Progress. Problems of the Developing Countries

Edited by Professor L. L. Klochkovsky, D. Sc. (Econ.)

PROGRESS PUBLISHERS

MOSCOW

h., .

Z. Romanova, I. Sheremetyev and K. Farasov

3KOHOM14KA CTPAH AATHHCKOH AMEPHKH

CONTENTS

Page

INTRODUCTION...................................................................................

9

THE STRUGGLE OF THE COUNTRIES OF LATIN AMERICA

AND THE CARIBBEAN FOR ECONOMIC INDEPENDENCE.........

12

Some of the Results of Economic Development .................................

13

The Deepening of the Contradictions of Dependent Capitalism.......

20

The Main Contradiction at the Present Stage.....................................

29

The Main Trends in the Struggle for Economic Liberation ..............

35

Ways of Developing Economic Co-operaliori with the Socialist

Countries...............................................................................................

44

The Imperialists Make Their Manoeuvres..........................................

51

The Ultimate Purpose---Social Liberation ..........................................

65

CUBA: THE EXPERIENCE GAINED IN SOCIAL AND ECONOMIC TRANSFORMATIONS AND IN THE BUILDING OF

THE FOUNDATIONS OF A SOCIALIST ECONOMY ......................

74

The Social and Economic Position of Cuba on the Eve of the

Revolution .............................................................................................

74

The Revolutionary Transformations in the Economy: the Agrarian Reforms and the Overthrow of the Dominion of Monopoly

Capital ...................................................................................................

79

Creating the Foundations of a Socialist Economy...............................

92

Social Transformations.........................................................................

101

The New Stage in the Building of a Socialist Society.........................

106

Co-operation with Other Socialist Countries.......................................

1 12

Cuba's Economic Relations with the Capitalist Countries...................

115

FOREIGN CAPITAL AND THE LATIN AMERICAN COUNTRIES'

ECONOMIC DEVELOPMENT ..............................................................

118

The Main Stages in the Expansion of Foreign Capital in Latin

America .................................................................................................

118

Expansion of Transnational Companies..............................................

127

State Aid as a Form of Economic F'xpansion ......................................

134

Some of the Social and Economic Consequences of the Expansion

of Foreign Capital.................................................................................

142

The Countries of Latin America Against the Domination of

Foreign Capital .....................................................................................

151

THE DEVELOPMENT OF INDUSTRY IN THE LATIN AMERICAN COUNTRIES..................................................................................

158

Ha amnuuc-KOM

©

HHCTHTVT AUTHHCKOH AMepiiKH,

English translation of the revised .Russian text © Progress Publishers 1984

Printed in the Union of Scvret Socialist

0604030000-105 ^^ 014(01)-84

The Contradictions in Dependent Capitalist Industrialisation: the

Latin American Variant........................................................................ 159

The Sources of the Policy of Capitalist Industrialisation................ 159

The Stages of Industrial Development............................................ 163

The Economic Results of Capitalist Industrialisation ..................... 173

The Social Consequences of Capitalist Industrialisation ................ 179

State Capitalist Methods of Providing Incentives for Industrial

Development ......................................................................................... 184

THE MINING INDUSTRY.................................................................... 189

Provision with Natural Resources........................................................ 189

The Role of Foreign Capital and the Consolidation of the State

Sector..................................................................................................... 192

The Quests for Internal Resources to Develop the Mining

Industry................................................................................................. 203

Co-operation with the Socialist Countries ........................................... 207

THE FUEL AND ENERGY INDUSTRY............................................... 208

The State of the Energy Resources ..................................................... 208

THE PETROLEUM INDUSTRY ........................................................... 214

The Positions of the State Sector in the Petroleum Industry............. 214

The Effect of the Energy Crisis on the Latin American Countries'

Petroleum Industry............................................................................... 218

Regional Energy and Petroleum Organisations: OLADE, ARPEL.

New Forms of Oil Agreements ............................................................ 220

A Brief Description of the Present State of the Oil-Extracting

Industry Throughout the Countries of the Region............................ 225

The Oil-Refining and Petrochemical Industry.................................... 227

THE POWER ENGINEERING INDUSTRY......................................... 235

The Fundamental Quantitative Characteristics of the Present-Day

Level of Electric Power Generation ..................................................... 235

The State Sector and the Role of Foreign Capital.............................. 237

Hydraulic Power Engineering and Problems of Constructing

Nuclear Power Stations......................................................................... 241

THE MANUFACTURING INDUSTRY................................................ 245

Certain Development Problems ........................................................... 245

The Structure of the Manufacturing Industry ................................... 251

The Further Industrial Development of the Region: Problems and

Alternatives ........................................................................................... 257

THE MAIN FEATURES OF THE DEVELOPMENT OF AGRICULTURE AND AGRARIAN TRANSFORMATIONS............................... 267

Peculiarities in the Development of Agriculture................................. 268

The Structure of the Land-Owning System and the Social Position

of the Workers in the Countryside...................................................... 283

Agrarian Reforms and Their Class Essence........................................ 288

THE FOREIGN TRADE RELATIONS OF THE LATIN AMERICAN COUNTRIES.................................................................................. 302

The Role of Foreign Trade in the Economy of the Region............... 302

The Dynamics of Foreign Trade ......................................................... 303

Specific Features of the Structure of Exports and Imports ............... 309

The Geographical Distribution of Foreign Trade .............................. 319

Foreign Capital and Foreign Trade.....................................................

Trends of Foreign Trade Development..............................................

THE DEVELOPMENT OF THE LATIN AMERICAN COUNTRIES' ECONOMIC INTEGRATION..................................................

- The Prerequisites for Economic Integration.......................................

The Peculiarities of the Main Economic Groupings...........................

Economic Integration and Foreign Capital.........................................

The Currency Problems of the Countries of Latin America..............

The Narrowness of the Currency and Financial Base........................

The Problem of Foreign Debts ............................................................

Latin America in the Currency System of Capitalism ........................

CONCLUSION ................................................................

325 333

343 344 354 376 383 384 392 396 402

INTRODUCTION

Of late, the economic development of the countries of Latin America and of the Caribbean basin has been attracting special interest among researchers in a wide variety of fields in economics, and among Western economists, in particular. Every year, extensive works on both the general and the narrower problems involved in the economic development of Latin America are on sale throughout that continent. In the main, these books aim at affirming ideas corresponding to the strategic interests of monopoly capitalism. In the sixties and seventies a number of voluminous works \\erc compiled by Latin American economists as well (particularly prominent among them are the studies of the Economic Commission for Latin America which deal with many problems concerning the economic development of that region). However, even progressively inclined Latin American scholars, often show considerable eclecticism in their general approach and contradictions are evident in their basic stands on key questions regarding the economic development of the Latin American countries, which prevents them from making a completely objective economic analysis and formulating the relevant conclusions.

In the circumstances obtaining at present, Marxist economists are faced with the task of making an extensive analysis of the economic situation in Latin America and employing this analysis to expose the myths evolved by bourgeois ideologists and to arm all the progressive forces in Latin America and the Caribbean with a correct understanding of the social and economic processes going on there. Increasingly intensive work in this direction is being carried out by the communist parties of Latin America and the Caribbean.

INTRODUCTION

INTRODUCTION

Soviet experts on Latin America see it as their duty to make a constructive contribution to the solution of this important problem. The monograph that we are offering readers is intended to put forward the point of view of Soviet specialists on Latin America with regard to some of the main problems to be tackled by the countries on that continent in the course of their economic development, and sums up the results of Soviet studies of the Latin American economy. In recent years the scale and level of this research have grown considerably. Attempts have been made to give a theoretical explanation of the changes taking place in the countries of Latin America and the Caribbean, to get to the root of the difficulties assailing their economic development and to determine the most effective ways of solving the problems facing these countries.^^1^^

This work was planned as a comprehensive study. It was intended, first and foremost, that it should examine the general trends in the economic development of that region, reveal the steady acceleration of the new progressive processes connected with the increasing striving of the Latin American peoples for genuine national freedom, economic independence, and equality in international relations. These tendencies are analysed from the standpoint of the two main opposing policies. There is the policy of the imperialists, who act in union with the forces of Latin American reaction and are out to keep the region within the framework of dependent capitalist development and retain it for itself as an

~^^1^^ Among the most important works written by groups of authors, and published in the late 1970s and the early 1980s: Ekonomika Latinskoi Ameriki (The Economy of Latin America), Nauka, Moscow, 1974; Ekonomicheskoye raivitiye stran Latinskoi Ameriki v nachale semidesyatykh godov (The Economic Development of the Countries of Latin America at the Beginning of the Seventies), Nauka, Moscow, 1976; Strany SEV i Latinskaya America (problem-) ekonomicheskikh otnoshenii) (The Countries of the Council for Mutual Economic Assistance and Latin America [Problems of Economic Relations]), Nauka, Moscow, 1976; SShA i Latinskaya Amerika (The USA and Latin America), Nauka, Moscow, 1978; NTR i promyshlennoye razvitiye stran Latinskoi Ameriki (The Scientific and Technological Revolution and the Industrial Development of the Countries of Latin America), Nauka, Moscow. 1981; Kapitalism v Latinskoi Amerike (Capitalism in Latin America), Nauka, Moscow, 1983.

object of intensive financial and economic exploitation. Opposed to this is the policy of the progressive antiimperialist forces, which are well aware that the interests of national development are incompatible with the continuing economic dependence on the imperialist powers and their monopolies and which are in favour of radical socioeconomic reforms on the continent.

At the same time, the authors saw their task as thai of not only examining the general features of and law-, governing the region's economic development, but also that of pointing out the characteristic features of the situation in the most vital branches of the economy, such as industry, agriculture, foreign trade, and the sphere of finance. Such an approach helps in discerning the specific conditions and peculiarities of the development of the branches of the economy in question and makes it possible to get a better idea of the present structure of the economy in the region, of the trends and factors in its evolution, of the specific manner in which general problems and development trends are being reflected in individual spheres of economic life.

The focal point of this research was the economic processes occurring in Latin America and the Caribbean in the sixties and seventies, and at the outset of the eighties. Material relating to the preceding period has only been made use of where necessary to reveal the major long-term trends in economic development.

The book does not claim to deal with all, or even the majority, of economic problems facing Latin America and the Caribbean. The tremendous variety of conditions, the specific nature of the situation taking shape in individual countries and the increasing dynamism in the development of the region as a whole mean that this cannot be done within the framework of a single study. The authors regard the present work merely as a step in the study by Marxists of problems of vital importance for the present and future of the Latin American continent.

STRL'GGI.K FOR ECONOMIC INDEPENDENCE

THE STRUGGLE OF THE COUNTRIES

OF LATIN AMERICA AND THE CARIBBEAN

FOR ECONOMIC INDEPENDENCE

It would, of course, be wrong to underestimate the difficulties involved in the current struggle. The forces of internal reaction and imperialism are trying to undermine the anti-imperialist movement and suppress the class struggle -of the Latin American working people. These forces are, however, unable to turn the situation on that continent to their advantage. As Rodney Arismendi, First Secretary of the Central Committee of the Communist Party of Uruguay, quite justly noted: "In order to comprehend the situation obtaining in Latin America with its trends and dialectic contradictions we should proceed from the fact that this continent is in the course of revolutionary upsurge. In spite of partial setbacks and the advance of fascism in some countries, this continent has definitely embarked on the great road leading to national and social liberation." '

SOME OF THE RESULTS OF ECONOMIC DEVELOPMENT

In the post-war years, capitalism has noticeably begun to develop apace in Latin America. For the first time in the entire history of these countries, capitalist relations have become the predominant force determining social reproduction and a powerful factor facilitating the restructuring of all spheres of economic activity in a capitalist manner. This provided a basis for a marked growth of the productive forces, changes in the structure of the economy, the strengthening of the political and economic positions of the national bourgeoisie, and the increasing part played by the working class in social production and political life.

At the same time, economic development has been accompanied by an aggravation of the various forms of socio-economic contradictions, increasingly uneven development and growing differentiation in the position of individual Latin American countries; the process took place in the setting of maturing economic prerequisites for an imminent crisis in the socio-economic system and the political structure of many countries on that continent.

Today, Latin America is a /one where the anti-imperialist liberation movement is on a powerful footing, intense class battles are being fought, and a mounting struggle is being waged by the broad masses of the people for democracy and social progress. The clearly marked tendency in the last few years for Latin America to play an increasing part in the world anti-imperialist liberation movement is directly linked with these processes. Objective factors are responsible for this struggle. Its chief motive force is the deepening crisis of dependent capitalism. It is precisely on the Latin American continent that dependent capitalism has reached greatest maturity and has demonstrated most vividly the organic vices inherent in it. Today, it has become more and more obvious that the key problems troubling Latin America cannot be solved by the traditional methods of dependent capitalist development. Quests for alternative of socio-economic development and the striving to put an end to the dependence on the imperialist states have become an important factor determining not only the situation obtaining on the continent, but also boosting the universal anti-imperialist struggle of the developing nations. This struggle has been highly spoken of in the CPSU documents of recent years. In the Report of the CPSU Central Committee to the Party's 25th Congress, it was emphasised: "It may definitely be said about the majority of them [of the liberated countries---Auth.] that they are defending their political and economic rights in a struggle against imperialism with mounting energy, striving to consolidate their independence and to raise the social, economic and cultural level of their peoples." '

~^^1^^ Documents and Resolutions. XXVth Congress of the CPSU, Novosti Press Agency Publishing House, 1976, p. 16.

Latinskaya Amerika (Latin America), No. 5, 1977, p. 7.

ECONOMIES OF LATIN AMERICAN COUNTRIES

STRUGGLE FOR ECONOMIC INDEPENDENCE

On the whole, from 1950 to 1980, the gross domestic product of the countries of Latin America increased almost fivefold. On average, it rose by 5.5 per cent per annum, which was more than the annual increase in the developed capitalist world (4.3 per cent) and in all the developing countries (5.0 per cent). However, owing to the fairly rapid population growth, the rate at which per capita production increased was lower. In these three decades, the per capita growth rate of the gross domestic product was 2.6 per cent in the countries of Latin America, as against the average figure of 3.1 per cent for the developed capitalist

countries.

The rate of economic development in the majority of Latin American states lags behind their requirements. In spite of a certain acceleration in economic growth and an increase in economic potential as a whole, the countries on that continent have not managed to play any substantial part in the world economy. From 1950 to 1977, the share of Latin America in the gross domestic product of the capitalist world only grew by 1.5 per cent (from 5.5 to 7 per cent).^^1^^ In some spheres (in particular, in international trade), the positions of the Latin American countries tended to become weaker. Latin America still remains a dependent and exploited region in the system of the world capitalist economy.

Marked changes have occurred in the structure of the Latin American economy since the Second World War. What was primarily an agrarian continent has now become an agrarian and industrial region. In 1980, the share of the manufacturing industry in the gross domestic product, which amounted to 18 per cent in the early post-war years, had reached 26.0 per cent, while the share of agriculture dropped from 31 to 10.0 per cent. Marked changes have also taken place in the structure of the manufacturing industry itself. New industries, such as metallurgy, metalworking, electrical engineering, motors, and chemicals have emerged in the more developed countries of Latin America.

~^^1^^ The Economic and Social Development and the External Economic Relations of Latin America, Vol. I, E/CEPAL 11061, UN ECLA, Santiago, 1979, p. 7.

The growth in industrial production was ensured to a considerable extent by the increasing output of heavy industry. In the period from 1960 to 1980, the share of engineering and metalworking rose from 17.2 to 27.6 per cent, arid of basic chemical industries, from 16.0 to 20.4 per cent.^^1^^

From the 1950s to the 1970s, in many Latin American countries, the concentration and centralisation of production and capital sharply intensified. The major enterprises, which took the lead both in the traditional spheres of production (the light and food industries) and in the new branches of heavy industry became the basis of the economic might of the industrial bourgeoisie. Industrialisation facilitated the accelerated merging of big industrial and banking capital. Besides the provision of ordinary credits, it became fairly common practice among many of the large private banks to buy up shares and other securities of industrial companies and to participate directly in the financing and management of industrial firms. The investing and financing activity of banking capital in industry became particularly intensive in the sixties and seventies, when heavy industry really started to develop apace. A new type of banking enterprise called financiera was set up which had large amounts of capital at its disposal and was controlled by the leading bank groups.

