problem with the American copper companies that provided Allende the ammunition he needed to gain the presidency in 1970. Frei hoped to increase the government’s share of copper profits by having Chile buy into part ownership of the companies (“Chileanization”). Frei got the companies’ to agree to this, but still the public perception was that Chile was being cheated by clever company lawyers, and Frei’s actions were savagely attacked by the Left. The elections of 1970 were predictably acrimonious. Frei was constitutionally unable to succeed himself; the democratic majority that had supported him in 1964 now split into two: one supported Jorge Alessandri, the other, Radomiro Tomic. Allende won a plurality with 36.3 percent; the other two candidates received a total of 62.7 percent.[13] On such a weak mandate, Allende launched Chile down the communist path.[14]

Allende’s victory was hailed by the International Left, and soon terrorist groups from all over the world — including the Tupamaros — set up training camps in Chile.[15] The staff of the Cuban embassy grew larger than the entire Chilean Department of State. The Soviet embassy smuggled in a flood of weapons: clearly, Allende had no intention of ending up as Perón did — disarmed when the crunch came.[16] Allende’s first act was to freeze prices and raise wages, a populist act done to enlarge his base. He then nationalized the steel, coal and banking industries, and many foreign operations as well. The Nixon administration saw these acts for what they were: an assault upon private, especially American, property, and he responded accordingly: there would be no Chilean access to World Bank or Inter-American Bank loans. Investment halted as Chile was cut off from foreign capital. Allende seemed remarkably unperturbed by all this and continued his seizures of land and businesses.[17]

Allende’s economics had the predictable results: by 1973 inflation was roaring along at 190 percent, almost continuous strikes ground business to a halt, the private sector was demoralized and the huge government deficits were covered by the printing press.[18] Allende’s radicals demanded faster nationalization, police action against all opposition and rule by decree. Chilean politics became superheated: there were massive pro- and anti-government demonstrations as Chilean society polarized. Allende certainly felt the ground moving beneath his feet, and he reached out to Frei for support. He was refused: Frei did not want to be tied to a crumbling government, no doubt believing that any post-Allende regime would look to him for leadership.[19] Allende was forced by circumstances to turn to the military for support even though he feared doing so. His fears proved justified: on September 11, 1973, convinced of the impotence of democracy to cure Chile’s disease, the Armed Forces put an end to the Allende regime. The Chilean experiment with bolshevism was strangled in its crib.[20] The military under Pinochet set out to do no less than destroy the old system of politiquería and set up an authoritarian state, and it did exactly that.[21] Chile would not become another Cuba.

Unlike the usual Latin American leader, Vargas was an amiable dictator. The first decade of his rule is known as the Década Getuliana; he influenced Brazilian politics more than anyone since Pedro II. His Estado Nôvo was but a prelude to the military rule of 1964-1985 and laid the groundwork for it. Vargas came to power in a time of political and economic unrest. Brazil had been struck hard by the Depression: her currency was worthless, she was in a balance of payments crisis and the market for her coffee had almost disappeared. Vargas ran for the presidency in 1930 and was defeated, but we should not be surprised to learn that with the help of the army he took power anyway. He began to construct the foundation for his “New State”: he appointed new state governors, crushed the radical opposition on the left and on the right, and like Perón, made overtures to labor. By 1937 he was ready: he dissolved congress and declared the Estado Nôvo.

His system was part Mussolini, part Salazar, and wholly Vargas. He referred to his creation from time to time as “Democratic Caesarism,” not seeming to mind that this was a contradiction. Vargas was building a new political system that greatly expanded the state’s size and its role in the economy. The government formed cartels with business and favored selected enterprises with investment. Vargas made labor a client of his corporate state and kept it tightly controlled, but coddled it with a large body of social legislation. To the military he seemed to be moving too far to the left, and he was deposed in 1945, thus officially ending the Estado Nôvo but leaving its essentials still intact. Amazingly, Vargas ran for president again in 1950, and won, but committed suicide four years later.[22]

The next ten years brought the slow destruction of Brazil’s economy and governing institutions, partly due to the policies of her presidents and partly due to the legacy of the Estado Nôvo. The massive state structure proved impossible to dismantle even as it devoured much of Brazil’s national income. Matters were made worse when Kubitschek built Brasilia. His new capital was gorgeous, and did much to open up rural Brazil, but it gave the country a mountain of debt and a healthy inflation. By the time Goulart assumed the presidency, Brazil’s problems were almost beyond one man’s capability to solve. Goulart was a protégé of Vargas, but he had nothing of Vargas’ political acumen. In the midst of economic turmoil, a rising unemployment and growing street demonstrations he occupied himself with attempting to unionize the rural peasantry and bring it under his political umbrella, thereby enlarging his political base. Goulart next tried the unthinkable: he declared his wish to unionize all enlisted men. The military leadership saw this as an assault on its special prerogatives — which it was. Claiming that democracy had failed to govern and had been corrupted by politicians,[23] the military abolished all political parties, proscribed from political activity a whole stratum of civil service personnel, and took control of the Brazilian state.

