United States Department of State's Responses to Property Seizures in Latin America Nathan D
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Old Dominion University ODU Digital Commons Graduate Program in International Studies Theses & Graduate Program in International Studies Dissertations Winter 1996 "Never Draw Unless You Mean to Shoot": United States Department of State's Responses to Property Seizures in Latin America Nathan D. Younge Old Dominion University Follow this and additional works at: https://digitalcommons.odu.edu/gpis_etds Part of the International Law Commons, International Relations Commons, and the Latin American History Commons Recommended Citation Younge, Nathan D.. ""Never Draw Unless You Mean to Shoot": United States Department of State's Responses to Property Seizures in Latin America" (1996). Master of Arts (MA), thesis, International Studies, Old Dominion University, DOI: 10.25777/bzag-n679 https://digitalcommons.odu.edu/gpis_etds/101 This Thesis is brought to you for free and open access by the Graduate Program in International Studies at ODU Digital Commons. It has been accepted for inclusion in Graduate Program in International Studies Theses & Dissertations by an authorized administrator of ODU Digital Commons. For more information, please contact [email protected]. “NEVER DRAW UNLESS YOU MEAN TO SHOOT”: U.S. DEPARTMENT OF STATE’S RESPONSES TO PROPERTY SEIZURES IN LATIN AMERICA by NATHAN D. YOUNGE B.A. June 1988, American University A Thesis submitted to the Faculty of Old Dominion University in Partial Fulfillment of the Requirement for the Degree of MASTER OF ARTS INTERNATIONAL STUDIES OLD DOMINION UNIVERSITY December 1996 Approved by: •an E. Supplee (Director) Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ABSTRACT This thesis examines the U.S. Department of State’s diplomatic handling of disputes over the seizure of U.S.-owned property in Latin America between 1937 and 1973. Seizures in Bolivia, Mexico, Guatemala, Cuba, Peru and Chile are used as case studies, and provide examples of successful and unsuccessful diplomatic outcomes. Several key factors are analyzed in each dispute, including whether the Department took a conciliatory or confrontational approach toward each country, the kind of economic pressure applied, the situations under which the Department opted for official diplomatic involvement, and the types of informal facintative assistance provided to U.S. claimants. The thesis then attempts to determine which measures helped to resolve outstanding disputes and which did not. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS Page ABSTRACT ....................................................................................................................................» LIST OF ILLUSTRATIONS....................................................................................................... v LIST OF ABBREVIATIONS ...................................................................................................vi SECTION I OVERVIEW Chapter I. IN TRO D U C TIO N ............................................................................................. 2 II. LATIN AMERICAN AND U.S. PERSPECTIVES ON PROPERTY SEIZURES ................................................................................... 9 THE LATIN AMERICAN PERSPECTIVE .................................................9 THE U.S. PERSPECTIVE ........................................................................ 12 CONCLUSION ........................................................................................... 17 SECTION II CASE STUDIES III. ERA OF THE GOOD NEIGHBOR POLICY: BOLIVIA AND MEXICO ....................................................................................................... 20 BOLIVIA ....................................................................................................... 20 BACKGROUND ............................................................................. 21 THE STATE DEPARTMENT RESPONSE ............................ 24 MEXICO ....................................................................................................... 32 BACKGROUND ............................................................................. 33 THE STATE DEPARTMENT RESPONSE ............................ 39 CONCLUSION ........................................................................................... 49 IV. COLD WAR ERA SEIZURES: GUATEMALA AND CUBA 52 iii Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Page GUATEMALA .............................................................................................. 52 BACKGROUND ............................................................................. 53 THE STATE DEPARTMENT RESPONSE ................................56 CUBA ............................................................................................................ 66 BACKGROUND ............................................................................. 66 THE STATE DEPARTMENT RESPONSE ................................70 CONCLUSION ........................................................................................... 78 V. POST-CUBAN COLD WAR SEIZURES: PERU AND CHILE ... 81 PERU ............................................................................................................... 81 BACKGROUND ............................................................................. 82 THE STATE DEPARTMENT RESPONSE ............................ 90 CHILE ............................................................................................................ 100 BACKGROUND ............................................................................ 100 THE STATE DEPARTMENT RESPONSE ............................ 109 CONCLUSION ........................................................................................... 123 SECTION III CONCLUSION VI. RESULTS AND CONCLUSIONS ........................................................ 127 BIBLIOGRAPHY ...................................................................................................... 134 VITA ............................................................................................................................. 143 iv Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF ILLUSTRATIONS Page Figure 1. Oil Production in Mexico, L909-1937 ......................................................... 35 2. U.S. Bilateral Economic Assistance to Guatemala, 1946-1961 .... 63 3. U.S. Bilateral Assistance to Peru, 1962-1976 .......................................... 96 4. U.S. Bilateral Loans and Grants to Chile, 1964-1976 ......................... 112 Table 1. Mexican Oil Settlements...................................................................................48 2. Final Statistical Report on Cuban Claims Program ................................. 76 3. Standard Oil's Valuation of Properties Seized by Peru ........................ 89 4. Chilean Government Rulings on Compensation to American Mining Concerns......................................................................................... 105 5. OPIC Claims Resolved by Cash Settlements and Guarantees .... 121 v Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF ABBREVIATIONS AID U.S. Agency for International Development APRA American Popular Revolutionary Alliance (Peru) CHILTELCO Compaiua de Telefonos de Chile CIA Central Intelligence Agency EPF Empresa Petrolera Fiscal (Peru) FCSC Foreign Claims Settlement Commission IDB Inter-American Development Bank IMF International Monetary Fund INRA National Institute of Agrarian Reform (Cuba) IPC International Petroleum Company ITT International Telephone and Telegraph Company NSC National Security Council OAS Organization of American States OPIC Overseas Private Investment Corporation RG Record Group (U.S. National Archives) STPRM Syndicate of Oil Workers of the Mexican Republic UN United Nations Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. SECTION I OVERVIEW Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER I INTRODUCTION Latin American seizures of U.S.-owned property over the last six decades have totaled more than three billion dollars. Starting with the first major Bolivian seizure in 1937, the U.S. Department of State shouldered the responsibility of developing a response which balanced political, economic and security issues. In many cases, policies developed for Latin America shaped the U.S. response in other areas of the world. Although the trend in Latin America since the early 1980s has shifted toward privatization of state-owned enterprises, U.S. handling of property seizures in Latin America is vital for understanding the evolution of regional relations in this century. This study will focus on the development of State Department policy toward seizures in Bolivia (1937-42), Mexico (1938-42), Guatemala (1952-54), Cuba (1959-present), Peru (1969-73) and Chile (1970-73). Throughout this period, the State Department faced three types of seizures: "nationalizations," "expropriations," and "confiscations." Each is unique and elicited different responses from the State Department. The term "nationalization" may be described as: The transfer to the State, by a legislative act and in the public interest, of property or private rights