The increasing concentration and centralisation of production and capital was accompanied by the formation and strengthening of the financial and industrial monopoly groups, and the extension of their influence to all spheres of the social life of the Latin American countries.

In Brazil, in the mid-seventies, there were 53 entrepreneurial groups with assets of more than 100 million dollars each. Of these, 31 did, in the main, belong to the local bourgeoisie, including eleven that were not associated with foreign capital at all.^^2^^ According to the Colombian researcher Julio Silva Colmenares, ten financial and industrial groups in Colombia controlled 50 per cent of the country's economy in

~^^1^^ Monthly Bulletin of Statistics, Vol. 36, No. 5, 1982, p. XXI.

~^^2^^ Mirovaya ekonomika i mezhdunarodniye otnosheniya (World Economy and International Relations), No. 10, 1977, p. 72

ECONOMIES OF LATIN AMF.RICAN COUNTRIES

STRUGGLE FOR ECONOMIC INDEPENDENCE

the seventies.^^1^^ In Mexico, in the sixties and seventies, the influence of the financial groups Banco Nacional de Mexico (BANAMEX), Banco Mercantil (BANCOMER), SEPAFIN and others expanded substantially. In Chile, after the military coup of 1973, the processes of concentration and centralisation of production and capital, which had been interrupted while the Popular Unity was in power, greatly gathered momentum. The large industrial (except for the copper mines), commercial and credit enterprises are controlled by several financial groups headed by the families of M. Cruzato, F. Lorrain, A. Edwards, Yarur, and E. MatteAlessandri. In Venezuela, where the concentration of capital is being nurtured by the abundant flow of petrodollars, the economic might of the leading financial and industrial groups is rapidly growing. In the mid-seventies, the capital controlled by the Vollmer-Zuloaga group was estimated at 3,400 million bolivars (1 US dollar=4.5 bolivars), by the Banco Union group---1,700 million bolivars, by the Mendoza group---1,200 million bolivars, by the Boulton group---409 million bolivars, and by the Polar group---315 million bolivars.^^2^^

The extent of the change that have occurred should not be exaggerated, of course. Although the processes of concentration and centralisation of capital in the Latin American countries are certainly significant, one cannot help but see that the local (national) monopoly groups, which are coming into being, are nothing like the pillars of international capitalism in their economic and financial capacity, and are even considerably smaller than the monopolies of the so-called ``second'' echelon. For this reason, Latin American capital has sought to make maximum use of the support of the state in its interests. The flourishing monopoly groups in the leading countries on that continent maintain very close ties with the state apparatus.

In the post-war years, state capitalism made a considerable step forward in its development in Latin America. In many Latin American countries, the state became a serious force in the economy. The state sector expanded and was consolidated. By the sixties, in six countries in that region (Argentina, Brazil, Venezuela, Colombia, Mexico, and Chile) a nucleus of the national economy was formed by the 180 companies wielding the largest capital. Of these companies, 70 completely belonged to or were controlled by the state.^^1^^

In the seventies, as a result of the extensive measures taken to nationalise foreign property and the policy of expanding the state sector, the latter's positions in the economy became stronger. The state played an important part in financing economic development and capital construction. At the beginning of the seventies, it was responsible for almost one third of the capital investments in Latin America (some 10,000 million dollars). The financial and industrial oligarchy and the latifundista strata are attempting to use government interference in economic life in their own interests, to strengthen their positions in the economy, to boost their financial might and to increase their exploitation of the working people.

In most Latin American countries, the economic activities of the state are subordinated to the interests of the ruling classes to a considerable extent. This determined, above all, the range of industries on which the state focussed its attention. In the main, these included the capital-intensive branches of the infrastructure (road and railway construction, irrigation and the power industry, oil extraction and oil refining, and the iron and steel industry). This also determined other aspects of state activity: the organisation of mixed companies with the participation of private, including foreign, capital, the provision of long-term preferential credits for private entrepreneurs, the subsidising of them in concealed form (in particular, in the form of deliveries of output from state-owned enterprises at lower prices), and the

~^^1^^ Julio Silva Colmenares, Los verdaderos duenos del pais. Oligarquia y monopolies en Colombia, Fondo Editorial Suramerica, Bogota, 1977, pp. 106-107, 303, 310.

~^^2^^ Radames Larrazabal, Monopolias nacionales, Centauro, Valencia, 1978,

pp. 80-90.

~^^1^^ I. K. Sheremetyev, Gosudarstvo i sotsialno-ekonomicheskoye razvitiye stran Latinskoi Ameriki (The State and the Socio-Economic Development of the Countries of Latin America), Nauka, Moscow, 1974, p. 19.

KCONOMIES OK LATIN AMERICAN COUNTRIES

STRUGGLE FOR ECONOMIC INDEPENDENCE

creation of favourable conditions for improving their profits by protectionist measures, and so forth).

At the same time, it should be emphasised that the striving to turn the state sector into an appendage of big capital, including foreign monopolies, and into an instrument of their enrichment, is opposed by the tendency to use state economic policy in national interests. In some countries, such as Peru, Guyana, Jamaica, and Nicaragua, effective steps have been taken to heighten the part played by the state in the shaping of the new social and economic relations, to ensure the consolidation of the foundations of national independence and a change in the position of the working people in society. For the moment, this tendency is somewhat limited, and its further development is meeting with stiff resistance on the part of the forces of Latin American reaction and imperialism, but it is persistently forging ahead. The post-war period has been marked by growing disproportions and increasing bottlenecks in the economy of the Latin American continent. This process has been manifested, in particular in the differentiation of the position of individual countries. While the economies of some Latin American states, such as Brazil, Mexico, Peru, Venezuela, and Costa Rica, were expanding at a fairly rapid rate, the rate of economic development in a considerable group of countries in the region remained low. Thus, the economies of Argentina and Uruguay have been subject to considerable stagnation. The average per capita growth rate of the gross domestic product in Argentina from 1950 to 1978 was 1.6 per cent, and that in Uruguay, 0.8 per cent. Economic development in Bolivia, Chile, Honduras, and Paraguay was extremely unstable. The economy of Haiti, where there was a drop in the per capita income, was essentially in a state of

crisis.

One of the most serious economic problems has been the considerable lag in agriculture. In the post-war years, the crop output in Latin America has increased on average by 3.4 per cent per year, and that of livestock raising, by 2.8 per cent. The per capita growth was even slower. In some countries, such as the Dominican Republic, Paraguay and El Salvador, the population growth was more rapid than that of

the output of agricultural produce. This led to a number of undesirable phenomena: grain imports had to be stepped up, and exports of some traditional types of agricultural produce had to be cut down. At the end of the seventies, the Latin American countries were forced to spend more than 6,000 million dollars on food imports (primarily wheat), as compared with 200 million dollars in the pre-war period. In the sixties and seventies, some of the leading Latin American exporters of agricultural produce found time and again they had insufficient resources to export. In Argentina, which is one of the world's largest meat producers, the government was compelled to take measures to limit the consumption of meat at home (which led to a marked drop in the per capita meat consumption in the country) and in some years it had to resort to grain imports in order to honour its commitments as far as export deliveries were concerned.

By the end of the 1970s the disproportions between individual the Latin American countries' industries had become much more pronounced. The enterprises set up within the framework of the ``import-substitution'' phase of industrialisation, were extremely dependent on imports due to the absence or the insufficiently developed nature of branches of the Department I. Moreover, the narrow bounds of the national markets in the Latin American countries create serious obstacles to expanding production and improving the profitability of enterprises. Production capacities were increasingly underloaded.

When summing up the results of the post-war period, bourgeois theoreticians, the apologists of dependent capitalist development, put every effort into extolling its successes in Latin America. They stress the accelerated rate of economic development in the region, make a point of emphasising the possibilities for the further economic growth of the Latin American countries and for the political prospects which are expected to take shape on that basis. The theory of the ``semi-periphery'' put forward by them proclaims the formation of a so-called group of "semi-peripheral countries" (including the main states in Latin America), which occupy an intermediate position between the developed and the developing countries and are increasingly gravitating in their

ECONOMIES OF LATIN AMERICAN COUNTRIES

SIIU <.(,!.F FOR ECONOMIC INDEPENDENCE

economic and political interests towards the main centres of developed capitalism.

Countering this approach, Marxist researchers, who do not deny the necessity of taking into account factors linked with the heightened level of capitalist development in the region, note at the same time, the exceptional importance of making a qualitative analysis of the results of that development. Precisely such an analysis makes it possible to reveal the specific features of the development of capitalism in conditions of dependence. Let us state the most important of them. The boost in the productive forces in Latin America and the changes in the structure of its economy were not accompanied by the sufficient progress of the countries on that continent in consolidating their economic independence. Their continuing and, in some spheres, increasing economic dependence on imperialism was attended by intensified imperialist exploitation. As a result, Latin America was deprived of the real fruits of economic progress on an ever growing scale. Economic development in the countries of that continent is not accompanied by adequate reforms in the social sphere, and the broad masses of the working people still do not have sufficient access to the benefits of economic and social progress.

Dependence is what has determined the type of development in Latin America and continues to do so. Raising the level of the productive forces and the emergence and establishment of more mature forms of capitalism do not make any difference to the type of development. In the post-war period, in Latin America, the former economic and social contradictions have become more marked and new ones have arisen, which is only to be expected where development has occurred in a state of dependence,

THE DEEPENING OF THE CONTRADICTIONS OF DEPENDENT CAPITALISM

All the principal social and economic processes that have occurred in Latin America since the Second World War have taken shape under the influence of two opposing tendencies: on the one hand, the striving of imperialism to keep the

region as a dependent and exploited link in the world capitalist economy, and, on the other hand, the aspiration of the national, patriotic forces to lessen economic dependence on. the leading imperialist powers, to strengthen the foundations of their national economies, and to secure conditions for independent development. The consequences of the post-war period do, however, indicate that, in spite of certain changes in the balance of forces between the imperialists and the forces of national liberation in favour of the latter, and the numerous concessions that international capitalism has been forced to make, the imperialist powers have, to a considerable extent, succeeded in preserving and in some respects, fortifying, their economic positions in Latin America.

In the late seventies and early eighties, the economic expansion of imperialism in the region was determined by a number of fresh factors. A key role in achieving this expansion is being played by the transnational corporations. In international capital the Latin American countries are being confronted by a qualitatively new force which has tremendous production and financial might, a ramified network of international ties, and extensive state backing. The transnational corporations have made large capital investments in Latin America. In spite of the considerable scale of nationalisation of foreign property in the region (according to some estimates, the assets of nationalised foreign companies amounted to as much as 10,000 million dollars), direct investments of foreign capital have grown throughout the post-war period. According to 1975 data, direct foreign investments in the countries of Latin America amounted to 37,600 million dollars, including 22,100 million dollars invested by US monopolies.^^1^^ The USA's investments have continued to grow: by 1978, they amounted to 27,700 million dollars and by the outset of the current decade they were estimated to have reached 38,000-39,000 million dollars.^^2^^ On the whole, in the post-war period, direct

~^^1^^ F.studio economuo de America Lalina, 1977; E/CEPAL/1050, UN ECI.A, New York, 1978, p. 1211.

~^^2^^ Survey oj Current Business, August 1981, p. 27.

ECONOMIES OF LATIN AMERICAN COUNTRIES

STRUGGLE FOR ECONOMIC INDEPENDENCE

investments of foreign capital in Latin America have increased approximately twelvefold.

It is not, however, just a matter of the quantitative growth of foreign investments. The multinational monopolies are staking on gaining control of the key economic processes in the countries on that continent---such as the importsubstitution industrialisation, the development of exportoriented industry and regional economic integration---on seizing the dominant position in the more dynamic branches of the economy, and on the introduction of new, more flexible and better concealed forms of dependence.

The transnational corporations' penetration into the manufacturing industry is of exceptional importance to them in preserving and consolidating their positions in the economies of the Latin American countries. At the end of the seventies, approximately half of all the new investments by US corporations (by the end of 1977, their total sum amounted to almost 10,000 million dollars) had been channelled into the manufacturing industry, which thus became the leading industry in which US capital was invested. Consequently, international capital occupies a prevailing position in many of the rapidly developing industries. According to the data of a selective survey conducted in Brazil, in 1977, foreign entrepreneurs controlled 26.6 per cent of the assets in the manufacturing industry; in the engineering industry as a whole, their share of the assets was 51.4 per cent, and in electrical engineering, 68.1 per cent. In Mexico in 1977, 33 per cent of the capital invested in the manufacturing industry belonged to transnational corporations, and 45 per cent of the capital invested in the engineering industry.^^1^^

On the whole, the nature of the penetration of foreign capital into the economies of the countries of Latin America in the sixties and seventies has changed considerably. Before the Second World War and in the first post-war decade, its activity was primarily that of an enclave nature. There were only poorly developed contacts between the enterprises it set up and the national economy and the products manufac-

~^^1^^ The Economic and Social Development and the External Economic Relations of Latin America, Vol. I, E/CEPAL/1061, 1979, p. 112.

tured were dispatched almost completely to foreign markets. The sixties and seventies were marked by the active penetration of transnational corporations into the fabric of the Latin American economies, and their intensive winning over of the domestic market. It is sufficient to mention that from 1966 to 1980 the subsidiaries of US companies alone increased sales of their output on that region's markets sevenfold; in 1980, the volume of sales was estimated to amount to 100,000 million dollars.^^1^^

Active penetration into the crediting and banking sphere is a new phenomenon in the expansion of international, primarily US, capital. In 1979, the direct investments of the US banks in the region exceeded 11,000 million dollars; in seven years (1973-1979), they grew almost sixfold, and there is every ground for expecting that crediting and financing operations will become the largest sphere of application of US capital. The part played by the US banks in the credit and finance system of Latin America is growing. According to some estimates, by the mid-seventies, they already controlled approximately half the bank assets of the countries in that region. The multinational bank monopolies are particularly active in the countries of the Caribbean. Thus, in the seventies, the Bahamas not only became a major finance centre in the Western hemisphere, but also a leading hub of international banking operations. In 1976, 265 financing organisations were operating there, of which 145 were branches of US banks.

The bank monopolies of the USA use their huge financial might to bring the enormous masses of national capital under their influence. They are highly active in mobilising the means available on the local money markets in the form of deposits, are setting up ramified networks of contacts with national private industrial and financial enterprises, and with government agencies. In many cases, Latin American investors prefer to keep their capital in branches of foreign banks, rather than at local banks, owing to the greater solvency of the former, the wider range of services provided by them,

~^^1^^ Calculated from: Survey of Current Business, May 1976, March 1978, August 1980.

ECONOMIES OK LATIN AMERICAN COUNTRIES

STRKiCl.E FOR ECONOMIC INDEPENDENCE

their more extensive system of international ties, and so forth. This in itself is sufficient reason for foreign banks in Latin America becoming vital focal points of contacts where the interests of foreign and local capital are closely intermingled and where the former subordinates to its will and takes advantage of the latter.

An important feature of the strategy of international monopoly capital in Latin America is the introduction of hidden forms of economic dependence, whereby stakes are placed on the so-called policy of "keeping a low profile". This new approach is determined first and foremost by the serious changes in the situation in Latin America; by the increasing desire of the Latin American states to fortify the foundations of their national economies, and by the growing discontent of the broad sections of the Latin American public with the domination of foreign capital in the economy. At the same time, this policy has reflected the new strategic aims of international capital, namely those of expanding its social basis on that continent, and of involving the widest possible circles of the Latin American bourgeoisie in its activity

more closely.

