At bottom the Castro problem lies in the special situation which created it—the misery in which most of the Latin American population lives. . . . The only alternative to Castroism is the democratic revolution which Betancourt has started to carry out. If Betancourt is not successful other Castros will come and other Castroisms rise in revolutions commanded by the anti-American extreme left.

—Estado de São Paulo, Brazil

The Alliance for Progress, President Kennedy’s ten year plan for economic aid to Latin America, has the merit of emphasizing the need for social reform as a necessary condition for economic growth. The area’s archaic and unjust systems of taxation and land tenure, as the President tactfully but firmly pointed out, must be modified if the underprivileged masses in those countries are to enjoy the benefits of modern technology. Aid under the program will therefore be channeled to those nations that are prepared to change the feudal characteristics of their society, so that our assistance does not continue to make the rich richer and leave the poor as wretched as before.

Despite the President’s gratifying sophistication about economic aid and his bold rhetoric about “a vast effort, unparalleled in magnitude and nobility of purpose,” it remains to be seen if his policies measure up to Latin American realities and aspirations. For the first time in our history we are threatened by a rival ideology in this hemisphere. Fidel Castro’s Cuba has already abandoned democracy and capitalism to experiment with the Soviet system of dictatorship and state ownership and control. If Castro survives and achieves some measure of success with his headlong course, the much less spectacular Kennedy Plan may seem too slow to Latin America’s awakening masses and the intellectuals who lead them, and a number of Castro-like governments might seize power. A crucial test of our policies will come in Venezuela, Cuba’s Caribbean neighbor, the richest nation in Latin America, governed by an exemplary liberal leader, but still plagued with typical economic and social problems.

In the years that have elapsed since the overthrow of a military government in 1958, Venezuela’s newly fledged democracy has barely managed to survive a series of attacks by forces of both the left and right. The almost successful assassination of President Betancourt last June, the armed uprising by university students in December, and the series of riots, bus burnings, and insurrections by disgruntled military men in the last few months, have made it seem that the country might be about to slide back into some form of dictatorship. To keep the lid on, Betancourt has had to close the schools, bar Cuban newspapers and newspapermen, ban political meetings, jail hundreds of his opponents, and—an embarrassing step for a former revolutionary—call in the army and place Caracas under martial law.

These disorders have been accompanied and intensified by continued signs of economic distress. The construction business is in a severe slump, and exploration and drilling programs in the crucial oil industry are running at about half their 1959 levels. Even with dollar revenues of more than $100 million a month, the current budget has a $250 million deficit; in the past three years Venezuela’s dollar reserves have fallen by more than $1 billion. Despite Betancourt’s promise that last year’s $200 million loan from fifteen U. S. banks was the last his government would make, he is again looking for foreign assistance, and has had to devalue the bolívar, once the world’s hardest currency.

These continued deficits and disorders are particularly discouraging because of Venezuela’s large and varied resources and the honest, able, and patient leadership of Rómulo Betancourt. If liberal democratic reforms do not work here, they are not likely to be successful in less richly endowed Latin American states. Venezuela, unlike some of its Caribbean neighbors, is not overpopulated; its less-than-seven-million people occupy an area one and one-half times as large as Texas, and only 2 per cent of its land area is at present under cultivation. There is a substantial cattle industry (the country has more cows than people), considerable production of such varied crops as coffee, cacao, rice, sugar, corn, and potatoes, and a remarkable variety of mineral resources. In the Guiana Highlands south of the Orinoco, which contain half the area of the country but only 3 per cent of its population, there are still largely unexploited reserves of asbestos, bauxite, coal, diamonds, and so on down to uranium. The current production of iron ore from the same area’s immense reserves feeds a small domestic steel industry and makes Venezuela the largest ore exporter in the world. Dwarfing all these activities is the oil industry, whose output of nearly three million barrels a day makes the nation the third largest producer in the world (after the United States and the USSR) and by far the largest exporter. Oil furnishes 90 per cent of Venezuela’s exports, brings the government revenues of more than $2 million a day, and is responsible for the country’s per capita income of about $800, the largest in Latin America. With such resources to draw from, it would seem that economic difficulties could be no more than temporary.