The authoritarian regime now gambled everything on all-out economic growth. Like Vargas it sought to use the power of the public sector as the engine of prosperity, and increased domestic investment by building a road through the center of the nation.[24] It simplified export controls, overhauled the banking system and institutionalized Brazil’s first stock market. After a slow start Brazil did indeed have an “economic miracle.” From 1968-1974 her GNP growth rate averaged a remarkable 10 percent a year, even though during much of this time she had to deal with a guerrilla insurgency. The military had thoughts of becoming a bastion of stability in South America, and perhaps even expanding her influence to the ex-Portuguese colonies of Mozambique and Angola. These dreams were not to last, for they were built upon faulty economic premises.[25] Brazil had borrowed heavily to finance her development; by 1982 she had the highest foreign debt in the world. The OPEC oil shocks of 1973 marked the beginning of a decline from which she has yet to emerge. Inflation again flared up, soon to be second only to that in Nicaragua. By the early 1980’s, the military had had enough, and expressed its desire to “re-democratize” society and disengage from politics. Elections were held in 1985, and the military handed over to a civilian, José Sarney, the mess that was Brazil.

Of the three countries discussed, Chile has clearly emerged from her ordeal in the best shape. The reason is simple: General Pinochet forced upon Chile the free market principles laid down 200 years ago by Adam Smith.[26] Pinochet reduced the role of the state, diversified Chile's economy, ended many government subsidies and returned the private property seized by Allende to its rightful owners. The 1982 world recession only lead Pinochet to speed up his reforms. The results of all this are plain for anyone who cares to look: inflation has been reduced to 10 percent from Allende’s 500 percent, and Chile is both paying off the principle of its foreign debt and experiencing a growing economy — the only Latin American nation in this situation.[27] In the 1989 election, the first held since 1973, the extreme left won no seats in the legislature, suggesting that Chile was cured of the toxin of socialism. Civilian president Patricio Alwyn has continued down the free market path, thereby guaranteeing Chile’s continuing stability and growth.[28]

Argentina has not fared nearly so well. The 1983 election of Raúl Alfonsín served to magnify Argentina’s problems: her inflation rate was passing 200 percent and she could not make her debt payments. By 1985 inflation had exceeded 1000 percent, which was clearly an intolerable situation. Argentina had to wait until the presidency of Carlos Menem for the cure for her disease, which was the dismantling of the over-powering state controls on the economy — a legacy of Peronism. Menem began to sell off hundreds of government owned enterprises, which has so far raised over $5.1 billion.[29] He has introduced an austerity plan that ends subsidies and encourages foreign investment. Menem just might return Argentina to the condition she was in just before World War Two: the richest nation, after Australia, in the Southern Hemisphere.

If “God is a Brazilian,” one would not know it from the scope of Brazil’s problems. Sarney induced shock therapy on the economy by a huge devaluation of the currency, but inflation continues unabated. Brazil’s problem is that the political structure put in place during the Estado Nôvo is still functioning: most economic activity is controlled by the state, high tariffs restrict imports, the unions have a stranglehold on governmental largesse, inefficient domestic industries are protected from foreign competition and the state still serves the primary purpose as a dispenser of patronage. These problems all stem from the fundamental nature of the corporatist, bureaucratic-authoritarian system. Collor perhaps meant well, but he was soon swept aside by governmental inertia and charges of corruption. Itamar Franco has fared no better, and has contributed to economic chaos by changing his economic minister three times in five months. Clearly, no one knows what to do. Brazil, “a country of the future,” is mired in the past, a victim of Vargas’ statist fantasy.

Two final notes. Our three countries all shared something that in all cases lead directly to decline, chaos and military intervention: an economy dominated and controlled by the “dead hand of the state.” They had not yet learned that liberty is based upon private property. Restrict private property and you restrict liberty, and so pave the way for tyranny and serfdom. Every totalitarian regime throughout history has known this well enough. And: These countries still live under the shadow of the military. Pinochet is still commander of the Chilean Armed Forces; both Alfonsín and Menem have had to deal with interminable military insurrections that have sapped Argentine morale and wasted her treasure.[30] Then why the debate over whether to persecute military officers? Were not these officers the same ones who killed, tortured and “disappeared” thousands during the civil wars against the guerrillas? Why not just get on with the trials and punish those who are found guilty?[31] My answer, as I sit in comfort 3000 miles away from all those unmarked graves in South America, is this: leave it alone. It does no one any good to prod the military into taking what it would surely consider to be defensive action. As the military saw things, it acted in the best interests of the nation and did indeed prevent the installation of regimes controlled by communist thugs. I should ask this question: are Chile and Argentina better off under Pinochet and Menem that they would have been under Allende and the Montoneros? The peoples of these nations, one way or another, have already answered this.