The policy of creating and fortifying latent, disguised forms of dependence has given rise to deep-going changes in the methods of economic penetration by the foreign monopolies into Latin America (investment tactics have been revised, new forms of expansion employed, etc.). One of the most vivid examples of the tendency towards secret penetration is the policy, pursued by foreign monopolies, of setting up the so-called mixed companies, with the participation of local capital. In the sixties and seventies, the organisation of "mixed companies" did virtually become the main form of foreign investment on the continent. In Mexico, in particular, in the period from 1957 to 1970, 976 companies were set up by foreign investors, of which 627 were mixed companies. It is important to emphasise that approximately half of these companies were formed on terms of the minority participation (from 20 to 50 per cent) of foreign capital.^^1^^ This process continued in the seventies, too. Thus, according to the

National Register of Foreign Investments in Mexico, from 1973 to 1975, 345 companies were set up in that country, with the participation of foreign capital; in 275 of them, less than half of the company's capital belonged to foreign investors.^^1^^

The latest evolution in the methods of economic penetration employed by international capital comprises the gradual and partial replacement of direct investments by the establishing of technological, credit, marketing, organisational, and other ties. On this basis, a ramified system of new hidden forms of dependence takes shape (technological, and credit, dependence on deliveries of raw materials and on sales of the output on markets controlled by the multinational monopolies, and so forth). On the whole, this restructuring does, in fact, only change the forms of control by foreign monopolies over the economy of the Latin American countries, but in no way diminishes it. Today, this fact is widely recognised not only in Latin America, but in the developed capitalist countries as well. Thus, the US economists Richard S. Newfarmer and Willard F. Mueller, who have made an analysis of the activities of US monopolies in Mexico and Brazil, have come to the conclusion that in these countries the subsidiary companies, just like the enterprises connected, in one way or another, with foreign capital, are closely integrated into the system of parent companies and are dependent on them when it comes to long-term credits, technology, supplies and sales on markets abroad, especially in capital-intensive industries and those requiring sophisticated technology.^^2^^

On the whole, since the war, the multinational monopolies have managed to bring under their control considerable amounts of national Latin American capital. Monopoly capital has not only taken a leading position in the private enterprise sector on the continent, but has also spread its influence to the activity of the state sector in the Latin

~^^1^^ Comercio Exterior, (Mexico) No. 7, 1976, Supplement, p. 32.

~^^2^^ Richard S. Newfarmer and Willard F. Mueller; Multinational Corporations in Brazil and Mexico: Structural Sources of Economic and Noneconomic Power, U.S. Government Printing Office, Washington, 1975, pp. 94, 148-149.

Desarrollo Indoamericano (Baranquilla), December

1976, p. 50.

DNOMIES OF LATIN AMERICAN COUNTRIES

STRUGGLE FOR ECONOMIC INDEPENDENCE

American countries. Thus, according to the press, the majority of the Argentinian local companies are tied up with foreign capital in one way or another. In Brazil, judging from data on the activities of the 200 biggest non-finance companies in 1974, foreign enterprises sold twice the volume of goods that the domestic business sector did.^^1^^ The multinational monopolies are, moreover, steadily expanding their ties with the state sector in Brazil, using it in their own interests. The Brazilian state-owned enterprises, such as Petrobras, Siderobras, Cia Anaonima Vale do Rio Doce, and Nucleobras, have entered into various kinds of co-operation with the transnational corporations, which also involves private Brazilian firms. Brazil's state-owned banks, in particular, the Banco Nacional de Desenvolvimiento Economico (the National Bank for Economic Development), are extensively financing foreign enterprises.

The contradictions arising from dependent development are manifest in the fact that outmoded production relations have been preserved. To quote the words of Rodney Arismendi, "the peculiarity consists in the fact that capitalist development has proceeded, and, at times, become dominant without destroying the primordial aspects of the old socioeconomic structure, rooted in Spanish and Portuguese colonial societies, which have left us a legacy of large, and occasionally enormous, landed property, a one-crop system, and dependence on the external market. Neither the war of independence, nor the period of national formation of each country, nor the epoch of imperialism, nor the governments of various strata of the bourgeoisie, which have existed, whether ephemerally or stably, in the 20th century, have wiped the stamp of pre-capitalist backwardness from the face of Latin American society.''^^2^^

The problem of eradicating pre-capitalist production relations became especially acute in agriculture. In most Latin American countries, the planned agrarian reforms are being carried out very slowly. From 1960 to 1970, the number of peasant families who received land as a result of

agrarian reforms comprised 1-1.2 million, i.e., approximately 100,000 families per year. In the first half of the 1970s, this figure doubled owing to the allotment of land to the peasants in Peru, Venezuela, Bolivia, and Mexico, and also in Ecuador, Panama, and Colombia.^^1^^ On the whole, however, one cannot regard the course of the agrarian reforms as satisfactory, if one takes into consideration the fact that the landless peasants numbered some 10-12 million in the mid-seventies. The huge concentration of landed property had been slightly eaten away, but not broken up completely. At the beginning of the seventies, a handful of extremely large landowners (one per cent of all the owners) held in their hands 62.2 per cent of all the landed property; in the 1970s, no more than 15 per cent of the land belonging to them was confiscated as a result of agrarian reforms.^^2^^

The vestiges of the pre-capitalist period, linked with the land monopoly of the latifundistas and the existence of numerous peasant households dependent on them, have constituted a serious obstacle to the development of the productive forces in agriculture; they have slowed down its technological progress, the expansion of the home market and economic growth as a whole and seriously complicated the further development of industry. Even in those countries where capitalism has firmly established itself as the dominating force (for example, in Argentina and Uruguay), semifeudal relations have been preserved in many of the peripheral areas. This has clearly left its mark on the whole structure of agriculture.

A serious phenomenon caused by the contradictions of dependent development is the wide gap between economic and social progress.

Dependent capitalist development in the countries of Latin America is leading to a deterioration in the situation of the working people. This process takes many different forms: aggravation of the employment problem, the steady increase

~^^1^^ Boletin economico de America Latina (United Nations, New York), Nos. 1-2, 1974, p. 106.

~^^2^^ Granma (Havana), April 20, 1975; El desarrollo economico y social y las relnciones exteriores de America Latina, UN ECLA, Guatemala, 1977, p. 150.

~^^1^^ Visao, August 31, 1975, p. 27.

~^^2^^ Problemas de una Revolution Continental, Montevideo, 1962, p. 443.

.S OF 1.A1IN AMERICAN COINTK1KS

S1RI(,(,I.K FOR ECONOMIC INDEPENDENCE

KCONOMIK

of obvious and latent unemployment, the increasing inequality as regards property, the growth of the marginal strata of society, who are virtually deprived of any real access to the fruits of economic and social progress, the low, and fluctuating living standard of the working class, and also of the middle urban strata, if one has in mind the main mass of

them.

In spite of definite advances in economic development achieved in the last fifteen or twenty years, the countries of Latin America have not managed to get anywhere near solving such a cardinal problem as creating real conditions for reducing mass unemployment and ensuring the fuller and more rational utilisation of the rapidly growing manpower resources. Not only has the system of dependent capitalism failed to solve this problem, it has also given rise to grave new obstacles to its solution. Dependent capitalism has accelerated the erosion of the traditional social and economic structures, the roots of which stretch back into the

pre-capitalist period.

This is particularly true of agriculture, where even at the beginning of the sixties as much as half of the gainfully employed population and considerably more than half of the entire population of the region were concentrated. In the face of the onslaught of capitalism, the broad massess of the hapless rural population, who were deprived of their former occupations and means of subsistence, surged into the towns and the trade and industrial areas. This is, to a large extent, responsible for the rapid urbanisation typical of the last two decades. The rational employment of an enormous workforce in the towns is, however, hindered by a number of specific obstacles arising out of the very system of dependent capitalist development. As production and capital are increasingly concentrated in the dynamic branches of the economy, where the transnational monopolies are actively operating, the demand for manpower relatively falls. This situation is exacerbated by scientific and technological progress, of which advantage is taken by both foreign and local big capital to boost profits with minimal additional expense on the hire of more manpower. In these circumstances, only those groups of the able-bodied population who are able to obtain an

education and some kind of vocational training have the opportunity to get job in large-scale modern production. At the same time, the working people, who have been deprived of" any chance of getting proper training are left jobless and outside the framework of economic development and socially useful activity. They help to swell the ranks of the unemployed, suffering from poverty and lack of rights.

The continuing and increasing inequality as regards property, and the polarisation of wealth and poverty, are yet another vice inherent in dependent capitalism. There are indicative data testifying to the fact that the main proportions of the distribution of the national income in the countries of that region have essentially remained the same. In the sixties and seventies, they were the following: half of the population received only 14 per cent of the total income, while 30 per cent of the propertied population appropriated 72 per cent of the income. These average data conceal even more striking contrasts in the distribution of incomes. Thus, at the beginning of the 1970s only 2.5 per cent of the total incomes (in 1960, 3.7 per cent) fell to the share of 20 per cent of the poorest section of the population, while on another pole of society 5 per cent of the privileged population appropriated nearly 30 per cent of the total

income.'

Thus, the nature of economic development in the region is a highly contradictory one. The complex of contradictions with the centres of developed capitalism became particularly pronounced.

THE MAIN CONTRADICTION AT THE PRESENT STAGE

The economic contradictions existing between the countries of Latin America and the Caribbean, on the one hand, and the imperialist powers, on the other, have become quite extensive and assume many different forms. These contradictions are caused by the increasing economic exploitation, to which the region is being subjected by the imperialist

The Economic and Social Development..., E/CEPAL/1024, 1977, p. 9.

STRUGGLE FOR ECONOMIC INDEPENDENCE

ECONOMIES OF LATIN AMERICAN COUNTRIES

powers and their monopolies. This exploitation is being achieved in a variety of ways.

One of the main levers resorted to in exploiting the natural, human, material and technical resources of the region is the withdrawal of private capital (direct private investments). Becoming involved in the most profitable branches of the economy, the multinational monopolies cream off big profits, the bulk of which they remove from Latin America. The pumping out of financial resources from the countries of Latin America as a result of the transfer of profits abroad by foreign private investors is rapidly gaining in scale. In the first half of the sixties, the annual amount of profits exported comprised on average 1,270 million dollars, while in the second half of that decade it had risen to approximately 2,000 million dollars; in the first half of the seventies, it exceeded 5,000 million dollars, and in 1976, it had reached 9,100 million, in 1977---10,800 million, in 1978---14,200 million dollars, and in 1979---19,900 million dollars.^^1^^ In the period from 1971 to 1979 alone, foreign investors withdrew from the countries of Latin America 70,000 million dollars, which is more than the overall volume of their capital investments in the region.

Latin America is subject to intensive exploitation in the

sphere of international credit, too. The payments due from

the Latin American countries in cancelling debts abroad are

rapidly growing. In 1960, their overall volume amounted to

1,400 million dollars, and in 1979, it was more than 25,000

million dollars. Expenditure on paying back the interest is

increasing particularly fast, these payments having swelled over

30 times (from 282 to 8994 million dollars), in the same

period.^^2^^ Thus, more than one third of the total sum used to pay

off foreign debts is absorbed by interest.

The Latin American states are at a tremendous disadvantage in the sphere of foreign trade, too, owing to the

~^^1^^ Indicators of Economy and Social Development in Latin America, E/CEPAL/981, Add. 3, ECLA, Port of Spain, 1975, pp. 194, 138; Progreso economico y social en America Latino. Informe anual 1980-81, Inter-American Development Bank, Washington, 1981, p. 469.

~^^2^^ Progreso economico y social en America Latina. Informe anual 1980-81, Inter-American Development Bank, Washington, 1981, p. 440.

unfavourable ratio of prices on their exported and imported goods. Throughout most of the fifties and sixties, as a result of excessively low prices on the world capitalist market on liquid fuel, raw materials, and many types of foodstuffs, Latin America was annually cheated out of hundreds of millions of dollars on its exports, while having to pay huge sums in excess on imports. As they gradually lost their hold on the raw materials branches and the plantation economy of the Latin American countries, the imperialist monopolies put tremendous effort into holding down prices on the main articles of Latin American exports. At the same time, they pursued a policy of constantly inflating the prices of the goods delivered to Latin America.

All this artificially lowered the purchasing power of Latin American exports and restricted the amount of imports the countries of that region could afford. Even when the market was more favourable and the prices of exports higher, most of the Latin American and Caribbean countries gained very little due to the steady rise in the prices of imported goods. On the whole, the ratio of export to import prices in the majority of countries in that region deteriorated over the thirty years from the fifties to the seventies. Thus, the index of the ratio of export and import prices for the non-- oilexporting Latin American countries amounted (on the basis of 1970 figures) to 124.0 in 1950-1954, 104.6 in 1955-1959, 95.9 in 1960-1969, 94.3 in 1971, 97.9 in 1972, 108.2 in 1973, 105.8 in 1974, 96.7 in 1975, and 98.7 in 1976.^^1^^ The situation did not improve in subsequent years either. According to ECLA estimates, in 1974-1978, the index of export prices for this group of countries increased, on average, by 5.2 per cent, while the index of import prices, by 6.7 per cent.² According to rough estimates, in the seventies, the Latin American countries lost some 3,000 million dollars as a result of this difference.

At the same time, it should be emphasised that the financial losses mentioned above are really only the top of the "iceberg of exploitation". Characteristic of the thirty

~^^1^^ E/CEPAL/1024, op. cit. 1977.

~^^2^^ E/CEPAL/1061, op. cit., Vol. I, 1979.

STRUGGLE FOR ECONOMIC INDEPENDENCE

FXONOMIES OF LATIN AMERICAN COUNTRIES

years from the fifties to the seventies was not only the manifold increase in the amounts of capital pumped out of the Latin American countries, but also the considerable expansion of the front of imperialist exploitation and the employment by the monopolies of new, carefully disguised, but highly effective methods of bleeding the region

white.

The core of the system of secret methods of exploitation is comprised of operations with the so-called transfer prices, widely employed by transnational corporations in their relations with their Latin American subsidiaries. By means of these operations, the multinational monopolies supply their enterprises in the region with raw materials, semi-finished products, and also machinery and equipment at inflated prices, sometimes manifold those on the world market. This was the case of Colombia, where pharmaceutical firms delivered semi-finished products, for example, for the manufacture of various medicaments at prices 60 times those on the world market. Studies made in Peru, Ecuador, and Chile revealed that the inflation of the prices of raw materials and semi-finished products delivered by foreign companies to the chemical, electronics, and rubber industries, varied from 100 to 500 per cent. The situation was similar in the sphere of imports of machines and equipment. Describing, in particular, equipment deliveries to Colombian subsidiaries by foreign companies, the Latin American economist Constantine Vaitsos notes: "Yet it appears that in all of the few cases where Colombia government officials were able to scrutinize the prices of capital goods (capitalized or bought) there was considerable overpricing..." ' The system of transfer prices enables the foreign companies to remove the bulk of all their profits abroad in a furtive manner. A special investigation conducted in the pharmaceutical industry of Colombia showed that the reported profits constituted only 3.4 per cent of the effective returns whereas with the help of overpricing 82.6 per cent of the incomes were obtained.^^2^^

~^^1^^ Constantine V. Vaitsos, [ntercountry Income Distribution and Transnational Enterprises, Clarendon Press, Oxford, 1974, p. 52.

2 Ibid., p. 62.

With the help of the mechanism of transfer prices, the foreign companies disguise the huge amounts of profits they obtain and successfully avoid various kinds of restrictions (first and foremost, restrictions on the transfer of profits abroad). In this connection, it should be noted that the transnational corporations do, as a rule, try to declare minimum profits (the profits of the US companies, for instance, in the manufacturing industry of the region usually constitute 10-11 per cent of the capital invested, a considerable part of these profits---up to 70 per cent---being reinvested, which means that the incomes officially transferred are only 4-5 per cent). Frequently, these companies announce considerable losses. However, in actual fact, all these actions only serve one purpose, namely, that of disguising the tremendous scale of exploitation. Strangely enough, it is precisely in those branches of industry where the profits are lowest and where losses are most often announced, that larger investments of foreign capital are made. In the motor industry, for example, in 1974, US companies had a loss of 70 million dollars, and in 1975 they made a profit of 90 million dollars, of which 76 million dollars were reinvested (total capital investments amounting to 1,100 million dollars). Nevertheless, this branch occupies second place in the manufacturing industry in terms of the amount of investments regularly made (in 1977-1980, US companies invested some 1,500 million dollars in it.^^1^^)

Exploitation based on the continent's technological dependence on the developed capitalist states, is becoming increasingly intensive. The Latin American states' outlays on technology are growing from year to year. In 1980, for example, they paid 591 million dollars for patents and various types of technological assistance to US corporations alone.^^2^^ In the region's manufacturing industry, expenditure on US technology in 1980 was bigger than the total sum of profits transferred to the USA. To quote the words of a manager of a US affiliate in Mexico, "use of payments for technology is the easiest legal way to transfer profits out of the

~^^1^^ Survey of Current Business, March, September 1981.