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Some of the problems facing the Betancourt regime are indeed short-term, dating back from the 1948—58 dictatorship of Marcos Pérez Jiménez. Like most Latin dictators, “PJ” stole large amounts of money and wasted still more. He left behind him $1.2 billion in promissory notes and such expensive mementos as an uneconomic $400 million steel plant, a railroad with hardly any freight or passengers, a money-losing government airline, an incredibly lavish Officers’ Club, and the magnificent (but generally empty) Hotel Humboldt, perched on a 4,000 foot hill overlooking the capital. These white elephants have caused much of the current pressure on the bolívar.

A more serious difficulty, for a country so heavily dependent on a single commodity for export, is the current world oil glut, increasing competition from the USSR, and the closing of certain outlets for Venezuelan crude oil. The proved reserves in the Soviet Union have risen to 60 trillion barrels, the current output of about three million barrels a day is scheduled to grow to nearly twice that by 1965, and consumption, owing to the shortage of Soviet automobiles, will remain comparatively low. Cut-rate Soviet oil has been finding purchasers in half a dozen Latin American countries, and in Finland, Denmark, Sweden, Italy, West Germany, Ceylon, India, and Pakistan as well, so that all the international producers have had to lower prices to meet the competition. When Fidel Castro seized the Standard, Shell, and Texaco refineries in Cuba, the whole of that small but significant market was lost to Venezuela. Argentina, which imported $300 million of oil a few years ago, is now almost self-sufficient, and even exports small quantities, and the Eisenhower-imposed quota on U. S. oil imports has also damaged Venezuelan prospects. As a result of these and other factors, the government’s 63 per cent share of oil profits fell from $823 million in 1958 to $740 million last year.

Betancourt, who is only the second democratically elected president of Venezuela (the first, novelist Rómulo Gallegos, was ousted by a junta of army officers and wealthy landlords in 1948), is of course not responsible for the current economic mess. Having come to power just when the slump started, however, he is blamed for it in the same way that Herbert Hoover was held responsible for the crash in 1929. Agricultural workers and unemployed slum-dwellers remember that they were a little better off, economically, in the booming times of Pérez Jiménez (and the Suez oil crisis); “PJ’s” ouster brought back civil liberties, but these have now been taken away again, prices continue to climb, and jobs are harder to find than ever. It is not surprising that many caraqueños eagerly listen to Prensa Latina’s glowing accounts of how well things are going in Cuba, and have come to agree with Fidel Castro’s attacks on parliamentary democracy as only another disguise for exploitation of the working class.

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The smoldering discontent that lies so close beneath the surface of Venezuelan life is most readily apparent in Caracas, where a quarter of a million people live in slums as primitive as any in South America. In the past fifteen years the capital’s population has shot up from 300,000 to 1.3 million, which is one-fifth of the nation’s total. One sees in Caracas the meaninglessness of per capita income figures; it is quite misleading to strike an average between the bureaucrat or businessman living in a gleaming luxury apartment house and the unemployed laborer living in a hut made of packing cases and corrugated iron, without electricity or running water. Such contrasts are sharper in Caracas than anywhere in Latin America. The windows of the splendid Officers’ Club, for example, look out over a hillside scabbed over with wretched hovels, from which in the rainy season tons of human excrement wash down. Caracas has more cars per hundred people than any other Latin American city, and traffic jams as bad as those in Detroit or Los Angeles. The visitor is therefore bound to be impressed by the Octopus, a new elevated highway connecting the different sections of town; then he gets a chance to look beneath it, and finds thousands of poor squatters using the road as a substitute for a roof. The capital is the only area Betancourt and his Democratic Action (AD) party failed to carry in the 1958 elections. Many of the workers who seized arms when Pérez Jiménez fled still have them, and there is strong fidelista sentiment among the politically important student groups at the university; only the army’s heavy hand keeps order.

The social situation out in the countryside is just as lopsided and unstable. A 1957 survey showed that some four thousand landowners, less than 2 per cent of the proprietors of farms, held about four-fifths of all the cultivated land in the country. Two-thirds of all the farms were smaller than thirteen acres, and 14 per cent less than three acres. Some 350,000 rural families, nearly a third of the total population, were without any land at all. Three-quarters of the working force is in agriculture, but the country still cannot feed itself; wheat, corn, meat, and even eggs must be imported from the United States. Already inadequate urban and rural living standards are threatened by a population increase of 3.6 per cent a year.