II. Guatemala, Costa Rica and Nicaragua have all had what some would call “revolutionary” social, political and economic experiences. Of these countries Nicaragua comes the closest to having had a “true” revolution, although it occurred within limits and never reached the excesses of Robespierre’s France. Some events in Costa Rica and Guatemala were revolutionary in the sense that profound changes were made in the political and economic arenas of these nations. They succeeded in Costa Rica but failed in Guatemala, yet one cannot understand the post-1948 history of these countries without an appreciation of what happened, and why.

The following essay is somewhat of a departure from the standard “academic” form. I have had the great fortune of having lived and worked in both Guatemala and Costa Rica and of having visited every Central American nation. The Sandinista Army allowed me to accompany it into the Atlantic Coast war zone on one of my trips to Nicaragua and saved me from Contra bullets when my curiosity got the better of me. I have visited a Contra camp in Honduras, stayed with a local Miskito Indian chief on the Miskito Coast, had an unlucky encounter with the Guatemalan guerrillas and backpacked through every jungle in Central America. It should be clear that I cannot avoid inserting my personal impressions into my paper, impressions that, I hope, do not just rescue me from one set of prejudices only to cause me to fall victim to another.

Guatemala’s history until 1931 was the usual one for Central American nations: the usual struggles between the Liberal and Conservative parties, the usual dictatorships, the usual corruption, the usual irrelevance in world affairs. Jorge Ubico (1931-1944) was out of character from the thuggish norm: he was “ruthless, thorough, intelligent, and effective.”[32] His administration was reasonably honest, he built roads, schools and hospitals, enforced sanitation laws, maintained order with his National Police and — almost unheard-of for Latin America — balanced the government’s books and restored her credit. He posed as a friend of the Indians and theoretically ended their state of peonage. Like Porfirio in Mexico, Ubico paid great attention to the needs of the Military, landed elites and foreign capital. An odd coalition of university students, industrial workers, civil servants and lower-level army men — all of whom formed the middle classes — managed to unseat Ubico in 1944. Guatemala then embarked upon her “social revolution.”[33]

Juan José Arévalo (1945-1950) was up to the task of reforming Guatemalan society. A university professor and until recently an exile in Argentina, Arévalo concentrated on organizing urban labor. His new Constitution (1945) guaranteed land reform and labor rights, and resembled the Mexican one of 1917. Arévalo introduced a social security system and wrote Guatemala’s first labor code. All this was but a prelude to Jacobo Arbenz Guzman (1950-1954); now the pace of reform would greatly accelerate. The Communist Party, organized under Arévalo as the Guatemalan Party of Labor (PGT) — and under whom it had very limited influence — found a comrade in Arbenz. The PGT used standard Moscow-issued tactics of intimidation of judges and legislators, manipulation of the media and control of unions in its support of Arbenz both before and after his election.[34] His response was to give PGT members positions of governmental power, particularly in those areas concerned with agrarian reform. The “social revolution” now entered its critical phase: thus emboldened, the PGT began an assault on its favorite whipping boy, the United Fruit Company.[35]

The campaign against United Fruit was hysterical, rabid and uncompromising. The PGT demanded the expropriation of all the company’s land, which would then be divided into small, peasant-owned holdings. The legal means through which Arbenz and the PGT acted was the Agrarian Reform Law of 1952.[36] Company protests were unavailing: its appeals for moderation, reconsideration of contracts and negotiation were ignored.[37] Hundreds of thousands of acres of company-owned land were seized by the Arbenz regime, which offered compensation of $600,000 [38] for land valued at $4,000,000.[39] The Eisenhower administration took this as an open challenge to U.S. policy in the region, and it acted accordingly. John Foster Dulles was dispatched to the 1954 Caracas conference of the Organization of American States (OAS) where he branded Guatemala as an agent of Soviet imperialism. He failed to get the OAS to agree to collective action under the 1947 Rio Treaty, but it did not matter: the United States was taking matters into its own hands.

Arbenz perfectly played the part of Soviet lackey. Fearing immediate U.S. intervention, he requested arms from the Soviet Union; this was all that Eisenhower needed. The CIA was sent to rid Central America of Arbenz, and so it did. It was perhaps the cheapest overthrow of a nation in U.S. history, even cheaper than the $10,000 Kermit Washington used to toss out Mussadeq. A radio transmitter as set up in the Petén, a few troops were massed at the border of Honduras, and false rumors were spread about legions of soldiers swarming toward the Guatemalan capital. This was all too much for Arbenz, and he fled for the security of — fittingly — Czechoslovakia.[40] The U.S. installed Carlos Castillo Armas as president, and then moved on to other, more important things.[41] Guatemala resumed her brutal history. Her “social revolution” was over.