~^^2^^ Ibid., August 1981.

2---452

ECONOMIES OF LATIN AMERICAN COUNTRIES

STRUGC.LE FOR ECONOMIC INDEPENDENCE

country".^^1^^ As a rule, the multinational monopolies supply their subsidiaries with technology at inflated rates, which allows the true amounts of profits obtained in the Latin American countries to be concealed.

Finally, among the hidden forms of exploitation, the offering of loans by the monopolies is acquiring ever increasing importance. As they come up against attempts by the Latin American states to restrict the transfer of profits out of the country, the transnational corporations are decreasing the amounts of direct investments, while, at the same time, increasing the loans offered to subsidiaries and mixed companies. According to rough estimates, for every dollar invested in Latin America and the Caribbean in the form of direct investments by US companies in the midseventies, approximately 1.5 dollars were provided in the form of loans.^^2^^ Correspondingly, an ever increasing part of the payments to the parent companies by Latin American enterprises are used to cancel the principal loan and the

interest on it.

The intensification of economic exploitation is bound to seriously aggravate the contradictions with the imperialist states in the region. Economic differences do, in fact, form the core of the conflicting relations with the United States and with other imperialist powers, both on national and, particularly, on regional levels. In the conditions obtaining today, there is every ground for saying that individual economic differences may well result in a crisis of the entire system of economic relations between the developed capitalist states and the countries of Latin America and the Caribbean. This is most marked in the continent's economic relations with the USA. The Latin American states are seeking a way out of this crisis by further extending the anti-imperialist struggle to put an end to the domination of international monopoly capital and by intensifying their efforts to consolidate their own economic independence.

THE MAIN TRENDS IN THE STRUGGLE FOR ECONOMIC LIBERATION

The growth in breadth and in depth of the anti-imperialist movement is one of the characteristic features of the situation in Latin America today. This is the outcome both of the ripening of the corresponding internal prerequisites in the region and of favourable changes in the international arena, namely, the fact that the forces of peace, progress and national liberation have consolidated their positions. The present alignment of the main forces in the world offers the developing countries considerably broader opportunities for waging a struggle for economic independence. As was noted in the Report of the Central Committee of the CPSU to the Party's 25th Congress, "with the present correlation of world class forces, the liberated countries are quite able to resist imperialist diktat and achieve just---that is, equal---economic relations".' Today, the movement of the Latin American countries to gain economic independence is entering a new phase in its development. This phase signifies a considerable expansion of the front of the liberation struggle, the setting of new tasks, the occupation by individual Latin American states of advanced positions in the anti-imperialist struggle of the developing nations.

The victorious revolution in Nicaragua is extremely important from this point of view. It is evidence of the crisis of the imperialists' positions in Central America and the Caribbean and marks an important step in the development of the liberation process and undoubtedly opens up new prospects for extending the anti-imperialist movement of the Latin American peoples. As Rodney Arismendi emphasised: "...the Sandinista victory in Nicaragua means, above all, the awakening of a whole people, as fresh hope for the whole of Latin America. It will not be unthinking optimism to consider that it will have continent-wide influence and resonance.''~^^2^^

S. NewfarnH-v and WillardF Mueller, op. at., p. 17. 2 Survey of Current Bigness, August 1976, p. Ai.

~^^1^^ Documents and Resolutions. XXVth Congress of the CPSU, p. 16.

~^^2^^ America Latino (Moscow), No. 226, 1980, p. 10.

ECONOMIES OF LATIN AMERICAN COUNTRIES

STRUGGLE FOR ECONOMIC INDEPENDENCE

The countries of Latin America and the Caribbean have set themselves a number of new tasks in the struggle for economic liberation, tasks primarily linked with the desire of the Latin American countries to attain genuine national sovereignty with regard to their natural resources, to put an end to the sway of foreign capital and to establish control over the mining industry and the plantation economy, i.e., the two key branches of the economy on the continent. The significance of these tasks can hardly be overestimated. Whereas in the past, in most cases, it was a question of ensuring the relatively favourable distribution of the incomes gained by the foreign monopolies from the exploitation of the continent's natural resources, now it is a matter of abolishing the very foundations of the domination of foreign capital in Latin America.

An important trend in accomplishing these new tasks is the nationalisation of the property of foreign monopolies. In the seventies, nationalisation measures were enforced in Latin America on a fairly wide scale. In Peru, the government took over the property of such well-known US firms as International Petroleum Co. (a subsidiary of Standard Oil of New Jersey), Cerro de Pasco Copper Corp., W. R. Grace Corp. and Co., Standard Oil Co. of California, Gulf del Peru, and Marcona Mining Co. In Venezuela, the iron ore and the petroleum industries were nationalised in 1975 and 1976, and yet another step was taken at the beginning of 1978, when the government acquired 51 per cent of the shares of 176 foreign companies. The taking over of oil extraction by the government was of particular importance, since it was precisely in this branch of the Venezuelan economy that the biggest foreign investments on the continent were being made (estimated at approximately 5,000 million dollars); it was also a source of extremely high profits.

Large-scale nationalisation measures have been undertaken in a number of Caribbean countries, too. The government of Jamaica has bought up the controlling blocks of shares of the subsidiaries of three leading US aluminium companies (Kaiser Aluminium &: Chemical Corp., Reynolds Metals Co., and Alcoa), and has nationalised all the tracts of land belonging to these companies where the bauxites mines were

situated. Almost all foreign property in the sugar industry is now in the hands of the government, too. In Guyana the mining and dressing of bauxites has been nationalised, and also the sugar industry, insurance and foreign trade. In Nicaragua, the revolutionary government has confiscated the property of the Somoza family, who controlled approximately a third of the Nicaraguan economy, and has announced the nationalisation of private banks and the establishment of a state monopoly over foreign trade.

Naturally, the nationalisation processes in Latin America are going ahead amidst an extremely acute struggle and are by no means always irreversible. In Chile, the military fascist junta of Pinochet has virtually completed the denationalisation of the formerly nationalised enterprises. At the beginning of the eighties, the state section in Chile consisted of only 23 enterprises, instead of the 550 under the Popular Unity government. The Peruvian government's nationalisation policy has been fiercely attacked by foreign monopolies and the local oligarchic circles. Playing on the country's temporary economic difficulties, these circles are trying to achieve the de-nationalisation of state-owned enterprises in the fishing and cement industries, the abolition of the state monopoly over the export of non-ferrous and rare metals, and so forth. As a result of these intrigues, certain regressive trends have emerged in the country, which render the radical transformations wrought less effective. As the General Secretary of the Peruvian Communist Party, Jorge del Prado, noted in this connection, this "is a serious threat to our people, and means grave regression".^^1^^ In Guyana, as a result of pressure applied by the International Monetary Fund, great concessions have been made to foreign capital, allowing it access to the key branches of the country's economy yet again.

In spite of their undesirable effects, all these phenomena are not, however, affecting the general tendency for the state sector to gradually become stronger and for it to play an increasingly important part in the economy, a tendency that

~^^1^^ Unidad (Lima), November 2, 1979.

3H

IOMIKS OF LATIN AMERICAN COUNTRIES

STRUGGLE EOR ECONOMIC INDEPENDENCE

ECON

can be traced quite clearly in most of the Latin American

countries.

A vital place among the new tasks the Latin American states have set themselves is occupied by the restructuring of the entire system of foreign economic ties for the purpose of restricting imperialist exploitation and ensuring greater equality in relations with the developed capitalist states. The report of the Central Committee of the CPSU to the 26th Party Congress noted the importance of this tendency in the policy of the developing countries: "Restructuring international economic relations on a democratic foundation, along lines of equality is natural from the point of view of history. Much can and must be done in this respect." ' The setting of these tasks has lead to a revision and an intensification of some of the trends in the foreign economic policies of the Latin American states. The essence of the evolution consists in shifting the emphasis in the sphere of foreign economic policy on to the implementation of measures aimed at effectively consolidating the positions of the Latin American countries on the world capitalist market, on to the struggle to attain greater economic independence.

In solving the key foreign economic problems in the sixties and seventies, the Latin American countries attributed great importance to the development of regional economic integration. The approximately twenty-year-long experience of regional integration on the continent has shown that the creation of regional organisations like free trade zones or common markets does not guarantee an adequate solution to the urgent problems facing the countries of Latin America, for the extent of their mutual economic contacts still remains restricted. What is more, in the course of economic integration, serious differences have been arising, connected, in particular, with the unilateral enjoyment of the advantages of this process by the more developed countries (first and foremost, Argentina, Brazil, and Mexico), and also because the local enterprises are largely deprived of the benefits of

~^^1^^ Documents and Resolutions. The 26th Congress of the Communist Party of the Soviet Union, Novosti Press Agency Publishing House, Moscow, 1981, p. 21.

economic integration, since most of these benefits are gained by the subsidiaries of the multinational monopolies.

In the conditions obtaining, the Latin American states have started to work out a foreign economic policy aimed at effectively protecting their interests on the world capitalist market and at putting an end to inequality in economic relations with the developed capitalist states.

This policy has a number of specific features. First of all, it is characterised by the boosting of efforts to form a single front of the Latin American countries to withstand imperialism. An attempt is being made to make co-operation among the Latin American countries involve the whole of the continent. An important step in this direction was the formation in 1975 of the Latin American Economic System (LAES), which incorporated all the countries in the region. It may be said that a new, more profound stage in the integration process began when this system was created. Socialist Cuba became a member of this organisation along with the other Latin American states, while the USA did not join LAES. The functions ot LAES include ensuring the co-ordination of the foreign economic policies of the Latin American states and joint action in solving international economic problems. LAES takes an active part in working out and approving the positions adopted by the Latin American countries in all major international forums. Under its aegis, associations of Latin American exporters of raw materials and foodstuffs, and the Latin American multinational companies were set up and began operating, the finance, credit and trade policies are being co-ordinated, and some joint measures to develop individual branches of the economy (in particular, agriculture, and the power industry) are being worked out. These bodies represent the new forms that the integration process is taking in relations among the Latin American countries. A trend of equal importance is the growing co-operation among the Latin American and the African and Asian countries, which helps the developing states to unite their actions and make their joint efforts more effective. Today, Latin America is in the forefront of the struggle of the developing countries to create a new international economicorder. The active stand taken by representatives of the Latin

ECONOMIES

OF LATIN AMERICAN COUNTRIES

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American countries (above all, Peru, Mexico, Venezuela, Panama, Colombia, Guyana, Nicaragua, and Jamaica) at discussions in the United Nations and its organs, at international forums and in the course of bilateral negotiations on the restructuring of international economic relations is worthy of special mention. Authoritative Latin American statesmen constantly underline the striving to make a constructive contribution to the implementation of the programme of the new international economic order. Thus, for example, the former President of Mexico, Jose Lopez Portillo, said during his visit to the Soviet Union in the spring of 1978: "The charter of the economic rights and obligations of states has been adopted, now it is necessary to put it into effect completely. A new struggle awaits us, that of overcoming the obstacles preventing the establishment of just relations among peoples with the participation of all states, irrespective of the differences in their political systems." '

Special emphasis should be laid on the active part played by Cuba in expanding co-operation between Latin America and the other developing countries. Socialist Cuba has not only upheld international economic relations based on the principles of equality and justice, but is also making a weighty contribution to working out a common economic strategy for the developing states. In 1975, the Prime Minister of the Revolutionary Government of Cuba, Fidel Castro, said: "The Revolutionary Government of Cuba ... confirms its readiness to close the ranks with the non-aligned countries, with the OPEC countries and the rest of the economically backward world, in order to jointly pursue the correct policy in the face of economic crisis, unequal exchange, the plundering of our natural resources, threats and imperialist blackmail...''^^2^^

The active struggle to restructure international economic relations has had a tangible effect on the Latin American countries. One of its important results is the tendency for the Latin American states to consolidate their positions on the

world market. This tendency is closely connected, in particular with the utilisation by the countries of the region of export associations (both on a regional basis and in the form of membership by Latin American exporters in associations set up jointly with exporters from other developing countries).

At the end of the seventies and the beginning of the eighties, 27 Latin American countries were members of 26 international associations of exporters of raw materials and foodstuffs. In particular, Venezuela and Ecuador were members of the Organisation of the Petroleum Exporting Countries (OPEC), and Brazil was a member of the Union of Cocoa Producers, and was also the initiator of the setting up of the Association of Coffee Exporters. Peru and Chile were in the Association of Copper Exporters, and Peru and Mexico were members of the International Association of Mercury Producers. Bolivia was a party to the International Tin Agreement. Of the nine members of the International Bauxite Association, five are states of Latin America ( Jamaica, Surinam, Guyana, the Dominican Republic, and Haiti). Venezuela, Peru, and Chile are members of the International Association of Iron Ore Exporting Countries. In the seventies, moreover, specifically Latin American associations of raw materials and food exporters were set up, like the Union of Bananas Exporting Countries which includes Guatemala, Honduras, Colombia, Costa Rica and Panama, the Latin American Association of Meat Producers and also the Association of Latin American and Caribbean Exporters of Sugar. The latter is one of the largest export associations and comprises 22 countries. It is significant that one of its members is socialist Cuba, whose share in the world sugar market is extremely high (as much as 30 per cent of world exports).

The substantial successes attained by some of the associations, above all, OPEC, and also the associations of exporters of tin, bauxites, coffee, cocoa, and phosphates, just go to show that this form of integration can be used as an effective means of struggle for liberation from the diktat of the transnational corporations, help to consolidate the positions of the developing countries in the world economy, and raise

~^^1^^ Izvestia, May 18, 1978.

~^^2^^ Fidel Casiro, Los paises no alienados sabrdn cumplir el deber que demanda de ellos la horu actual, Edicion de Ciencias Sociales, Havana, 1975, p. 28.

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their incomes from exports.

The gradual increase in the number of partners of the Latin American states in the sphere of foreign economic relations is an important tendency. This process has led to a certain weakening of the USA's positions, both in the foreign trade of the Latin American countries and in other fields of their foreign economic relations. Whereas at the beginning of the fifties more than half of that continent's trade turnover fell to the share of the USA, by the end of the seventies, the figure had dropped to approximately One third. At the same time, the Latin American countries' trade relations with Western Europe have noticeably expanded (the share of Western Europe in the region's trade in this period grew from 19 per cent to 30 per cent). The Latin American countries have begun to purchase markedly larger amounts from Japan, whose share in Latin American imports increased from 2.2 per cent to 8.1 per cent from 1955 to 1979. Latin American importers frequently favour Japanese firms rather than their traditional trade partners in the USA and the Western European countries and in some cases they make a considerable part of their purchases in Japan. In the last few years, for example, Japanese companies have become the leading suppliers of iron and steel to Latin America. Sales of Japanese equipment on that continent have noticeably increased. On the whole, one cannot fail to recognise that this tendency gives the Latin American states greater room for manoeuvring and enables them to make more effective use of the competitive struggle among the imperialist powers in their own interests.