These grave social problems are of course nothing new. Venezuela’s masses have always been poor, dirty, landless, hungry, and illiterate; what has changed is their former willingness to endure such conditions as part of the natural order of things. The well-named “revolution of rising expectations,” kindled by the sight of luxuries at their very doorstep and fanned to a blaze by propaganda emanating from Moscow, Peiping, Havana—and Hollywood—is as strong in the Caracas slums as in any underdeveloped area in the world. Despite his government’s economic difficulties, Betancourt is doing what he can in the way of land reform, housing programs, and increased educational opportunities. The difficulty is that expectation outruns achievement, and that opposition parties can always promise more than the government in power is able to deliver.

As is usual in Latin America, the cutting edge of discontent is provided by the students. The armed groups that fortified the School of Pharmacy and defied the police last December showed the source of their ideology by nicknaming their strong points “Stalingrad” and “Sierra Maestra.” They are supported by the increasingly radical Republican Democratic (URD) party, which quit the government coalition last November; by the Communists, who got 6 per cent (160,000) of the congressional votes in 1958; and by the Movement of the Revolutionary Left (MIR), a fidelista splinter of the AD. On the other flank Betancourt is (at times literally) under fire from officers involuntarily retired in 1958, disgruntled captains and colonels on active duty who long for the return of military rule, and occasional assassins hired by Pérez Jiménez or by Generalissimo Rafael Leonidas Trujillo of the Dominican Republic.

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The troublesome and dangerous job of dealing with these almost overwhelming internal difficulties is complicated by the increasingly tense international situation in the Caribbean. Dictatorships of the left and right feel themselves menaced by Betancourt’s middle-of-the-road regime; the Venezuelan president still bears the scars caused by a dynamite explosion arranged by Trujillo’s thugs last June. This attempt on the life of their freely elected ruler by a hated despot naturally brought a wave of sympathy in Betancourt’s favor, and strengthened his position. The appeal to violence emanating from Havana is more pervasive and more dangerous. Cuba’s economic problems—monoculture, the latifundio, and dependence on the U.S. market and capital investments-—are so similar to Venezuela’s that Castro’s radical solutions naturally have a considerable amount of appeal to Venezuelan students, labor union leaders, and left-wing politicians. The social and economic program of the Cuban revolution, its achievements suitably touched up for export, are constantly reiterated by Cuban “tourists,” diplomats, and the Prensa Latina radio station. Before Betancourt barred Cuban emissaries and the Venezuelan police shot the leader of the 26th of July Movement in Caracas, Castro spent more money in Venezuela than anywhere else. In Havana last Christmas I met quite a few oil workers and union leaders from the Lake Maracaibo region who had been invited by the Cuban government for the year-end celebrations. They were impressed by the farm cooperatives they had seen and were violently in favor of the revolution. “If the Yankees ever attack Cuba,” one of them said to me, “we will blow up every one of their wells in Venezuela.”

Betancourt’s struggle against fidelismo has not been helped by the short-sighted policies of the Dulles-Herter State Department and the blundering incompetence of those Senators from Mississippi, Florida, and Alabama who play such key roles in shaping our Latin American policy. Venezuelans remember that Pérez Jiménez got U.S. armaments, loans, and the Legion of Merit, the highest award that can be given to a foreign citizen; nobody in Washington objected to “PJ’s” tyranny or incredible waste and graft, so long as he met his obligations to New York bankers and cooperated with Standard Oil, Mobil, Gulf, Texaco, and the rest. During his years of exile Betancourt had to swallow numerous slights from American officials anxious to remain on good terms with the dictator, and the restoration of democratic government was greeted by some of those officials with the sour comment that “the investment climate in Venezuela has rapidly worsened.”