Nicaragua is a mess; there is simply no getting around this fact. Her recent history reads like something out of The Old Testament: earthquake, tidal wave, hurricane, civil war, revolution, cholera, typhus, corruption, degeneracy, murder, genocide.[42] Nicaragua is tied with Haiti for the hemisphere’s most miserable land. Why this is so has filled a great deal of newsprint — too much, really — in the last decade. One thing is certain: Nicaragua presents a textbook case on how not to run a country.

Our tale of woe begins, but does not end, with the Somoza Dynasty (1937-1979). The Elder Somoza’s view of his fellow Nicaraguans and their ability to govern themselves was expressed in a 1953 interview he gave to the New York Times: “You cannot give a bunch of five-year-olds guns. They will kill each other.”[43] He was not quite the brute depicted in the media: he expanded education, built hospitals and roads, increased cotton production and brought hydroelectric power to Nicaragua. He left the treasury in the black and balanced its books, and gave Nicaragua a trade surplus of $11,600,000. He was assassinated anyway in 1956. After several other family members took their turn at running the country Anastasio Somoza Debayle (“Tachito”) became president in 1967 and more or less controlled Nicaragua thereafter until the rise of the Ortega brothers.[44] Tachito has a popular reputation, only partly deserved, for infamy. Concerning his mis-appropriation of aid funds after the 1972 earthquake he is guilty as charged. Then there is the rumor of la casa de vampiros, about how Tachito drained his own people of their blood to sell it to the United States. Alas, it is not true, at least the way it has been portrayed.[45] Somoza’s end came after he “allegedly” arranged the killing of La Prensa editor Pedro Joaquín Chamorro in 1978. The opposition now had a rallying point, and a great wave of popular uprisings began. Somoza was no Arbenz, and he fought it out almost until the end. After an unbelievably sanguinary civil war, in July 1979 the Sandinistas were in Managua.[46]

The devestation that lay before the victors was appalling: 50,000 Nicaraguans had been killed, Nicaragua’s infrastructure had been ravaged, the country was heavily in debt and her political culture had been decimated. Add to all this Nicaragua’s endemic poverty and illiteracy and you come up with a task that would have confounded Pericles.[47] The Sandinistas rolled up their sleeves and began to work, for they had big plans for Nicaragua: no less than the total transformation of the state along classic Marxist lines. They first squeezed out any inconvenient opposition, including the middle and professional classes represented by, among others, Violeta Chamorro. The Sandinistas injected politics into every level of society, from grade school on up.[48] “Block Committees” were set up to monitor all activity among the population, armed bands of youths (“turbas” ) were sent to break up all opposition rallies, the radio station of the Catholic Church was periodically shut down and opposition newspapers — including La Prensa — were denied a reliable supply of paper.[49] A huge political bureaucracy made up of FSLN loyalists was impressed upon Nicaraguan society, and all important ministerios were staffed by Sandinistas. The FSLN completely controlled the army, police forces and the unions, and they brought all levers of the economy under their sway. Daniel Ortega spoke in Trotskyite terms of “a revolution without frontiers” and began to undermine pro-American governments in the region.[50]

The only obstacle to FSLN plans was Ronald Reagan. He was elected in 1980 on a platform that had deplored “the Marxist Sandinista takeover of Nicaragua.”[51] Reagan began the destabilization of Nicaragua by using the CIA to fund, train, arm and supply groups of Nicaraguans who would do battle with the Sandinistas.[52] In spite of enormous political opposition[53] Reagan kept these contras [54] in the field until he had achieved his ends: the first free elections in Nicaragua.[55] He got them in 1990: Nicaragua, exhausted by endless war and Sandinista depredations, elected Violeta Chamorro president. The Nicaraguan revolution was ended, even if the Sandinistas were not.[56]

Those who call Costa Rica “the Switzerland of Central America” have never been to Switzerland.

Compared to the rest of Central America, Costa Rica is a success story. She avoided the chronic instability and violence of Central America for two reasons: her early settlement had created a prosperous, landed middle sector; and she had dispensed with her army. Thus, Costa Rica had no modern experience of a landed elite uniting with the military to dominate national life. This was indeed “revolutionary,” much more so than anything that happened in Guatemala and Nicaragua.

Costa Rica’s revolution began in 1948 when ex-president Rafael Angel Calderón Guardia (1940-1944) attempted to again win the presidency. After the victory of his opponent Ulate, Calderón and his supporters, with the backing of the communists, staged a revolt. José “Pepe” Figueres lead a successful civilian uprising against these calderonistas, and then headed a junta that governed Costa Rica for 18 months.[57] During this period Don Pepe abolished the army, outlawed the communist party, wrote a new constitution,[58] gave women the vote and began the creation of a modern welfare state. Figueres believed that the state should be an instrument of economic power, and so he greatly expanded its control over much of the private sector. He involved the government in banking, insurance, housing, public utilities and transportation.[59] Figueres then turned the government over to Ulate, who ruled until 1953. Figueres himself won the presidency (1953-1958). His policies had engendered much opposition, especially among business interests that objected to Figueres’ economic ideas.[60] His party lost the election in 1958, and Figueres spoke words never before heard in Central American politics: “I consider our defeat as a contribution, in a way, to democracy in Latin America. It is not customary for a party in power to lose an election.”[61]

Although Costa Rican politics over the next thirty years was a long debate about Figueres’ economic policies, none would argue over his elimination of the national army. All political contests would now be carried out solely at the ballot box, and violence virtually disappeared from Costa Rican public life. Is there a Guatemalan or Nicaraguan who would not wish the same for his own country?