When evaluating the attainments of the liberation forces in Latin America as a whole, it must be acknowledged that they open up certain possibilities for reducing the dependence of the Latin American states on the imperialist powers and for restricting imperialist exploitation. At the same time, one cannot fail to see that the ruling circles in the Latin American countries (the top latifundistas, and the financial and industrial oligarchy) are attempting to use these achievements in their own selfish interests. At the present time, they see their main aims as the following: firstly, to ensure themselves favourable conditions for co-operation with the

developed capitalist states, and, secondly, taking advantage of nationalistic sentiment and the growing anti-imperialist aspirations of the broad masses of the people to achieve a relaxation of social tensions and distract the masses from their struggle against the very foundations of capitalist exploitation and social injustice. Accordingly, the ruling classes on the Latin American continent are trying to restrict the anti-imperialist struggle primarily to the sphere of international economic relations, to make it just a matter of achieving a definite transformation in the positions of international capital, to a certain restructuring of the international division of labour, and to partial quantitative and structural changes in industrial production and in the foreign trade of the Latin American countries. At the same time, they persistently oppose any radical transformations in the economy at home.

Typical of the tactics employed by the ruling circles in many Latin American states are considerable inconsistency in questions of the protection of the continent's fundamental national economic interests, and a tendency to come to half-hearted compromises with international monopoly capital. Naturally, all this is bound to be reflected in the character, scale and effectiveness of the struggle of the Latin American countries for economic liberation. At the moment, this struggle does not embrace many of the vital spheres (in particular, it barely touches on the forms that the continent's hidden dependence takes, where the interests of the Latin American oligarchy and the multinational monopolies are most closely interwoven), and it hardly provides any solutions to the key problems (first and foremost, the problem of the tremendous social inequality and the continuing impoverishment of the broad masses of the people).

The policies aimed at the preservation and consolidation of the foundations of capitalism, and the energetic search for compromises with international monopoly capital are actively encouraged by the imperialist powers. The latter see one of their main tasks as that of preserving their positions in Latin America and the Caribbean with the help of economic and political manoeuvres, making that region one of their nearest reserves by partially overcoming the existing contradictions,

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and cutting it off from the world national liberation movement.

WAYS OF DEVELOPING ECONOMIC CO-OPERATION WITH THE SOCIALIST COUNTRIES

The strengthening of extensive co-operation, including economic ties, between the countries of Latin America and the socialist community is acquiring growing importance for consolidating the Latin American countries' gains in the struggle for economic liberation. The progressive forces on the continent regard the union with the socialist community as a vital factor in accelerating the economic and social progress of the Latin American states. As stressed at the Conference of the Communist Parties of Latin America and the Caribbean Region, held in Havana in June 1975, the growing might of the forces of socialism is a reliable guarantee of success for the peoples of Latin America in their difficult struggle for complete liberation.

The gradual stepping up of economic relations with the socialist community by the countries of Latin America is helping to strengthen their positions in the world. It signifies an end to their economic isolation from the world of socialism and an abandonment of the narrow orientation of their foreign economic contacts to the developed capitalist countries, and leads to a lessening in their economic dependence on the imperialist states.

From the fifties to the seventies, the economic ties between the socialist and the Latin American countries developed in difficult circumstances. On the Latin American continent, the prerequisites for expanding these ties were relatively slow in maturing. This was due to the specific political, social and economic conditions obtaining in Latin America, the main ones of which were the following: the concentration of political power in the hands of the most reactionary forces; the dependence of economic development, and also of the big bourgeosie and latifundistas on foreign monopoly capital; and the fragmented nature of the democratic forces in the struggle to end imperialist domination and achieve independent development. On the whole, the result of these

conditions right up to the sixties was a generally restrained attitude towards economic contacts with the socialist states on the part of business and political circles in Latin America.

-The imperialist monopolies also offered stiff opposition to the expansion of economic co-operation with the Soviet Union, and other member-countries of the Council for Mutual Economic Assistance (CMEA). There is every ground for asserting that in no other region of the developing world did monopoly (especially US) capital resort to such extensive subversive activities in order to prevent the development of economic co-operation with the socialist countries, as it did in Latin America. The entire ramified system of levers which foreign monopolies had at their disposal in the Latin American economy was widely employed; political, ideological, and frequently even military, pressure was also applied.

The situation began to change noticeably in the seventies. There was a substantial increase in the number of Latin American countries that were maintaining economic relations with the socialist states, an increase in the volume of mutual trade, an improvement in the legal provisions for economic relations, and the working out of certain forms of production co-operation. Although the extent of economic relations, on the whole, still remains relatively limited, it can be said with good reason that the Latin American continent is turning to the socialist countries and that a new stage in the development of its economic relations with them has begun. This is closely connected with the serious changes that occurred at the very outset of the seventies both in the international arena and on the Latin American continent itself.

The vital prerequisites for the furthering of this process were provided by detente, which undermined the concept of ``freezing'' relations with the socialist countries which prevailed during the cold war period. In the second half of the sixties and in the seventies, a large group of countries of Latin America and the Caribbean established diplomatic relations with the Soviet Union and other socialist states. Co-operation on questions of strengthening detente has formed an important basis for relations between the socialist countries and many states in Latin America.

The failure of the political and economic blockade of

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socialist Cuba, which was persistently thrust upon the Latin American countries by the US imperialists was an event of great importance. Whereas only Mexico had diplomatic relations with Cuba before 1970, at the present time, 15 Latin American countries have diplomatic relations with it. At the same time, trade and economic co-operation was renewed. During the seventies many Latin American countries (among them Argentina, Peru, Mexico, Venezuela, Colombia, Jamaica, Guyana, and Nicaragua) began to develop trade and economic ties with Cuba.

The improvement and expansion of all forms of contacts were the outcome of mutual efforts. The consistent policy of the Soviet Union and the other CMEA member-countries to strengthen equal co-operation with the Latin American states was also of paramount importance. In Latin America, people thought highly of the Soviet Union's energetic and disinterested support for the resolute struggle of the peoples on that continent for the consolidation of political independence and economic liberation and for the enlargement of Latin America's role in international life. The new trends in the foreign policy of the Latin American countries played an important part too: their striving to put an end to the one-sided orientation of their foreign policy to the USA, and to pursue an independent course in foreign policy, and the active diversification of their contacts abroad.

The expansion of economic co-operation is an important basis for the growth and strengthening of relations between the socialist states and the countries of Latin America. In the seventies, the Soviet Union's economic relations with the Latin American states developed dynamically. In its trade and economic relations with Latin America, the Soviet Union invariably proceeds from the lofty and noble principles of respect for the interests of its partners, equality, and a sincere desire to assist the acceleration of economic and social progress in the Latin American countries and the consolidation of their independence. When describing the Soviet Union's policy, Leonid Brezhnev said: "We in the Soviet Union have always seen just and free international trade not only as a good means of satisfying the material interests of the participating countries, but also and above all, a powerful

factor in strengthening peace and good relations among peoples." '

Trade between the Soviet Union and the countries of Latin America is developing at a rapid rate. In the seventies, the Soviet Union's trade turnover with that region increased more than tenfold. In 1981, the overall volume of SovietLatin American trade had exceeded 3,000 million roubles. A characteristic feature of this trade is a considerable increase in the number of the Soviet Union's trade partners in Latin America. By the end of 1981, 27 countries in Latin America and the Caribbean were carrying on trade with the Soviet Union. The Soviet Union's major partners in the region are Argentina, Brazil, Bolivia, Peru, and Mexico. At the present time, the greatest progress has been made in developing trade with Argentina. This has been largely facilitated by the firm stand taken by the Argentine government, which, in spite of pressure from the USA, announced its refusal to participate in the boycott of the Soviet Union with regard to grain deliveries. In July 1980, a long-term agreement (for 1980-1985) was signed by Argentina and the Soviet Union on deliveries of a minimum of four million tonnes of maize and sorgo and 500,000 tonnes of soya beans per year.

Of no less importance is the considerable increase in the range of goods exchanged. The number of products, which have become a constant item of trade between the Soviet Union and the countries of Latin America is growing, and this is leading to the gradual formation of a stable basis for expanding of trade relations independent of fluctuations in the market or casual demand for certain goods. The Soviet Union is expanding its exports of machines, industrial equipment, and means of transport to Latin America. In the second half of the seventies and at the beginning of the eighties the Soviet Union delivered to the Latin American countries various kinds of machinery and other equipment to the value of approximately 300 million roubles. More than 10,000 cars and 1,200 lorries, more than 8,000 tractors, some 3,000 metal-cutting lathes, and the turbines and generators for five electric power stations with an overall capacity of 4.4

~^^1^^ Pravda, October 14, 1980.

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million kilowatts have been sold to these countries. Besides, the Soviet Union delivers chemicals, fertilisers, medicaments, clocks and watches to the Latin American countries. The Soviet Union is also becoming an increasingly important purchaser of Latin American goods, in particular, grain, meat, sugar, wool, non-ferrous metals, oil, and cocoa. Latin America plays a highly significant part in supplying the Soviet market with some foodstuffs and raw materials. In some years, the region's share in Soviet imports of coffee amounted to 50 per cent, cocoa---25 per cent, bananas---73 per cent, wool---15 per cent, and so forth. Soviet purchases of goods produced by the young national industry in the Latin American countries are gradually increasing. Such Latin American products as footwear, clothing, including woollen articles, finished and semi-finished leather, and medicaments have already won an excellent reputation for themselves on the Soviet market.

Of great significance in this trade is the increasing use of agreements and contracts. In the seventies, trade agreements were concluded with 13 Latin American countries. In actual fact, the Soviet Union has agreements with all its main trade partners on the general principles governing trade, which envisage, in particular, the mutual granting of most favoured nation treatment. Agreements on deliveries of machines and other equipment on preferential terms have been concluded with 11 countries. Soviet machines are delivered on an instalment basis for periods of up to ten years estimated at payments of 4.5-5 per cent per year. All the earnings from these sales are used to buy Latin American goods, including finished and semi-finished products.

The improvement and strengthening of Soviet-Latin American economic relations is facilitated by the work of mixed commissions, owing to which a number of problems have been solved. The work of the Soviet-Brazilian commission helped to complete negotiations on the delivery of Soviet turbines and generators to Brazil, to conclude a new agreement on supplies of Soviet machines and equipment to Brazil on an instalment basis and on purchases by Soviet foreign trade organisations of goods traditionally not exported by Brazil, such as footwear and leather clothing.

The Soviet-Argentine commission played an important part in concluding contracts on deliveries to Argentina of Soviet power engineering equipment and on the purchase by the Soviet Union of Argentine goods. At the sessions, held in 1980 of the Soviet-Colombian commission on trade, economic, scientific and technical co-operation and the Soviet-Mexican trade commission, a number of new forms of co-operation were planned, and a step forward was made in solving some vital problems, including those connected with the implementation of major projects.

Not only trade, but also economic, scientific and technical contacts were expanded during the seventies. The Soviet Union has concluded agreements on economic and technical co-operation with a number of countries (Argentina, Venezuela, Guyana, Colombia, Costa Rica, Mexico, Peru, and Jamaica). Within the framework of these agreements power stations are being constructed in Argentina and Brazil with the assistance of the Soviet Union, tin ore concentration plants are being built, an agreement has been signed with Colombia on the designing, delivery and assembly of equipment for the Urra hydropower complex, and a contract has been concluded on the construction of a factory to produce glass insulators in Mexico. In Peru, with the help of the Soviet Union, all the scientific and technical details are being worked out with regard to the building of the first unit of the Olmos hydropower and irrigation complex. Designs for the Rentema hydropower station have already been prepared by Soviet organisations, and for an iron and steel works with a capacity of 2 million tonnes of steel per year near the town of Nasca. Soviet specialists are taking part in the construction of the Paita fishing industry complex, and in the investigation of the hydropower potential of the rivers Maranon and Ucayali Huallaga.

The Soviet Union attaches great importance to the promotion of trade and economic relations with countries that have embarked on a new path, such as Nicaragua and Gi-enada (before the US aggression). Unlike some other Latin American states, these countries still do not have firm contacts with Soviet foreign trade organisations. But the necessary conditions have already been created for forging such contacts.

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The Soviet Union has signed a number of important agreements with both countries, including trade agreements and agreements on deliveries of Soviet machines and equipment on preferential terms. A five-year agreement has also been concluded on purchases in Nicaragua by the Soviet Union of coffee, cotton, and sugar, guaranteeing that country a stable market for considerable quantities of those

products.

In the conditions obtaining today, there are favourable opportunities for the further development of trade and economic ties between the Soviet Union and the other member-countries of the Council for Mutual Economic Assistance, on the one hand, and the Latin American countries, on the other.

For its part, the Soviet Union is pursuing a firm policy of expanding mutually advantageous co-operation with the Latin American countries. In the Report of the Central Committee of the CPSU to the 26th Party Congress, it was noted with satisfaction that the Soviet Union was expanding mutually beneficial ties with the countries of Latin America and was prepared to continue expanding them.' This refers to the considerable increase in the mutual-commodity turnover in economic, scientific and technical co-operation, and to the establishment of other forms of mutually beneficial contacts. Naturally, an important prerequisite for the realisation of these possibilities is the successful solution of the existing problems and the overcoming of the current

difficulties.

One of these unsolved problems is the need to maintain trade relations on a balanced basis. One cannot fail to see that up till now the expansion of trade between the Soviet Union and most of the other CMEA member-countries, on the one hand, and Latin America, on the other, was mainly achieved on the basis of the more rapid growth of purchases of Latin American goods. In 1981, for example, Soviet purchases in Latin America exceeded the deliveries of Soviet goods to that region almost 30 times. The one-sided nature

~^^1^^ See: Documents and Resolutions. The 26th Congress of the Communist Party of the Soviet Union, p. 33.

of trade, the steadily growing deficit in the trade operations of the socialist states with the countries of Latin America cannot but act as a brake on the development of a mutual commodity turnover. Ensuring the balanced expansion of trade would indubitably open up considerably wider prospects for its accelerated growth.

The Soviet Union and the other socialist states are trying to create all the necessary conditions (organisational, legal, credit, and finance, and so on) for establishing firm, mutually beneficial economic ties. And they are right in awaiting similar measures, meeting the interests of cooperation, on the part of all the Latin American countries interested in these ties. Unfortunately, in some cases, measures of this type are not sufficiently consistent. Not all the Latin American states offer the socialist countries the same conditions in trade as those enjoyed by the developed 'capitalist countries. The solution of all these pressing problems will create reliable prerequisites for the stable growth of trade and economic co-operation.

The forces of imperialism and Latin American reaction are putting up stiff resistance to the improvement of economic relations with the socialist community. Playing on the notorious "communist danger", these forces are pursuing active subversive policies and are creating artificial obstacles and barriers to co-operation between the Latin American states and the CMEA member-countries.

It can, however, be confidently stated that, in spite of all the intrigues on the part of enemies of the progress arid independence of the Latin American peoples, the economic ties between the Soviet Union and other CMEA membercountries, on the one hand, and Latin America, on the other, will develop and become stronger, for this process corresponds to the fundamental national needs of the Latin American peoples and serves the interests of consolidating peaceful international co-operation.

THE IMPERIALISTS MAKE THEIR MANOEUVRES

The profound changes that have occurred in Latin America and the Caribbean and are connected with the growing

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struggle for economic liberation and with the greater part played by the countries on that continent in the world national liberation movement have forced the imperialist powers to revise their policy with regard to this region. In so doing, the imperialist powers have been paying greater attention to Latin America and the Caribbean, working out various measures aimed at achieving certain compromises in respect of the most urgent problems in economic and political relations, and at the implanting in the region of the ideas of "mutual dependence" and the imposition of economic shackles that are meant to confirm these ideas.

The leading role in working out and pursuing this neocolonialist policy is played by the USA. The greater attention being paid to Latin American problems by Washington is the result of at least two circumstances. First and foremost, the growing anti-imperialist struggle of the Latin American people is spearheaded against US monopoly capital and is chiefly aimed at lessening economic dependence on the USA. At the same time, owing to the important changes that are occurring in the international arena (such as the heigtened confrontation between the imperialist powers and the developing countries, the worsening of relations between the USA and the Arab and other Asian and African countries which export raw materials and liquid fuel), the ruling circles in the USA have been compelled to reckon with the real possibility of a relative strengthening of the role of Latin America as a raw materials base for the USA, and a sphere of important economic interests for US monopoly capital. This is why the USA's increasing influence on the new progressive processes developing on the Latin American continent is becoming of paramount importance, because this influence is meant to nullify the growing anti-US tendencies and keep the revolutionary process in Latin America within the narrowest framework possible.

