The United States pursued an active policy toward the Third World, or "developing countries," as they were designated in UN jargon - as did Canada and West European countries, joined by Japan as it became richer. Soviet interventions in developing countries, especially in the Middle East and Africa, mainly in the form of grants of military equipment and training and resident technical advisers, more rarely as financial assistance, were a source of frustration and irritation to successive American administrations during the 1960s and 1970s. The US government tried to counter these measures, both by preemption and by direct response.
The program that captured most imagination in the United States and indeed in many developing nations was the Peace Corps. President Kennedy created it in 1961 to mobilize the energy, enthusiasm, and idealism of young adults, as he thought the Communist countries (especially Cuba) were able to do. This program sent volunteers (only expenses were covered by the government) to developing countries to work in towns and villages on anything that could be helpful, mainly teaching and public health. Starting from nothing, the program grew to over 10,000 volunteers by 1964, in forty-six countries.52 It reached a peak expenditure of $110 million in 1968, before declining as Nixon showed less interest in it. The volunteers went abroad neither as diplomats nor intelligence agents, but to do good in ways envisioned largely by each individual. The experience exposed young Americans to different and much less privileged parts of the world; the program also exposed people in developing countries to idealistic Americans, unencumbered by the exigent requirements of US government policy. By all accounts, the Peace Corps was highly successful. In recipient countries, the demand for volunteers often greatly exceeded the supply. Many of the Americans who volunteered felt their careers were decisively shaped by their Peace Corps experience.
Kennedy also altered the guidelines of the United States Information Agency (USIA). Previously, it had disseminated information about the United States around the world and had focused on doctrinaire material about the merits of capitalism. Now, it provided more realistic and pluralistic accounts of life in the country. Its budget, moreover, was nearly doubled over the decade, 1960-70.
Kennedy also built on earlier legislation and created a "Food for Peace" program. American agricultural products were exported to developing countries not only in humanitarian emergencies (for example, due to drought), but more generally to alleviate malnutrition and to contribute to development projects through the budget of the recipient country. This program grew sharply fTom $350 million in 1960 to over $1.6 billion in 1965 before stabilizing between $1-2 billion annually. It had the advantage of appealing greatly to US farmers, who under US agricultural support programs were producing surpluses of several products that periodically became fiscally burdensome.
It had the disadvantage, as was later discovered, of diverting the attention of recipient governments away from improving their indigenous agricultural production and productivity, and sometimes depressing the incomes of their farmers. But it was typically appreciated by recipient governments, and it created a source of US leverage insofar as the threat of cutting food aid could occasionally be used to alter undesired behavior, as noted above in the case of Egypt and perhaps most dramatically in the case of India.
The United States had had foreign assistance programs since the late 1940s, most notably the Marshall Plan to help Europe recover from World War II (Eastern European countries were invited to join, but at Soviet insistence declined to participate - one of the earliest signs of the sharp division of Europe that was to persist for four decades). After the Marshall Plan, US bilateral aid (as opposed to loans for development projects from the World Bank) was largely in the form of technical assistance until the Development Loan Fund was created by the Eisenhower administration in 1958. Kennedy felt that the US aid program lacked overall strategic vision and that it was guided too much by short-term, Cold War considerations. Earlier programs were combined in 1961 into the Agency for International Development, with the charge of focusing on economic development and taking a longer-term view of each recipient country’s prospects and how they could best be assisted. Kennedy tried but failed to get congressional support for multiyear appropriations, and his Department of Defense objected to incorporating military assistance in AID’s mandate. Moreover, economic assistance levels actually declined for several years due to congressional skepticism combined with outright opposition. Nonetheless, US economic assistance was somewhat reoriented toward development objectives. The largest recipients of US economic assistance during the period 1966-72 were, in order of amount received, India, South Vietnam, Pakistan, South Korea, Israel, Brazil, Turkey, and Colombia, ranging from $3.7 billion for India to $600 million for Colombia.
A component of economic assistance that received special attention was the Alliance for Progress. Latin America, it was felt, had been neglected by US policymakers, and such attention as they did focus on the region went mainly to protecting American business interests. After the unhappy developments in Cuba, Kennedy felt the need for a more affirmative, preemptive program for Latin America, and the Alliance for Progress was his response. This component of the aid budget grew sharply during the 1960s - possibly with some effect. Soviet adventurism there was notably lower than in some other parts of the world, although it was not altogether absent. Cuba, however, sometimes encouraged and assisted revolutionary groups and local Communist parties.