Guatemala spent the years after the CIA overthrow undoing the Arévalo-Arbenz reforms. All attempts at land reform were abandoned. Government brutality, especially against the Mayan Indians, continued. In response to this official terror a guerrilla group arose in the highlands. The ensuing civil war cost 100,000 lives, and an equal number fled into refugee camps in Mexico where from time to time the Cabíles of the Guatemalan Army would raid on search and destroy missions. Political life degenerated into a spiral of violence: torture, death squads, kidnapping and ferocious oppression of all possible opposition.[62] At the height of this terror 100 assassinations and 40 kidnappings were occurring every month; Guatemala’s political center was almost eliminated. The Army used classic and brutally efficient counter-insurgency tactics: free-fire zones were established, 1,000,000 Mayans were concentrated in army-run “model cities,” and civil defense patrols were begun. International outcry over Guatemala’s human rights record had no effect; the army was fighting to win.[63] The guerrillas were pushed into the northern jungle region of Petén, where they could only harass, not threaten, the Army.[64] By 1985 the government felt confident enough to write a new constitution providing for a civilian leadership. Elections in 1985 produced the first civilian president in 30 years, Marco Vinicio Cerezo Arévalo.

A reasonable person might assume that the prognosis for change Guatemala is dismal, but this is not the case. Cerezo has done little to investigate the human rights abuses of the last 20 years, but as he himself said, “What do you expect? This is Guatemala.” What is important is that the Army allowed him to serve his full term. Tension has subsided even in the Mayan areas, the military is less visible, some Indians have returned, there is an opposition press and labor is allowed to organize. The 1991 election was a reasonably peaceful one; the new president, Jorge Serrano, began negotiating with the guerrillas and even started to prosecute some military men for death squad activity. There is now the beginning of a normal political culture. What remains to be dealt with is the interminable problem of land reform and the necessity of creating a market economy. This more than anything else would revitalize the middle classes and might even bring the Indians into the national life of Guatemala. I would not invest there just yet, but I might start looking at property.

Nicaragua has no hope, not now nor in the near future. The reason is that the Sandinistas, defeated at the ballot box, have nevertheless maintained themselves in power. Thomas Borge himself admitted as much in a speech after his party’s loss in 1990: “The Sandinistas are prepared to lose an election, but not power.”[65] The FSLN has kept control of the army, the police forces, the labor unions, the courts and every important organ of the Nicaraguan state. It is, as Daniel Ortega said it would be, “ruling from below.” All Sandinista promises to the Contras — free seed, farmland, a smaller army, the return of property — have gone unfulfilled. More than 200 ex-contra leaders have been murdered in the last two years: there have been no prosecutions, and none are expected.[66] Some contras have even returned to the hills, ready to fight again.

Chamorro made an enormous mistake by leaving Humberto Ortega in control of the army. She did this no doubt to placate the opposition, never knowing that communists cannot be placated: it is all or nothing for them. This proved again — if anyone still needs proof — that Marxism is totally incompatable with democracy. Chamorro has yet to make any effort to correct past FSLN abuses.[67] Even her UNO allies have broken with her for her coddling of the Sandinistas. She seems to be allying herself more and more with the FSLN: her son-in-law Antonio Lacayo is accused of diverting U.S. aid funds intended for economic relief to the accounts of Sandinista officials. In several Ortega-like acts Chamorro directed the Sandinista police to prevent Assembly President Alfredo César from his office and then dismissed the entire legislative leadership.[68]

Until the Sandinistas are eliminated from power Nicaragua has no chance to achieve economic and social — to say nothing of political — progress. Indeed, it is still in a state of war waged by other means. Foreign capital avoids the place, recently returned refugees — once full of hope — are again leaving, and the national economy has been reduced to barter. Nicaraguans are exhausted after fourteen years of war, corruption, misery, and political and moral collapse. Such is the legacy of the Sandinistas and their “revolution of the poets.”