The USA has a plentiful stock of neocolonialist means at its disposal. Just as before, it is staking greatly on its support for reactionary military regimes (proof of this is its active assistance to Somoza, who tried to drown the Nicaraguan revolution in blood, its support of the reactionary government in El Salvador, of the military dictatorship of Pinochet, of the

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Uruguayan military clique, the bloodthirsty regime of Alfredo Stroessner in Paraguay, and of other reactionary regimes). Washington frequently resorts to economic pressure and blackmail (it stops the granting of credits, limits trade, and so forth) in seeking to compel the Latin American countries to give up their demands.

At the same time, there are people in political and business circles in the West who are well aware that in the present conditions, with a mighty upsurge in the anti-imperialist struggle in the developing countries, increasingly staking on the use of force, blatant pressure cannot guarantee sound and long-term success. The special commission on relations between the USA and Latin America, which was headed by Sol M. Linowitz, former US representative in the Organisation of American States, prepared a report in which it recommended that a policy of non-interference in the internal affairs of the Latin American countries should be pursued, relations with Cuba normalised, a plan worked out for stabilising prices for raw materials, which should take account of the opinions and interests of the Latin American countries, consultations held with these countries on questions of trade, and so forth.'

In the situation that has taken shape, the developed capitalist countries, and above all the USA, are increasingly concentrating on hidden manoeuvres in their policy, on seeking compromises through granting partial concessions, on establishing new forms of relations providing for effective ways of making the Latin American countries economically dependent on the developed capitalist states. "The imperialists," it was noted in the report of the Central Committee of the CPSU to the 26th Party Congress, "are displeased with the fact that the newly-free countries are consolidating their independence. In a thousand ways they are trying to bind these countries to themselves in order to deal more freely with their natural riches, and to use their territory for their strategic designs.''^^2^^ The USA's policy in Latin America and

~^^1^^ Los Estados Unities y America Latina: proximos pasos, Washington, 1976.

~^^2^^ Documents and Resolutions. The 26th Congress of the Communist Parly of the Soviet Union, p. 19.

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the Caribbean is increasingly being determined by a neocolonialist strategy aimed at undermining the unified effort of the developing states and at breaking up their united anti-imperialist front. Drawing the Latin American continent (or, at least, the leading Latin American countries) into the group of industrially developed powers, isolating it and counterposing it to the majority of African and Asian countries is regarded by Washington as one of the key means of achieving its aims.

Here an important stake is made on the increased differentiation in the group of developing countries as a whole and in Latin America in particular, the growing differences between the Latin American and the African and Asian countries as regards their economic potential, the growth rate of the productive forces, the extent of capitalist development, and so on. In stressing these differences, US neocolonialist ideologists put forward as the most important task that of convincing the ruling circles in the Latin American states that the continent's accelerated economic growth, just like the solution of the main economic problems, is only possible if the close union with the West is preserved and if these states strictly follow the lead given by the general political and economic policy of the developed capitalist countries. The idea of strengthening the economic union with the West through certain concessions made by the developed capitalist countries and mutual compromises is widely propagandised in Latin America by US diplomats, political scientists and businessmen, as well as by the US mass media. Thus, the eminent US political scientist Albert Fishlow, in particular, wrote: "With the present changes in the international economic order, the Latin American countries will stand to gain more by integrating their economies with that of the West than by regional intergration and co-operation with the developing

coutntries." '

The carrying out of the tasks set involves a number of special features. One of these consists in the fact that the United States, owing to an acute worsening of eco-

~^^1^^ Foro International, Vol. XVIII, No. 2, October-December, 1977, p. 370.

nomic contradictions with the region, the failure of notorious Pan-Americanism and the increasingly energetic attempts of the Latin American countries to diversify their foreign economic ties, is forced to co-ordinate their efforts with the actions of the West-European countries and Japan on a considerably wider scale than formerly. Collective economic neocolonialism is increasingly becoming the basis of the USA's neocolonialist strategy in Latin America. Another important circumstance is that the political measures taken by the USA in that region are closely Intertwined with the actions of private US capital, (primarily of the multinational monopolies) and are given all kinds of support by the latter. Finally, it is also highly significant that it is a matter of economic operations virtually unprecedented in scale. It should be emphasised that back in the sixties the USA set about taking large-scale action in Latin America aimed at accelerating capitalist development in the region. With its direct participation, a ``Mexican'' and a ``Brazilian'' development models emerged, while the massive support on the part of the USA both by political means and via the channels of private enterprise was of decisive significance for the functioning of these models. In this connection, the following description of the "Brazilian model of development", given by the well-known Brazilian sociologist Florestan Fernandes, is fairly indicative: "The Brazilian miracle is, first and foremost, the result of propaganda, and I might say, cynical propaganda at that. There was no miracle, but what, in fact, happened was that Brazil had been incorporated into the economy of monopoly capitalism: we were incorporated by economically hegemonistic nations, and by the super-power, the USA...." '

At the same time, owing to the situation that took shape in the mid-seventies, the USA and its imperialist partners were faced with the need to take much more extensive measures. Financing became an important means of US economic neocolonialism. The serious aggravation of economic difficulties, in particular, the formation of huge deficits in the trade-- andpayments balances, forced the Latin American countries (except the oil exporters) to turn to the USA and other

~^^1^^ Banas (Rio de Janeiro), No. 1155, 1977, p. 24.

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industrially developed capitalist states for considerable financial resources. The seriosness of the problems facing the region can be seen from the following figures: whereas from 1966 to 1970, the trade balance deficit of the non-- oilexporting Latin American countries was no more than 2,000 million dollars, in 1974 it was 12,000 million, 1975---12,900 million, in 1976---9,000 million, in 1977---4,600 million, and in 1978---13,500 million.^^1^^ Economic difficulties became particularly acute in Brazil and Mexico, where it was even a question of the bankruptcy of the ``Brazilian'' and the ``Mexican'' models of development. In these circumstances, the Western powers granted the Latin American countries considerable loans and credits; in the period from 1973 to 1982, the latter received over 200,000 million dollars. Over half of this sum was granted to Brazil and Mexico. On the whole, approximately 50 per cent of all the financial resources provided by the Western powers to the developing countries in the form of loans and credits falls to the share of this region. This fact is doubtless proof that in the conditions obtaining today Latin America is treated as a very serious objective in the neocolonialist strategy of the USA and the other imperialist

powers.

By granting such large sums, the monopoly capital of the USA and the other imperialist powers is obviously reckoning on acquiring a new and powerful lever with which to exert pressure. For this reason, exceedingly harsh credit conditions are imposed on Latin America.

US finance policy is characterised by a striving to nullify the efforts of the Latin American countries aimed at gaining wider access to the sources of relatively more advantageous government credits. A concept of a special approach to the solution of problems of financing in the region is being put about, according to which, the Latin American countries which are better developed economically should have their need for foreign financing satisfied by private credits. In actual fact, the private banks have become the Latin American countries' main creditors. The share of govern-

~^^1^^ Handbook of International Trade and Development Statistics, 1979, United Nations, New York, 1980, pp. 4, 5, 14, 19.

ment credits and loans in the overall sum of foreign financing obtained by the countries of the region during the the sixties and seventies fell sharply from 60 per cent in 1961-1965 to 25 per cent in 1970-1975 and to 9.7 per cent in 1977-1978. Accordingly, various forms of private credits began to play a rapidly increasing part. Thus, the volume of credits provided by the private banks grew from 500 million dollars in 1969-1970 to 12,400 million dollars in 1978, and their share in the overall sum of financial resources flowing into Latin America increased from 16 per cent to 55 per cent.^^1^^

A direct result of this policy has been a marked worsening of the conditions of foreign financing and a serious aggravation of the foreign debt problem. The interest rate on the credits granted is constantly growing; it went up from about 7 per cent at the beginning of the seventies to 10.9 per cent in 1979.^^2^^ The average term for paying off credits has become shorter: in 1979, 49 per cent of all the credits had to be paid off in one to five years, and 35 per cent of the credits, in five to ten years.^^3^^ Thus, most of the foreign debts (84 per cent) were short-term ones. This has led to the uneven growth of the expenditure on the clearing of foreign debts (from 2,500 million dollars in 1970 to 25,000 million dollars in 1979)^^4^^ and compels the Latin American countries to turn to foreign sources of finance over and over again. Their increasing financial dependence caused by this opens up to the USA and the other imperialist states the possibility of exerting economic and political pressure on the countries of the region.

Energetic action is being undertaken by international monopoly capital to achieve a definite restructuring of economic relations with Latin America by extensively drawing the region into the international capitalist division of labour. This action is carried out within the framework of

~^^1^^ The Economic and Social Progress in Latin America, Annual Report 1979, Inter-American Development Bank, Washington, 1979, pp. 84-86.

~^^2^^ Ibid., Annual Report 1980/81, Washington, 1981, p. 97.

~^^3^^ Ibid., p. 98.

~^^4^^ Ibid., p. 96.

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the concept of the so-called new international division of labour. This concept is aimed at cuts in material- and labour-intensive and pollutant industries in the industrially developed states, and the transfer thereof to the developing

countries.

By restructuring economic relations in this manner, the imperialist powers and their monopolies intend to achieve a certain mitigation of the conflicts with the developing states, and at the same time, to create a new system to maintain their domination over the countries of Asia, Africa and Latin America. It is important to stress here that the transnational monopolies are attempting to make the programme for including Latin America in the new international division of labour a component part of the overall strategy for the development of the region, and an element of the new industrial policy pursued by many Latin American countries (the so-called policy of developing an export-oriented manufacturing industry).

The construction of export-oriented enterprises started in the countries of Latin America in the mid-sixties, and is continuing apace. This process already embraces the greater part of the region. According to the available estimates, in 1975, enterprises of a similar nature existed in 16 Latin American countries (although the majority of them were concentrated in Mexico and Brazil) and they employed approximately 265,000 people.^^1^^ These enterprises produce and export various consumer goods, such as clothing, footwear, parts and units for domestic appliances, certain means of transport, chemicals, and fertilisers.

The participation of US monopolies in the setting up of export-oriented industrial enterprises and the exercise of control over exports of the finished and semi-finished products is achieved in various ways. The subsidiaries of US companies and the firms connected with US capital are expanding the production and exports of the abovementioned goods at a fairly high rate. Thus, from 1966 to 1976, enterprises of the manufacturing industry alone, in

which the controlling block of shares belongs to US capital, increased their exports approximately 4.5 times (from 362 million dollars to 1,700 million dollars).' A further substantial expansion of exports may be expected in the near future. In particular, the US motor companies intend to sharply increase the volume of exports of their Latin American subsidiaries. The subsidiaries of Ford and General Motors in Brazil plan to bring their exports up to approximately 1,000 million dollars each (in 1978, they amounted to 200 million and 40 million dollars respectively).^^2^^

The export-oriented industrial enterprises in the Caribbean countries, such as the Bahamas, Trinidad and Tobago, Jamaica and Barbados, are also growing very, rapidly. They frequently form the production core of some towns. One such example is Spanish Town, which is the third largest and the most rapidly growing town in Jamaica. Here US companies control more than 40 per cent of industrial production. Half of all those employed work at enterprises belonging to US clothing manufacturers. Most of the output is exported to the USA. Besides clothing, foreign companies produce in Jamaica computer parts, telephone and telegraph equipment, perfumes and cosmetics for sale on foreign markets.

In the Bahamas, all the large enterprises (pharmaceutical, perfume, and cement plants) belong to foreign companies and produce goods for export.

The oil and petrochemical monopolies are becoming extremely active in the countries of the Caribbean. They have built the world's largest oil refineries here, processing imported oil, which has made it possible for the Caribbean countries to become sizeable suppliers of petroleum products in the seventies (the total cost of their exports of petroleum products at the beginning of the eighties exceeded the cost of Venezuelan oil exports). The multinational oil monopolies are intending to build large oil refineries and petrochemical plants in the Bahamas and on the Virgin Islands, and in

, 835.

~^^1^^ Survey of Current Business, August 1975, pp. 28-29; March 1978, p. 36.

~^^2^^ Business Week, October 30, 1978, p. 42.

Comerdo exterior, July 1978, p.

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ECONOMIES OK LATIN AMERICAN COUNTRIES

Trinidad and Tobago in the very near future.^^1^^

The organisation by the multinational monopolies of enterprises specialising in the production of separate parts of various types of equipment, in the assembly of units and in the supply of these to other enterprises of the parent company is of great importance. A considerable number of such enterprises have been set up in Mexico (there were some 400 by the beginning of the eighties). The practice of setting up such enterprises has also become common, in the last few years, in Brazil, Colombia, and a number of countries in Central America and the Caribbean. In seeking to ensure favourable conditions for the access of their products to the market in the USA, the US companies have managed to have preferential tariffs established (the introduction of special articles 806.30 and 807 in the Customs Regulations of the USA which envisage the levying of customs duty not on the total cost of imported goods, but only on the cost of their manufacture abroad). The exports of products from the above mentioned enterprises to the USA are growing very rapidly. In the period from 1967 to 1976, they rose from 30 million dollars to 1,600 million dollars. According to rough estimates, no less than one third of all Latin American exports of finished articles to the USA are effected on this basis.

An important part in establishing a new international division of labour is played by the big US trade monopolies through the marketing network of which textiles, footwear, clothing, leather articles, and other consumer goods are sold. On the whole, all this is leading to a markedly growing share of semi-finished and finished articles in imports to the USA from Latin America, which in the period from 1961 to 1977

~^^1^^ It should be noted that these oil refineries and petrochemical enterprises, which bring their owners considerable financial gains, act as a buffer as well: they offer the monopolies quite a few possibilities for manoeuvring in a situation marked by growing contradictions between the countries producing and the countries consuming oil. The events of 1973 and 1974 showed that when the Arab states imposed an embargo on oil deliveries to the USA, this had an insignificant effect on the supply of oil to the enterprises in the Caribbean. Consequently, these enterprises were an important reserve of supplies of petroleum products for the United States itself.

STRUGGLE FOR ECONOMIC INDEPENDENCE

rose from 7.6 per cent to approximately 23 per cent. The overall volume of US purchases of these products in the region is now worth more than 5,000 million dollars. These changes mean that US capital has made a definite step towards satisfying the demands of the Latin American countries interested in expanding their industrial base, diversifying their exports, increasing their foreign currency receipts, and so forth. This evolution, however, is being achieved through the preservation and strengthening of the positions of the US multinational monopolies and the creation of new forms of economic ties to bind that continent to the US market.

An important element of the neocolonialist manoeuvres is

the stake, much publicised by Washington, on quests for an

individual approach to separate Latin American countries,

and emphasis on developing bilateral co-operation. The

secret purpose of these manoeuvres is to take advantage of

the process of differentiation and the deepening of the

centrifugal tendencies in a number of Latin American

countries. Describing this evolution in the USA's policy, the

journal Progressive wrote in 1979: "As U.S. policymakers and

entrepreneurs began to suffer acute indigestion resulting

from their efforts to swallow the hemisphere in one bite,

they turned from regional to bilateral strategies, stressing

differences among the various nations and adjusting policies

to maintain the Balkanisation that has been the plague of

Latin America.''^^1^^

In order to make effective use of these tactics, the USA took steps to lessen the differences with its southern neighbours in respect of questions on which there was a fairly high degree of regional unity. In particular, the White House concluded new agreements with Panama on the canal, which made it possible to decolonise its territory and, at the same time, which provided for US control over the canal for a long time to come.

The signing of Protocol I to the Tlatelolco agreement on the creation of a non-nuclear zone in Latin America was a similar step.

Progressive, March 1979, p. 15.