The United States’ moves against the revolutionary Cuban regime have also been managed with little regard for the awkward position in which they placed Venezuela. Last June, for example, the Venezuelan Labor Federation (CTV) and several URD leaders pledged themselves to support the Cuban revolution against its “Yanqui” enemies. The U.S. diplomatic delegation at San Jose that August, however, insisted on a strong anti-Castro stand, a step which most Latin American governments would have preferred to avoid. Angel Luis Arcaya, Betan-court’s URD foreign minister and chief of the Venezuelan delegation to San Jose, fought for a milder resolution; when beaten, he refused to sign the final declaration, and when he returned to Caracas, he was greeted as a hero. It was Betan-court’s dismissal of Arcaya, followed by the resignation of all the URD cabinet members, that led to the student riots I have mentioned above. Senators Ellender and Eastland did not help matters when they declared that “what Latin America needs is more dictators like Trujillo” and “wished there was a Trujillo in every country in Central and South America.” Shortly afterward, Trujillo was given 322,000 tons of the sugar quota taken away from Cuba. Our diplomatic “triumph” at San Jose left Castro as strongly in power as ever and achieved nothing but the weakening of an invaluable ally.

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In the meanwhile, the streets of Caracas, still heavily guarded by troops equipped with tear-gas bombs and machine guns, are quiet. The leftist opposition has evidently decided that Betancourt cannot be overthrown by a popular revolution just now, and that a more patient policy is indicated. The government’s repressive measures, they believe, will be a continuing source of resentment, and in the long run they do not think Betan-court’s moderate reform program will satisfy popular aspirations. The success or failure of these programs during the next few years, will determine the political future of Venezuela, and it is in implementing them that Betancourt is running into a number of obstacles.

A major and seemingly ineradicable difficulty is the continued dominance of the military in Venezuelan public life, and the generals’ habit of regarding themselves as a kind of super-legislature. Betancourt remembers quite well that his mentor Gallegos was thrown out of office when the army decided that it did not like his land and tax reforms, and he therefore treats the opinions of the defense minister, General Antonio Briceño Livares, with great caution and respect. The army’s loyalty, moreover, must be paid for. Betancourt is obliged to make continual obeisances to the “important role” of the military as “the advance guard for the defense of our sovereignty,” and to spend a quarter of his budget on the practically autonomous armed forces. Even so, the 150-year-old habit of conspiracy continues. No elected president has ever finished out his term in Venezuela, and if Betancourt is unlucky or makes a major misstep, the army will send him to join his unfortunate predecessors.

The government’s land reform program has also had to be carried out with excessive moderation, and in such a way as not to interfere with any vested interests. Venezuela has never had a tax on land, and Betancourt does not dare to impose one. The Agrarian Reform law passed a little over a year ago will not touch privately-owned estates that are under cultivation, and guarantees payment in full for whatever land is expropriated. One plantation in Portuguesa State, for example, was purchased for $480,000 and turned over to some three hundred farm families, who also had to be given loans for seed, equipment, and living expenses. Other farmers have been settled on formerly unused government lands, which require expensive penetration roads and irrigation projects. At the present time about twenty thousand farm families have been resettled on something like two million acres. As Congressman Selden of Alabama pointed out after a visit to Venezuela last fall, resettlement of all the landless rural families at the present rate will take at least fifteen years and cost about $7 billion. Venezuela does not have that much money, and may not have that much time to head off a social revolution. Mild as it is, the agrarian program is bitterly resented by the landholding oligarchs, who see themselves losing their supply of cheap labor and their old status as feudal lords.

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Industrializing the nation, the dream of every Latin American government, also presents grave problems. Venezuela is one of the highest cost countries in the world, perhaps the only one whose citizens fly to Miami or New York for an “inexpensive” vacation. Under their new contract the oil workers will receive $23 a day in wages and fringe benefits, so that it is more expensive to hire a man in Venezuela than in Texas or California. These high costs have edged Venezuelan crude oil out of several markets, and make it quite impossible for manufacturers to find an overseas outlet. As a result, Venezuela has had to protect her infant industries with high tariff walls, and to stay outside the developing South American Common Market. But the home market of 6.6 million people, nine-tenths of them bitterly impoverished, cannot support any sizable industrial plant. Betancourt has recently chartered a government industrial corporation which he hopes will make “a second Ruhr” of the Orinoco Valley, but even the officials in charge admit that it will take decades to turn their ambitious blueprints into reality.

The government programs in education and housing are also handicapped by prior commitments and lack of funds. During his first two years in office Betancourt built schools for some 90,000 pupils and provided free lunches for some 100,000 poor children. But half the population remains illiterate, and tens of thousands of students are still without classrooms. Fidel Castro’s Cuba, with infinitely smaller resources, and at the cost of a social civil war, has done a great deal more. Illiteracy in Cuba should be all but eliminated by the end of this year. The Venezuelan housing program also lags behind Cuba’s. Less than 12,000 low-cost houses have so far been built, and a scandalously large number of them have been set aside for officers’ families, who certainly do not need additional subsidies.