The legacy that Costa Rica must deal with is that of Figueres: the overpowering state role in the economy. Costa Rica today faces a huge budget deficit, low growth rates, a widening trade gap and a weakened colon. Costa Rica simply cannot afford the amount of money it spends on public welfare. Further drags on her economy are a state-owned banking system that restricts foreign currency transactions, a tariff rate that can exceed 100 percent, a haphazard electrical supply and a ridiculous phone system. What all this means is that Costa Rica does not work very well. Even so most Costa Ricans have long accepted the social contract that has allowed them free schools and health care, clean water, national insurance and political stability. The Costa Ricans’ acceptance is reflected in their high degree of political participation that lends legitimacy to the government. In political science jargon, there is “a high degree of correspondence between the actual governance of the system and the formal political arrangements described in the constitution.”[69] In short, Costa Ricans are content with the system.

Whatever change that lies ahead will come first to the economic realm. Costa Rica’s economy is simply ill-prepared for the modern world. She has no obvious comparative advantage in any export item, little industrial development and a one-crop economy — coffee, of course. Costa Rica has not integrated herself into the international economic system in any meaningful way: most foreign investment there is in tourism and associated service sectors. Some Costa Rican elites might one day find it necessary to alter the economic system to better compete with Mexico and South America for foreign capital and U.S. attention, although there is little evidence as yet of any domestic entrepreneurial activity. Costa Rica’s political system adds to her stagnation: there are two political parties that alternate in power, but neither party seriously questions the state’s role in the economy. At the sub-presidential level, the same faces from the same families appear repeatedly in different ministries.[70] Very substantive political change is thus, for the time being, unlikely. Most probably she will remain what she has been for some time: a friendly backwater where one can go to relax on white palm-encrusted beaches and forget for a while the modern world. After our discussion of Guatemala and Nicaragua, that might not be such a bad thing.

2. Shidmore, Thomas E., and Smith, Peter H. Modern Latin America. New York: Oxford Press, 1992.

3. Diamond, Larry, et. al., eds. Democracy in Developing Countries: Latin America. Boulder: Lynne Reiner, 1989.

4. Herring, Hubert. A History of Latin America. New York: Alfred A. Knopf, 1968.

[1]For a somewhat macabre look at the psychological aspects of Perón’s rule, see V.S. Naipaul, The Return of Eva Perón.

[2]Perón spent time during World War Two with Mussolini’s Alpine troops and as Military Attaché in Italy. No doubt the governing style of Il Duce had great influence upon him.

[3]There is a remarkable similarity between Juan and Eva Perón and Justinian and Theodora, Byzantine Emperor and Empress of the sixth century. Like Eva, Theodora had been an actress and a prostitute. Like Eva, Theodora gave her husband essential support at a crucial point in his reign (the “Nika” riots). Like Eva, Theodora died of cancer. Like Eva, she was sanctified after her death. Like Juan Perón, Justinian completely reorganized the apparatus of the state. Like Perón, Justinian reduced it to bankruptcy.

[4]The story of the Peróns, said Borges, “is a story I could never write.”

[5]Paul Johnson, Modern Times (New York, 1991), 617.

[6]For a blow-by-blow description of the last days of the Illía presidency, see John Gunther, Inside South America (New York, 1966), 196-197.

[7]What an amazing year! The Red Brigades, the Montoneros, the Tupamaros, the PLO, the Japanese Red Army, the Weathermen, the ETA, the IRA, the Bader-Meinhoff and the PFLP all were formed or began extensive operations in that year. Argentina had good company.

[8]But had the old tyrant really left? All during this period he kept in communication with the leaders of his movement, giving them advice, stirring things up and planning his return.

[9]Lest we become enamored of our own moral superiority, let us remember our own Civil War was fought to, among other things, rid the nation of the “toxin” of slavery.

[10]The Argentine military thought that Ronald Reagan would support it. This was a reasonable belief: it had already agreed to help Reagan in his war against the Sandinistas by training and arming the contras. The Falklands War ended Reagan’s plans and forced him to look at other avenues for contra aid.

[11]Many find something sinister in the fact that the CIA supported Frei’s campaign, just as it later helped destabilize Allende. But why should a government not send aid to governments that it supports? There is a term for this: it is called Foreign Policy.

[12]Thomas Skidmore and Peter Smith, Modern Latin America (Oxford, 1992), 129-130.

[13]Skidmore and Smith, ibid., 133. The authors imply that there was not much difference between Allende and Tomic because Tomic also wanted to completely nationalize the copper companies; thus, the pro-socialist vote was larger than it would seem. However, nationalization was supported by all sectors of Chilean society and could not be identified by party label.

[14]The election was thrown into the Congress where, according to the constitution, the winner of a race where no candidate won a majority would be decided. Custom dictated that the candidate with the most votes would win, so the presidency went to Allende, but only after he had promised not to subvert the constitution. A reasonable person might ask why the congress felt it necessary to exact such a promise from Allende, something never before done.

[15]Carlos Rangel, The Latin Americans (New York, 1977), 267. These camps were off-limits to even the Chilean military.

[16]Eva had pleaded with her consort to allow her to arm the workers. Had Perón taken this advice he might not have been overthrown.

