IT IS often thought that among the many and often contradictory reasons why the Cold War was a distinctive period in the history of US relations with Latin America is the fact that this was an era in the history of Washington’s policy towards the region when ideology was more important than the balance of power or economic considerations.
Put simply, according to prevailing theories of international relations and security, US policy was often illogical.
Jorge Domínguez and other scholars have all shown how during the Cold War ideological motives repeatedly trumped good geopolitical sense in Washington’s fractious relations with the region, although without offering detailed explanations of the internal American processes that generated such policy anomalies.
One of the most interesting findings in Noel Maurer’s pioneering study of what might be called the economics of imperialism provides a fascinating complement to scholarship about this well known aspect of US foreign policy, while also offering strong clues as to how this may have functioned.
As a talented economic historian, Maurer has constructed his arguments cogently from a close examination of the data of US interventions across the world to protect the investment and property of its citizens following, for example, expropriations and nationalisations. History is littered with examples of such actions and reactions, and Latin America has been a key arena for them from the late 19th century to modern times.
The author downplays the ideological dimension of US interventions and concentrates on the internal political factors that made these more likely. He argues that, while highly successful in terms of their underlying objectives of defending US business owners and their particular interests, interventions throughout the 20th century invariably disregarded strategic or ideological considerations – as well as the consequences themselves of taking a hard line.
In short, domestic interests trumped strategic interests repeatedly, and this was surprising given how relatively unimportant foreign investment was to the US economy. Maurer writes:
“After the Cuban Revolution of 1958, many within the State Department feared that it was the American hard line on expropriation that drove Castro into the arms of the Soviet Union – yet the United States ran such strategic risks again and again and again, in Indonesia and Peru and Ethiopia and elsewhere. Simply put, no US president could afford to take a Solomonic view and ignore the immense pressures that private interests could bring to bear to insist upon the defence of their property rights.” [p 4]
Maurer points out that some presidents needed little persuasion to respond to domestic business pressures, while others were much more reluctant to use American power to protect wealthy co-nationals from foreign governments – but did so anyway.
In an ambitious and sweeping survey of US interventions abroad on behalf of business, Maurer examines the ways by which these investors influenced their government to intercede in disputes and disagreements with sovereign states on their behalf in sub-regions such as Central America and the Caribbean.
He demonstrates how, ultimately, US policy became so entangled with these business objectives that it was hard to separate them. In the 1970s in particular, Washington not only failed to resist pressure to defend American investments, but also failed to influence target governments to take steps to make property rights more secure in the long term.
He builds an intriguing argument to explain a key mechanism of US imperialism, asserting that his findings suggest the possibility of an “empire trap” whereby one administration’s promise to intervene on behalf of US investors makes it harder for future administrations to refrain from such intervention. Importantly, this obeys market forces: if the president commits to use the power of the state to defend property rights in a foreign country, the perceived risks of investing in that country fall, ensuring both that more capital flows into it and thereby increasing the political influence of investors even further while also extending the possibility that investors will believe such a promise applies elsewhere. Maurer writes:
“In short, successful intervention on behalf of overseas investors begets more overseas investment, which creates more pressure to intervene when those investments come under threat. The result is an ‘empire trap’, where US administrations find it difficult to resist pressures to defend American overseas property rights.” [p 8]
The author explores the crude politics that gave business interests such leverage in a highly paradoxical context – the US government was powerful enough to protect American investors abroad, but their interests were small relative to the country’s wealth – which placed a premium on their ability to convince the government to use its power on their behalf.
When looked at empirically, it is clear that US investors succeeded in trumping domestic opposition and strategic interests, even if the political tactics they employed changed over time, shifting from the use of personal political connections in the early 20th century to more sophisticated techniques that linked their interests to those of the government itself, and ultimately resorting to large-scale mobilisation of public opinion and congress.
Maurer has provided us with an innovative and groundbreaking insight into the mechanics of US imperialism that helps to explain the dynamic forces that have driven it, and why it has been so expansive.
The irony of his analysis is that it is not a power-hungry state that is the main protagonist of this story, but private business – offering a clue to those Latin Americans who still have anti-imperialist reflexes about how to channel them.