Since the government cannot cut the army’s budget and is unwilling or unable to impose land or income taxes, the only way to speed up these programs would be to draw greater revenue from the oil companies. But the present state of the world market for oil is discouraging; Venezuela exported 30 million more barrels in 1960 than in 1959, yet received 56 million bolívares less in income. Betan-court’s decision not to grant any more concessions has brought new investment to a halt, yet the government oil company formed last year is too small and slow-moving to take up the slack. Officials of the company were not even appointed until a year after its incorporation, and its director hopes, “optimistically,” to produce ten thousand barrels a day by the end of this year (as against 1.1 million a day for Creole, a subsidiary of Standard Oil). The company seems to have been established merely as a sop to the nationalist groups who have been demanding a Castro-like expropriation of foreign-owned properties.

The resignation this March of the finance minister, Dr. Thomas Enrique Carillo Batalla, after only three months in office, is a sign of renewed financial crisis. Dr. Carillo’s orthodox program, aimed at balancing the budget and halting the flight of capital, depended upon a $900 million long-term loan from Washington, a sum vastly in excess of anything the U.S. was willing to put up. The collapse of his minister’s ambitious plans means still another setback for Betan-court’s hope of reviving Venezuela’s economy and financing liberal reforms.

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Despite his difficulties Betancourt is, of course, sympathetic to the Kennedy program; his comment upon it was that “the White House begins to speak a language that has not been heard since the days of Franklin Delano Roosevelt.” Venezuela’s president is an old personal friend of A. A. Berle, Kennedy’s chief adviser on Latin American affairs. Betancourt is also highly satisfied with the appointment of Teodoro Moscoso as our next ambassador to Venezuela. Moscoso, the former head of “Operation Bootstrap,” and the first Puerto Rican appointed to ambassadorial rank, speaks Spanish as his native language and has an exceptional grasp of Latin American economic problems.

Despite these promising auguries of understanding and good will, Kennedy too must reckon with internal political factors that may adversely affect his Latin American program. It is going to be very hard to persuade Congress to provide more money for loans to nations that have squandered so many billions already; Representative Otto Passman of Louisiana, whose subcommittee is now studying the initial request for $500 million, has a long record of successfully cutting down foreign aid appropriations. Venezuela’s mineral exports to this country are also under pressure. When Labor Secretary Goldberg visited Hibbing, Minnesota, recently to investigate unemployment there, for example, he was told that “Charity begins at home,” and asked what the government intended to do about curbing iron ore imports. President Kennedy has also continued the quota on oil imports. West Virginia coal miners and U.S. oil producers, unlike Venezuelans, can vote and make campaign contributions, and Sam Rayburn and Lyndon Johnson must be kept satisfied. Such pressures as these may force further cutbacks and delays in a program that seems somewhat inadequate to begin with, and the Venezuelan people may not be willing to wait.

The consequences of Betancourt’s failure to resolve his domestic difficulties could be very serious. A military dictatorship no longer seems a real possibility, for the Venezuelan people would refuse to work for such a government. But if democratic reform fails in Venezuela, the nation is almost sure to take a sharp turn toward Castroism, and a Fidel Castro in Caracas would make our current troubles with Cuba look petty. Cuban sugar is not, after all, an essential commodity, and because Cuba is an island she can be effectively isolated by the U.S. navy operating out of our bases on the mainland and at Guantanamo. But Venezuela supplies a substantial part of the Western Hemisphere’s oil, and two-fifths of U.S. iron ore imports; U.S. businessmen have $3.5 billion invested in the country, three times their former stake in Cuba. From a strategic point of view, Venezuela’s impenetrable mountain regions are ideal for Castro-style guerrilla warfare, and her land frontiers border the most impoverished and rebellious regions of Brazil and Colombia. These dark perspectives may seem rather remote, but after observing Fidel Castro’s rapid leftward course we cannot ignore the possibility of the same thing happening in countries like Venezuela that suffer from the same social ills that bedeviled pre-1958 Cuba.

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