[17]Castro was so impressed with his acolyte that he graced Chile with his presence for an entire month in 1971. Castro traveled the length and breadth of Chile, haranguing the masses with six hour speeches.

[18]Allende’s inflation occurred before the oil shocks of the same year, and cannot be blamed upon them.

[19]He was wrong. Pinochet had no use whatsoever for politicians of the ancien régime.

[20]In the end Moscow did nothing to aid its client, not even issuing credits. Allende was worth more to the Soviets dead than alive.

[21]Allende, in true totalitarian style, flaunted laws, set up parallel organizations to compete with the state, tried to create a “popular assembly” to dominate the congress and began to build a public education system to spread communist propaganda. He ignored a Supreme Court ruling accusing him of refusing to recognize the decisions of the courts.

[22]Between presidential terms Vargas won a seat on the federal senate. When he ran for the presidency in 1950 he found support from a powerful coalition of socialists and labor, thus creating an unfair comparison with Perón.

[23]As in Chile and Argentina, it certainly had a point: Brazil was ungovernable by conventional methods due to “the inherent instability of democracy amid rapid social mobilization and extreme inequality.” — Diamond, et. al., eds., Democracy in Developing Countries (Boulder, 1989), 141.

[24]This road, BR 364 (the Transamazonica ), connects Brazil’s coastal cities with her rural heartland. Belén, Manaus, Pôrto Velho and Brasilia can now be reached from any point in the nation. More than anything else, this road has opened Brazil’s back country to development and remains the military regime’s most enduring legacy.

[25]These included using the public sector for development, relying upon a steady injection of foreign investment, and maintaining import controls, currency restrictions and high tariffs.

[26]In his Wealth of Nations, published in 1776, the same year as the Declaration of Independence.

[27]“Under extra-ordinarily unfavorable circumstances, the Chilean authorities have engineered an economic turnaround without precedent in the history of Chile.” — The World Bank, quoted in Paul Johnson, op.cit., 739.

[28]Arturo Valenzuela, in Diamond, op. cit., 159, calls the Pinochet regime “one of the harshest dictatorships of the contemporary world.” This, in the era of Brezhnev, Kim-Il-Sung, Castro, Pol Pot, Idi Amin, et. al., is pure nonsense. Valenzuela should — and does — know better.

[29]The Wall Street Journal, Mar. 10, 1993, A10.

[30]Brazil might consider herself lucky in this case. Not even the military wants to tackle the mess.

[31]But then, who are the guilty? Viola, with his “Dirty War?” or Allende, with his Marxist dreams?

[32]Hubert Herring, A History of Latin America (New York, 1968), 475.

[33]It can be argued that the reforms of Ubico, however skewered toward the upper classes, did in fact lay the groundwork for Arévalo and Arbenz.

[34]Thomas Skidmore and Peter Smith, op. cit., 339; Hubert Herring, op. cit., 476.

[35]United Fruit had an investment of $60 million; International Railways of Central America, $50 million; Empresa Eléctrica, $15 million. All were American-owned.

[36]The PGT had at most 2,000 members, and probably considerably fewer. Its actions presented a text-book case on how a small but determined minority could dominate a weakly-lead state.

[37]The PGT, like communist parties before and since, was interested in power, not truth. United Fruit paid three times the average daily wage in Guatemala. Its large land holdings were necessary for the proper cultivation of bananas: banana culture had to be constantly shifted from field to field to prevent soil exhaustion and the spread of Panama Disease.

[38]The lower amount represents the value that United Fruit placed on its holdings for the purposes of Guatemalan taxation. Much has been made of the differences in these values, that somehow United Fruit was cheating Guatemala of taxes due on the actual market value of the land and therefore should have accepted the lower value as fair and reasonable. However, foreign enterprises whether here or in other countries routinely underestimate the actual value of their holdings. The reasons for this are due to the rather arcane principles of international accounting, taking into consideration foreign currency exchange regulations, ease of capitalization and allowances for depreciation. It should be remembered that the Guatemalan government itself had given tax breaks to United Fruit and other foreign companies to encourage investment and industrialization.

[39]Skidmore and Smith (op. cit., 340) quote a much higher price, $15,854,849, which is somewhat deceitful. Their amount comes from the U.S. Department of State, not from United Fruit. The higher value bolsters their claim that the United Fruit stock holdings of certain high-level U.S. officials was an important factor leading up to the overthrow of Arbenz. Thus, they tie U.S. foreign policy during the Cold War to the price of bananas in Guatemala.

[40]Carlos Rangel, op. cit., 52.

[41]Such as the Bay of Pigs. There is no doubt that the CIA was proud of what it had accomplished in Guatemala. This pride lead it into thinking that all clandestine operations in Latin America would be this easy.