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US diplomats have been putting great effort into strengthening bilateral relations with many countries in Latin America. Special attention has been paid, in particular, to building up relations with Mexico, which is, to quite a large extent, a consequence of the "oil factor" (interest in Mexico's huge oil resources discovered in the seventies has been growing apace). This process has not only been reflected in the more frequent exchanges of top level visits (the Mexican President Jose Lopez Portillo, was the first foreign head of state to be received by Jimmy Carter in the White House; in February 1979, President Carter visited Mexico, and in September President Lopez Portillo again paid an official visit to Washington; elected to the post of US President in 1980, Ronald Reagan met with President Lopez Portillo in January 1981, even before he had officially taken up his duties, and again in April 1981), but also in large-scale measures in the sphere of foreign economic policy. These measures include the signing (for the first time in 35 years) of a US-Mexican trade agreement (December 1977), an agreement on supplies of Mexican gas to the USA ( September 1979), and intensive negotiations on deliveries of Mexican oil. Political and business circles in the USA attribute special importance to the idea of creating a "North American economic community", which would include the USA, Canada, and Mexico.

At the end of the seventies, setting up the "North American economic community" became one of the main strategic goals of US foreign economic policy. Moreover, the scale of Washington's plans for regional integration has been ever on the increase. Whereas, initially, it was a question of creating an energy association consisting of the USA, Canada, and Mexico, then, at the end of the seventies and in the early eighties the US administration proposed that a North American common market should be formed, with the participation of the three above-mentioned countries, and at the beginning of the eighties plans were hatched to organise a more extensive economic association, of which the countries of Central America and the Caribbean could also be members in one form or another.

Politically the plan to create a North American community

is obviously aimed at cutting Mexico and, possibly, some other Central American and Caribbean countries off from the united front of Latin American stales, and thereby undermining the anti-imperialist movement in the region. At the same time, through the implementation of the plan, US monopoly capital hopes to achieve some of its long-term economic aims.

It is primarily a question of the opportunities for expanding exploitation of the Mexican market. The US monopolies are energetically taking advantage of Mexico's increasing income from oil exports and its rapidly growing import requirements to boost exports to that country. In 1979 and 1980 alone, the USA's exports to Mexico more than doubled (from 4,900 to 11,000 million dollars). As noted in the US press, if circumstances are favourable, the US monopolies will be able to make their export expansion on the Mexican market even more intensive. According to the Business Week magazine, if the North American community were to be formed, Mexico might well become in the next few years the USA's second biggest trade partner after Canada, overtaking Japan.^^1^^

The possibilities of more extensive utilisation of Mexican (and also Canadian) oil and gas resources in the interests of the USA are no less important either. It should be noted that the USA's numerous attempts to apply pressure to Mexico in order to force it to accept disadvantageous conditions with regard to supplies of oil and gas to the USA have not as vet brought any tangible results. Mexico has stood firm in not allowing the USA to dictate to it and is pursuing an oil policy which corresponds to its national interests. It has refused to assume any obligations with regard to guaranteed supplies of oil to the USA, has decided to limit the amount of oil exported to the USA, and concluded a number of agreements which ensure a larger number of Mexican oil buyers. Moreover, greater access to Mexican oil is seen by the ruling circles in the USA as a vital element in their foreign economic policy (above all, as regards the diversification of sources of supply of liquid fuel and the possibility of

~^^1^^ Business Week, October 3, 1979.

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I < ONOM1ES OK LATIN AMERICAN COUNTRIES

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increasing pressure on the Arab oil-exporting countries). The North American economic community is expected to help substantially in solving this problem for the US monopolies. Within its framework, they hope to obtain keys to the rich oil resources of Mexico and to use them as a tool in the struggle against the OPEC countries. As the well-known Mexican scholar Jose Luis Cecena noted, "once the USA had created a common market, it would quite confidently be able to dispose of these vital [petroleum] products of both Mexico and Canada. Thereby it would debilitate OPEC".^^1^^

The US administration is paying great attention to the strengthening of US positions in the Caribbean. Considering the rising anti-US sentiment in the Caribbean countries, Washington is endeavouring to employ a wide variety of economic levers to get co-operation going. Special significance is attributed to the expansion of economic aid. The Carter administration markedly enlarged its allocations for technical and economic assistance to the Caribbean countries, raising them to 125 million dollars in the 1978/1979 fiscal year. The US Agency for International Development allotted more than 40 million dollars to the Caribbean Bank of Development. Besides this, the US administration has sought to mobilise additional means by various channels. At the end of 1977, on the initiative of the White House, an international consortium was formed to render aid to the countries of the Caribbean, which included 30 countries and 15 international organisations. Through the International Monetary Fund and this consortium, the Caribbean states received 115 million dollars. From 1977 to 1979, the loans provided to these countries by the International Bank for Reconstruction and Development increased from 58 million to 150 million dollars, and those provided by the Inter-American Development Bank, from 62.5 million to 250 million dollars. In 1981, the Reagan administration came out with the "Initiative in the Caribbean" programme, which was a new step in the US economic activities in the region. The programme envisaged providing certain privileges in trade and more loans to the countries of the region and in fact served to sharply invigorate

the role of private capital there.

Naturally, it would not be right to underestimate the danger of the neocolonialist manoeuvres of the USA and its imperialist partners, aimed at isolating Latin America from the world national liberation movement, rending asunder the unity of a group of developing states, and undermining their struggle to restructure international economic relations. These manoeuvres can even complicate the solution of the problems facing the countries of Asia, Africa, and Latin America. As the experience of the recent period has shown---in particular, the insufficiently productive results of the major international forums of UNCTAD V (Manila, May 1979), the World Conference on Science and Technology for the Purposes of Development (Vienna, August 1979), the Third General Conference of UNIDO (Delhi, January and February 1980)---the lack of the necessary unity and co-ordinated action seriously hinders the developing states in attaining the set goals, and forces them to come to disadvantageous compromises. At the same time, one cannot help but see that the USA's neocolonialist policy is extremely inconsistent and contradictory. Intended to bring about a certain smoothing out of the conflicts with the Latin American countries through partial concessions, this policy is marked by frequent relapses into blatant contempt of their economic interests and attempts to bring crude pressure to bear and use blackmail. From their own experience, the Latin American countries are becoming increasingly convinced that they can only secure their national interests by taking resolute action aimed at strengthening their economic and political independence, and by waging a persistent struggle against the manoeuvres of international capital.

THE ULTIMATE PURPOSE---SOCIAL LIBERATION

The deepening of the contradictions of dependent capitalism in Latin America, the impossibility of finding a cardinal solution to the main social and economic problems, and the strenuous efforts of international monopoly capital to keep that continent a dependent and exploited part of the world capitalist system all make the question of which path of

~^^1^^ Excelsior, October 2, 1979.

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ECONOMIES OF LATIN AMERICAN COUNTRIES

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socio-political and economic development should be taken in the region increasingly urgent.

Wide strata of the Latin American public are involved in the struggle for the way that they believe should be taken. The ruling classes in the Latin American countries ( primarily, the big bourgeoisie) are striving to find means of boosting the growth of capitalism. In so doing, they put a high stake on the liberal reformist concept which proceeds from the possible rapid growth of the national private capitalist system and of the preservation of liberal democracy as the predominant form of superstructure. But, as experience has shown, the liberal-reformist path has not ensured the fulfilment of the tasks set. Economically, it has given rise to the impasses of import-substitution industrialisation, has drastically complicated the problem of foreign debts, and has aggravated the crisis of the traditional structures. In politics it has led to a tremendous swing to the left in the sentiments of the people, the culmination of which was the revolution in Chile. In a number of countries, such as Venezuela, Costa Rica, and Colombia, the ruling classes are trying to inject some life into the bankrupt liberal reformist concept. At the same time, in the ruling circles in many Latin American states, a striving to copy the "Brazilian development model" is becoming increasingly evident. This model is enjoying the ever growing support of international capital, which is advertising it as the main guideline for the countries on that continent and the chief alternative for achieving profound social and economic transformations.

The widely propagandised achievements of the "Brazilian model" (acceleration of the rates of overall economic development, expansion of the industrial potential, and a growth of exports) cannot, of course, conceal the serious shortcomings inherent in it and the numerous bad social and economic effects it has.

One of the main consequences of the "Brazilian miracle" is the greater economic dependence on the imperialist states. This is the immediate result of the increase in direct private foreign investments in the Brazilian economy, the granting to Brazil of large foreign loans, the growing role of exports in the economic life of the country, and the consolidation of its

6 I » H i» P

dependence on foreign markets. The following figures reveal the scale of the foreign monopolies' invasion of Brazil: \vhereas in 1963 to 1966, the gross influx of loans and direct investments amounted to 2,000 million dollars, in 1967 to 1973 it was 17,000 million, and in 1974 to 1976, 28,000 million dollars. The foreign monopolies are closely bound up with the Brazilian industrial and financial oligarchy and are using the Brazilian state sector in their own interests. On this basis, a bloc of big foreign and domestic capital has been formed (with the former predominating), which is closely linked with the government apparatus and opposes all the progressive forces in the country.

Brazil's economic development is being effected on the basis of continually increasing exploitation and the suppression of the rights of the working population. This fact is now widely recognised in Latin America. A rigid policy is being pursued in Brazil to restrict rises in wages and other forms of incomes for the working people. From 1964 to 1974 the real wages of Brazilian workers fell by approximately 55 per cent (while labour productivity grew on average by 56 per cent per employed person).^^1^^ Consequently, the average hourly earnings of an industrial worker in Brazil at the beginning of the seventies were half those in Mexico, and even lower than those in Paraguay. The real purchasing power of the wages of high-skilled workers had also decreased considerably. In 1978, for example, the real purchasing power of the wages of metal-workers in Sao Paulo was 34 per cent lower than it was in 1965.^^2^^ There has been an extraordinary growth in the unevennes of the distribution of incomes in Brazil as well. Whereas in 1960, the upper stratum, which comprised 5 per cent of the Brazilians, gained 27 per cent of the entire national income, in 1970, the figure had already grown to 36 per cent.^^3^^ In the rates at which incomes are being redistributed in favour of the ruling upper crust, Brazil has overtaken most of the Latin American countries.

I

I

~^^1^^ Bonos, No. 1046, 1974, p. 11.

~^^2^^ O Estado de Sao Paulo, February 2, 1979.

~^^3^^ Conjuntura Economica (Rio de Janeiro), No. 8, 1972, p. 6.

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Using the demagogic slogans such as "first production, then distribution", the ruling circles are striving to suppress any attempts on the part of the Brazilian workers to achieve an improvement in their living conditions and reject their demands to carry out even very modest social reforms. At the same time, the concentration of wealth and poverty in the country has acquired such an odious nature that the ruling bosses are more and more frequently being forced to speak of the need to make social differentiation less marked, even if only partially. The so-called social integration programme is to serve this purpose. This programme envisages certain measures to distribute incomes more evenly among the various groups of the population.

One cannot help but notice the grave errors committed in the Brazilian development strategy, which was largely designed with a view to a favourable state of the world market. Even when the conditions on foreign markets were advantageous, anxiety was definitely caused in Brazil by such factors as the increase in the trade balance deficit, which almost reached 1,500 million dollars more than once in the seventies, and which even exceeded that level at the beginning of the eighties; the country's increased dependence on imports of liquid fuel, raw materials, semi-finished goods, considerable currency fluctuations and insufficiently rapid rates of boosting exports.

At a time when the economic difficulties were being aggravated in the centres of world capitalism and the energy and monetary crises were deepening, the economic position of Brazil became considerably more complicated. In the mid-seventies, the rate of Brazil's economic development slowed down. In some industries, marketing difficulties increased. The level of capital investments dropped, and the unemployment figures increased (at the end of the seventies, there were 3.5 million unemployed, or 7.5 per cent of the able-bodied population). Inflation has acquired a spasmodic nature.

At the end of the seventies and the beginning of the eighties, an increasingly difficult situation was taking shape in the sphere of foreign trade: the trade balance regularly shows a large deficit, which is covered by loans from abroad.

By the end of 1982, the country's foreign debts had reached 70,000 million dollars. In the late 1970s and the early 1980s, Brazil was compelled to spend 60 per cent of its export earnings on cancelling foreign debts. In describing the situation that had taken shape in Brazil at the end of the seventies, the Movimento journal wrote in the autumn of 1979 that the regrettable experience of the economic development model chosen by Brazil quite obviously showed that that model had turned against the country's national interests.

The crisis of the "Brazilian model" has led to definite changes in the country's political situation at home. The beginning of the eighties saw a mighty upsurge in the strike struggle of the working class, and mass-scale demands on the part of the public at large for democratisation of political life. Pressure from the masses forced the government to pass a law on amnesty, which allowed progressive figures, above all Communists, to return to their homeland.

For its part, the imperialists and Brazilian reactionaries are persistently seeking to prevent the development of these new trends in the country's political life. However, the progressive forces in Brazil are proceeding from an optimistic evaluation of the political situation and the hope of possible favourable changes in the future. The General Secretary of the Central Committee of the Brazilian Communist Party, Luis Carlos Prestes, stressed the following: "... The situation in Brazil is fairly contradictory, if only because the government cannot go over to a counter-attack against the workers. The transnational companies hold the levers controlling the economy in their hands. But we are convinced that the process of real democratisation in Brazil will continue." '

The broad progressive circles in Latin America are seeking a way out of the structural crisis by means of struggle against the domination of foreign monopolies, strengthening economic independence, and carrying out social transformations that would fulfil the expectations of the masses.

In evaluating the situation obtaining in Latin America, Fidel Castro said in his report to the Second Congress of the Communist Party of Cuba: "The very fact that the revolution-

~^^1^^ Pravda, December 13, 1979.

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ary national liberation movements are spreading ever more extensively on this continent which have a profound social emphasis, and the action taken by the working people in various countries is being intensified, goes to show that the crisis of the system of imperialist domination and oligarchy in this region of the world is deepening... The remarkable struggle of the peoples of Central America and the Caribbean is a most vivid and heroic form this process is taking." '

The peoples of Peru, Panama, Guyana and other countries are active participants in this struggle. The people of Nicaragua who have overthrown the brutal dictatorship of Somoza, have also taken this path, as well as the people of El Salvador, who are fighting the forces of local reaction which are extensively supported by the US imperialists. The experience accumulated in carrying out cardinal social and economic transformations makes it clear that the progressive forces on the Latin American continent can only make each step forward in this sphere in an extremely intense struggle with the internal reactionaries and the imperialists supporting them, all of whom are attempting to suppress the development of the revolutionary process in the region at any cost, to prevent social progress, and to abolish the revolutionary gains of these countries' peoples.

The experience of Peru is instructive. In 1968, the patriotic government of Juan Velasco Alvarado came to power and set about introducing radical social and economic reforms. From 1968 to 1975 foreign property in Peru was extensively nationalised, which made it possible to restrict foreign control over many vital branches of the economy. A land reform was carried out, the part played by the government in the economy was consolidated, and steps were taken to restructure the economy on the basis of mainly public property. The activity of the government of Juan Velasco Alvarado dealt a serious blow at the imperialists and their local allies, shook their dominion, deprived them of their privileges, and helped to make changes in society's economic structure in the interests of the workers. This

i

policy could have led to the creation of a state where there was national democracy. However, the lack of necessary union with the more radical left forces (the working class and the- peasantry and their revolutionary parties) hindered further progressive reforms.

In 1975, the government of Velasco Alvarado fell, and Peru began to move backwards. A policy is now being pursued aimed at curtailing the state sector and the implementation of agrarian transformations has been slowed down. The workers' communes have been disbanded, and strikes have been banned. This regression, as the General Secretary of the Central Committee of the Peruvian Communist Party, Jorge del Prado said, "is dangerous for the people, it represents a serious step backwards".^^1^^

The progressive forces, in Peru are uniting their efforts to defend the revolutionary gains. The mood of the masses in the country is now more revolutionary than it was ever before, and the progressive organisations are prepared to take resolute and effective action. One important indicator is the founding of a bloc of left-wing political parties---La Unidad de las Fuerzas de Izquierda (the Unity of Left-Wing Forces), which comprises the Peruvian Communist Party, the Socialist Revolutionary Party, and other progressive political organisations and associations. The creation of the Unity of Left-Wing Forces embodied the long-felt aspiration of the broad masses in Peru to obtain an effective instrument in the struggle for social and economic progress and democracy. The bloc is looking well ahead, and, should conditions be favourable, it could well serve as the basis for a wider popular front.