Finally, just as the Soviet Union supported many governments by providing arms and other military equipment, so did the United States. Indeed, the United States in total exported nearly twice the value of military equipment - some as sales to allies, some provided as foreign assistance to developing countries. The assistance sometimes included money for training. Military grants generally exceeded $1.5 billion a year in the early 1960s, then rose steadily to a peak of $4.5 billion in 1972. The steep increase reflected the US attempt to shift military responsibility to the government of South Vietnam for defending the South against Communist North Vietnam and its Viet Cong allies. Thereafter, it receded to under $3 billion (less in dollars of 1960, due to the inflation that occurred between 1967 and 1975). The main recipients of military assistance in the early 1970s, apart from Vietnam, were Turkey and Greece in NATO, Israel, South Korea, Cambodia, Laos, Republic of China (Taiwan), Thailand, andJordan, in that order, but many other countries received smaller amounts on a regular basis.53
One further channel of economic assistance needs to be mentioned: discriminatory trading arrangements. The newly established EEC, with its common external tariff, provided preferential access to the European market (through lower tariffs, or higher quotas on selected agricultural products) for former European colonies in the so-called ACP (for Africa, Caribbean, Pacific) regions, but excluding larger former colonies such as India, Pakistan, Indonesia, and Vietnam. Thus, goods from selected small countries got preferential access to the European market. In the mid-1960s, the developing countries, through the newly created UN Conference on Trade and Development (UNCTAD), called upon all rich countries to extend tariff preferences to all poor countries. The Generalized System of Preferences (GSP), as it was called, was first embraced by Australia, Europe, and Canada, and only later by a more reluctant Japan and United States. President Johnson accepted GSP for the United States only in 1967. Since it required legislation, it was not legally adopted until the Trade Act of 1974, and could not be implemented until 1976. Neither the European nor the US scheme, which differed in important details, was nearly as generous as liberal trade advocates had in mind; but these schemes arguably encouraged some private investment in developing countries to take advantage of the tariff preferences.
The Soviet Union also purchased products from its client states, most notably sugar from Cuba, which could not be sold to the United States because of its embargo, or to Europe because of its agricultural protection. But Soviet trade was undertaken by a monopoly trading ministry, so sales were subject to govemment-to-government negotiation and had to fit into the requirements of the five-year economic plan or else was regarded as outright aid.
The real "battleground" of the Cold War after the early 1960s was thus competition for influence in developing countries through trade, financial and technical aid, and military assistance in the form of equipment and training. Both the USSR and the United States also had programs for bringing students to their respective universities. The Soviet ambassador to the United States, Anatolii Dobrynin, lamented, in his memoirs, published many years later, that "detente was to a certain extent buried in the fields of Soviet-American rivalry in the Third World."54
Recession and recovery
From the perspective of Soviet leaders, the Soviet Union in the mid-1970s was doing very well in its economic competition with the United States. Its aggregate production had risen slowly but steadily relative to US production, and output of products of special interest, such as steel, had come to exceed US production. The major hard-currency exports of the Soviet Union, crude oil and gold, had enjoyed substantial increases in price on the world market. At the same time, the "capitalist" world economy was in turmoil, experiencing in 1975 its worst recession since the 1930s. The Bretton Woods system of financial cooperation was in disarray, and the onset of "stagflation" created serious dilemmas of policy in most market-oriented economies. In short, Communists still confidently expected the ultimate victory of Communism against the ailing capitalist system.
This self-satisfaction neglected the fundamental recuperative capacities of market capitalism. Incentives for adaptation, innovation, and private initiative remained strong. To take only one example, the integrated circuit, introduced in the early 1970s, was to revolutionize computation, communication, and much else, including military applications.55 While the Communist system could dictate heavy investment in traditional products, it did so inefficiently and inflexibly, without extensive innovation. It could not adapt well to changes in technology and to changes in the composition of demand. By the mid-1980s, Soviet president Mikhail Gorbachev would declare, "We cannot go on like this," and inaugurated his ultimately unsuccessful economic reform of the Soviet system of Communism.
World History