[42]Earthquake: 1972; Tidal Wave: 1991 — flooded the port of Corinto; Hurricane: 1990 — destroyed the Atlantic town of Bluefields; Civil War: 1978-1979, 1982-1990; Revolution: 1979-present; Cholera and Typhus: 1990 — after the destruction of many public health facilities by the 1990 storm; Corruption: FSLN scandals involving vote fraud, diversion of aid funds, seizure of private property, many other examples; Degeneracy: nearly one-half of the ruling junta was homosexual, the FSLN engaged in drug trafficking; Murder: Humberto Ortega is wanted in Costa Rica for homicide; Genocide: against the Miskito Indians.

[43]Interview with Sydney Gruson, November 16.

[44]Somoza had attended West Point, where one of his classmates was Alexander Haig. This fact no doubt gives plenty of ammunition to conspiracy theorists.

[45]Peter Davis, Where is Nicaragua? (New York, 1987), 19-24. Davis was the producer of the popular agit-prop cinema piece Hearts and Minds. In no way can he be considered as an apologist for Somoza; he is, in fact, an unabashed leftist. He dedicated his book to Victor Navasky.

[46]Named after Augusto Sandino, a Nicaraguan “freedom fighter” who fought against U.S. intervention in his country. The FSLN (Frente Sandinista para la Liberación Nacional ) was a disparate coalition united only by their hatred of Somoza.

[47]There is more: almost one-half of the population was under 15 years of age; life expectancy for males was only 60. The life expectancy for Costa Rica, a nation less than two hours by car from Managua, was 78.

[48]Thus, children were taught numbers by counting grenades and rifles, were required to wear the red Sandinista uniform while swearing eternal hatred of the Yankee, and were told to be vigilant of any sign of disloyalty in their parents.

[49]The official FSLN organ, La Barricada, has never missed an edition, which was just as well: as toilet paper is in constant short supply, Nicaraguans keep the latest issue of the Sandinista newspaper in the baño.

[50]This included sending arms to the rebels in El Salvador as well as attempting to destabilize Costa Rica. This infuriated the Costa Ricans for they had allowed the Sandinistas use of their territory against Somoza. To this day there is no love lost between these two nations.

[51]Thomas Skidmore and Peter Smith, op. cit., 329.

[52]There simply is not the time nor the space to do this subject any justice. All I can offer here is the briefest of outlines.

[53]The Democrats tried to stop Reagan any way they could. Recall the “Dear Commandante” letter sent by Senators Kennedy, Metzenbaum, Biden, et. al. asking Mr. Ortega to hold out until a democrat could replace Reagan, and the interminable fights over funding for the Contras.

[54]Much nonsense has been said and written about the political makeup of the Contras. They were an umbrella organization that directed the military and political opposition to the FSLN. Most of their leadership — Enrique Bermudez, Alfonso Robelo, Eden Pastora — had in fact been associated with the victorious coalition against Somoza. Overcoming enormous international hostility, propaganda and lies, they fought the Sandinistas to a standstill that lead to the elections of 1990.

[55]Some call the 1984 election free and fair, although opposition groups were broken up, their media outlets were shut down, poll watchers were arrested and transport to polling stations was unavailable for anti-Sandinista groups.

[56]For a humorous look at the 1990 elections see P.J. O’Rourke’s Give War a Chance (New York, 1992).

[57]Calderón received the backing of Somoza and Honduras’ Carías; Figueres was supported by Arévalo.

[58]The constitution disallowed any re-election for the presidency.

[59]For this he was called a communist by the presidents of Cuba, Nicaragua, Venezuela, Colombia and the Dominican Republic. They sponsored a 1955 invasion of Costa Rica, which was easily repulsed.

[60]One economic problem he did not have was with United Fruit. As president Don Pepe negotiated a new and reasonable contract with the company that boosted Costa Rica’s profit share from 10 percent to 30 percent.

[61]Hubert Herring, op. cit., 500.

[62]This violence was restricted to Guatemalans. Foreigners remained untouched.

[63]Ronald Reagan cut off arms to Guatemala in 1983. Israel picked up the slack and did a brisk business there, supplying arms and training to the Guatemalan Army. The U.S. resumed arms deliveries under Bush.

[64]They are still there; they number about 6,000.

[65]P.J. O’Rourke, op. cit., 61.

[66]The National Review, March 1, 1993, 19.

[67]Robert S. Greenberger, op. cit.

[68]Jeane Kirkpatrick, The Conservative Chronicle, Feb. 24, 1993, 30; The Wall Street Journal , March 12, 1993, A11.

[69]Larry Diamond, et. al., eds., Democracy in Developing Countries, (Boulder, 1989), v. 4, John Booth, “Costa Rica: The roots of Democratic Stability,” 387.

[70]Most political and economic power is concentrated within a few families. It is no accident that the current president is Rafael Calderón Fourier, the son of the ex-president. A candidate for next year’s presidential election is José María Figueres, son of Don Pepe.