An intense struggle to further progressive reforms is being waged in Guyana, too. The progressive democratic forces are demanding that a solution should be sought to the current complex economic problems not at the expense of the workers, but at the expense of the capitalists. They are in favour of the retention and consolidation of the state sector, the consistent implementation of an agrarian reform in favour of those who work the land, the development of

~^^1^^ Pravda, December 19, 1980.

Unidad, November 2, 1979.

ECONOMIES OF LATIN AMERICAN COUNTRIES

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planning, the involvement of broad sections of the masses in the social and economic transformations, and the establishment of firm ties with the countries of the socialist community. The imperialist powers and their international organisations are unyieldingly opposing this progressive policy. The International Monetary Fund is applying constant pressure to Guyana, actively playing on the country's economic and currency difficulties. Under pressure from the International Monetary Fund, the New Investment Codex has been adopted in Guyana, which makes serious concessions to foreign capital. In these circumstances, the broad masses are demanding ever more decisively that the intrigues of the imperialists and all kinds of reactionaries should be rebuffed. Appraising the situation optimistically, the General Secretary of the People's Progressive Party of Guyana, Cheddi Jagan, wrote at the end of the seventies: "While there are dangers in the Guyana political situation, new possibilities are opening up for revolutionary advance. Not since 1953 has such a broad-based unity developed in the struggle for ' democracy, a unity comprising the opposition parties, the most important trade unions in the key sectors of the economy, and the main religious bodies representing Christianity, Hinduism and Islam." '

The revolutionary alternative not only opposing imperialism, but also capitalism, is being given increasing support in Latin America today. The broad popular masses there are becoming increasingly aware of the truth of Lenin's words that "progress, if we leave out for the moment the possibility of temporary steps backward, can be made only in the direction of socialist society, only in the direction of the socialist revolution".^^2^^

The attempts of the imperialists and internal reactionaries to go over to a counter-attack, to block the path to progress, will only intensify the indignation of the workers and make the class struggle become even more heated. Latin American reality (in particular, the victory of the Nicaraguan people,

and the growth of the revolutionary movement in El Salvador) shows that conditions are ripening there for a new mighty revolutionary wave. In dealing with the ultimate reasons for the revolutionary acts of the masses in the world of capitalism during a friendly visit to Cuba, Leonid Brezhnev stressed: "Revolution does not feed on somebody's `propaganda' or 'subversive activity' as the imperialist press is in the habit of asserting. Revolution feeds on realities, the unbearable conditions in which peoples have to live. Therein lie its deep and indestructible roots. And any attempts to bar the road to progress and suppress the striving for freedom by means of terror and repressions can only increase the anger of the popular masses." '

The foremost progressive forces in the countries of Latin America quite justly consider that genuine economic and social liberation is only possible if anti-imperialist and socialist tasks are brought closer together and if the anti-imperialist movement is escalated into a struggle to put an end to social injustice and capitalist exploitation. As noted at the Conference of the Communist Parties of Latin America and the Caribbean held in Havana in 1975, "the struggle for democracy for the popular masses, for vital structural reforms and for the transition to socialism is inseparably linked with the fight against the monopolies and the imperialism, which not only control our wealth, but also support the oligarchies and the oligarchic governments..."-

~^^1^^ L. I. Brezhnev, Following Lenin's Course, Progress Publishers, Moscow 1975, p. 369.

~^^2^^ "Latin America in the Struggle Against Imperialism, for National Independence, Democracy, People's Welfare, Peace, and Socialism. Document of the Conference of Communist Parties of Latin America and the Caribbean, June 1975", Information Bulletin (Prague) No 12 T'9^^9^^) 1975 pp. 37-38.

'

' ' '

~^^1^^ World Marxist Review, No. 12, 1979, p. 88.

~^^2^^ V. I. Lenin, "The Junius Pamphlet", Collected Works, Vol. 22, 1964, p. 316 (here and elsewhere Progress Publishers).

CUBA: THE EXPERIENCE GAINED

IN SOCIAL AND ECONOMIC

TRANSFORMATIONS AND IN THE BUILDING

OF THE FOUNDATIONS OF

A SOCIALIST ECONOMY

CUBA: EXPERIENCE OF TRANSFORMATIONS

1898, when the USA occupied the island, intervening in Cuba's war of liberation against Spain. In examining the main crises in the international policies of the great powers at the turn of the century, in his "Notebooks on Imperialism", Lenin defined the essence of the Spanish-US war of 1898 concisely and expressively with the words: "Cuba and Philippines plundered.''^^1^^ In 1958, the USA's private capital investments in Cuba amounted to some 1,000 million dollars (nearly 12 per cent of all the capital investments in the Latin American countries).^^2^^ Fidel Castro noted that, having shed a whole sea of blood, Cuba turned from a Spanish colony into a US one. The natural resources, the best lands, the banks, the service sphere, foreign trade and the emergent industry were all in the hands of foreigners. The country's economic, political and cultural life was completely controlled by the United States.

The most important industry dominated by US capital was sugar production. On the eve of the revolution, the capital investments in this industry amounted to 650 million dollars, of which more than half (330 million) was the capital of US monopolies. Some 500,000 workers were employed in the sugar industry. Its output in some years reached 6 million to 7 million tonnes. The extremely large share of the sugar industry in Cuba's economy did, in fact, make it a monoculture country.

Cuba's agriculture completely depended on the sugar industry, for sugar cane was grown on more than 27 per cent (184,400 caballerias^^3^^) of all the country's farm land. In 1958, of the 161 sugar refineries, 36 largest ones with some 40 per cent of the total sugar output, belonged to US capital. The latter was also invested on a considerable scale in the sugar refineries belonging to Cuban capitalists, which meant that almost the entire sugar industry of Cuba was controlled by US companies.

The path traversed by Cuba following the victory of the revolution, the radical social and economic transformations effected and the experience accumulated in building a new, socialist society in that country are of tremendous significance to the other countries of Latin America. And this is quite natural.

``The power of a small country like Cuba," emphasised Fidel Castro Ruz in the Report of the Central Committee of the Communist Party of Cuba to the Party's 2nd Congress, "does not lie with its military or economic might, but is of a moral nature. Cuba, which was the last to liberate itself from the Spanish colonialism, became the first country in this hemisphere to throw off the imperialist Yankee yoke.lt was the first country in this continent to embark on the road of creating new, and higher forms of economic and social life, on the road of building socialism.''^^1^^

THE SOCIAL AND ECONOMIC POSITION OF CUBA ON THE EVE OF THE REVOLUTION

The economic position of Cuba in the pre-revolutionary period was determined by three main factors: the complete domination of US monopolies in the key branches of the economy; the predominance of a system of latifundia in agriculture; and the poverty of the country's working masses. The penetration of the country by US monopolies, which swiftly brought about their complete dominion, began in

~^^1^^ El Congreso del Partido Comunista de Cuba. Informe central, Editora Politica, Havana, 1980, p. 1.

~^^1^^ V. I. Lenin, "Notebook `Egelhaaf'", Collected Works, Vol. 39, 1968, p. 687.

~^^2^^ Inostranniye monopolii na Kube. 1898-1958 gody (The Foreign Monopolies in Cuba. 1898-1958), Nauka, Moscow, 1976, p. 6.

~^^3^^ One caballeria= 13.4 hectares.

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The mining industry was also controlled by US capital. Cuba is rich in nickel-containing ores (it holds one of the leading places in the world), and also has copper resources. US monopolies completely controlled the extraction of nickel, cobalt, and other valuable minerals. Nickel extraction was in the hands of two US companies: Nicaro Nickel Company to which the giant Nicaro nickel plant belonged, and Moa Bay Mining Company, which owned the Moa nickel plant in Oriente Province. The American Metal Company of the United States was engaged in extracting copper ore, while the US company Cuba Mining controlled 60 per cent of the extraction of manganese ore. Cuba did, moreover, supply the US industry with chromite ores, tungsten, and various types of non-metallic minerals. US monopolies also occupied a dominant position in Cuba's chemical and pharmaceutical industries.

Of those industries where local capital prevailed the tobacco, textile and footwear industries were developed considerably, but they suffered greatly from US competition.

The US banks played a vital part in Cuba's financial life. In 1958, more than 39 per cent of the bank deposits in Cuba were held by them, as well as by the banks of other imperialist countries.

The US monopolies controlled the bulk of the railway, sea, and air transport, and also communications. Moreover, almost 92 per cent of the electricity generation was concentrated in the hands of the US firm Compania Cubana de Electricidad.

The agriculture of pre-revolutionary Cuba, was dominated by the latifundia system, a form of land ownership which provided a buttress for the dictatorial regime. The economic interests of the land-owning oligarchy were intermingled with those of the big trade, banking, and, in a number of cases, industrial Cuban bourgeoisie, who had firm ties with the US monopolies. According to the 1946 census, 2,336 of the holdings had an area of 4,247 million hectares, i.e., 1.5 per cent of the owners possessed more than 46 per cent of all the privately owned land. At the same time, 111,000 holdings or 70 per cent of all the holdings, had an area of 1,018 million hectares, or 12 per cent of all the privately

owned land.^^1^^ Moreover, approximately one fifth of all the arable land belonged to US companies, which were the biggest latifundistas.^^2^^ Thus, for example, in Camaguey Province, more than 685,000 hectares of land, which comprised more than 20 per cent of the arable land in the province, was owned by six US companies.^^3^^

Typical of Cuba's agriculture in the pre-revolutionary period was a close intermingling of capitalist methods of exploitation on the large sugar and livestock-breeding latifundia and semi-feudal methods (share cropping) in tobacco and coffee production. Some 63.9 per cent of Cuban peasants did not own the land they worked. It was leased by them, a phenomenon that was exceptionally common in Cuba's agriculture. The land was worked by out-of-date methods, and there was an extremely low level of mechanisation. The peasants lived in terrible poverty.

The rapacious exploitation of material and manpower resources combined with the deliberate suppression of local industry, had destructive consequences for the country's economic development. No more than 10-15 per cent of the gross national product fell to the share of the industry (excluding the sugar industry).^^4^^ Handicrafts prevailed in the manufacturing industry (except for a few large enterprises mostly owned by US monopolies). Although Cuba was an agrarian country, it was only able to satisfy slightly more than half of its needs in agricultural produce. In the USA some 1.7 million hectares of land were worked every year to provide exports of foodstuffs and raw materials to Cuba, while in Cuba itself the same area of land remained unworked.^^5^^

The domination of US monopolies in the chief branches of Cuba's economy determined the main trend and the nature

~^^1^^ Leyes del Gobierno Provisional de la Revolution, Vol. Ill, 4 Ed., Havana, 1960; p. 137.

~^^2^^ Leyes del Gobierno Provisional de la Revolution, Vol. Ill, Havana, 1959. ^s Oscar Pino-Santos, El imperialismo norteamericano en la econamiu de Cuba,

Havana, 1960, p. 59.

~^^4^^ Voprosy ekonomiki (Questions of Economics), No. 5, 1966, p. 1L'5.

~^^5^^ La estructura economita de Cuba y la reforma agraria, Havana, 1959, p. 75.

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of the country's foreign trade. The share of the United States in Cuba's exports in 1958 amounted to approximately 66.8 per cent and in its imports to almost 69.8 per cent. Cuba was virtually turned by the United States into a supplier of cheap raw materials and a purchaser of industrial and agricultural products at high prices. Sugar and the other products of sugar refining accounted for approximately 80 per cent in Cuba's foreign trade balance. Tobacco accounted for 6-7 per cent of the total value of exports, and the products of the mining industry 3-8 per cent. The main importer of Cuban sugar (2.8-3.2 million tonnes per annum), the USA, exerted heavy economic pressure on Cuba by raising or lowering import quotas with regard to Cuban sugar, which were established every year.

After the Second World War, in accordance with the General Agreement on Tariffs and Trade (GATT), which Cuba joined in 1948, and the law on sugar quotas adopted in the USA, Cuban-US trade was characterised by more favourable terms than those enjoyed by other foreign trade partners of these countries. However, the USA as the stronger partner, gained greater benefits from these advantages, having monopolised two thirds of Cuba's incomes from sugar exports. Moreover, the USA's share in Cuba's imports was greater than that in its exports, which meant that the monopolies of the United States obtained additional profits. A situation took shape where the USA began to completely determine the structure, volume, and geography of Cuba's foreign trade.

The transfer of profits abroad was bleeding the country's already feeble economic organism white. The ever increasing results of Cuba's failing balance of payments in the USA in the ten years preceding the revolution amounted to some 1,000 million dollars.

Fidel Castro described the social consequences of the sway of foreign capital and of the land-owning oligarchy in his speech to the 15th Session of the United Nations' General Assembly: "Three and a half million out of a total of slightly more than 6,000,000 lived in huts, shacks and slums, without the slightest sanitary facilities. In the cities, rents took almost one third of family incomes. Electricity rates and rents were

the highest in the world. Thirty-seven and one half per cent of our population were illiterate; 70 per cent of the rural children had no teachers; 2 per cent of our population, that is 100,000 persons out of a total population of more than 6,000,000 suffered from tuberculosis. Ninety-five per cent of the children in rural areas were afflicted by parasites, and the infant mortality rate was therefore, very high, just the opposite of the average life span..." ' In 1958, the number of unemployed and partially employed rose to 657,000, i.e., it comprised more than 40 per cent of Cuba's able-bodied population.^^2^^

The low standard of living of the masses, primarily the peasants and the agricultural labourers, meant that their purchasing power was minimal, which restricted the development of the domestic market and held back the growth of industry. There were some 4 million people in Cuba with such a low annual income that even the small number of goods produced by the national industry did not find a market.

This was the economic situation obtaining in the country in the pre-revolutionary period. The revolution, which took place in January 1959, overthrew the dictatorship of Batista and proclaimed the country's political independence.

THE REVOLUTIONARY TRANSFORMATIONS

IN THE ECONOMY: THE AGRARIAN REFORM

AND THE OVERTHROW OF THE DOMINION

OF MONOPOLY CAPITAL

After the dictatorship of Batista was overthrown, the revolution was faced with the tasks of abolishing the economic positions of the latifundistas and foreign monopolies. These tasks were interconnected because foreign capital had formed a union with the latifundistas, and the dictatorship was an expression of the political dominion of the reactionary forces. The most important achievement in

~^^1^^ Address by Prime Minister Fidel Castro at the Fifteenth Session of the General Assembly of the United Nations, September 26, 1960.

2 Teoria y prdctica (Havana), No. 29, 1966, p. 16.

ECONOMIES OF LATIN AMERICAN COUNTRIES

r

CUBA: KXI'KRIKNCE OF TRANSFORMATIONS

the struggle for genuine national liberation was the abolition of the system of latifundia and the ousting of US capital from agricultural production.

The agrarian reform marked the beginning of the radical changes in the country's economic and social structure. The law on the agrarian reform passed on May 17, 1959, was a development and a logical completion of the law of October 10, 1958, "On the Right of the Peasants to the Land", which had been adopted by the command of the insurgent army at the height of the revolutionary struggle. The law on agrarian reform was of enormous mobilising significance, for the struggle against the dictatorial regime and the US monopolies was regarded by the working masses in the countryside primarily as a struggle for land. The law on the agrarian reform was aimed at ending the sway of foreign monopolies and the system of sugar and livestock-breeding latifundia, and at the gratuitous transfer of the land to the peasants, at the creation of collective forms of farming, and at the building of a truly national economy.

Article 1 of the law abolished the latifundia. The maximum area of land that could be owned by a juridical or a physical person was established as 30 caballerias. The big landowners received redemption in the form of bonds to be cancelled over a period of 20 years in instalments of 4.5 per cent per year. Article 15 established the right to ownership of the land solely by the citizens of Cuba.

Initially (May to December 1959), the land being distributed was that belonging to the state or confiscated from the supporters of the dictator Batista, and also that leased to the peasants by the landowners. Then (in 1960), the foreign, mainly US, companies, and the local latifundistas were dispossessed of their lands. By the end of 1960, the owning of latifundia in Cuba had been completely abolished. An extremely powerful blow had been struck at the imperialists: the economic foundations of their dominion in Cuba had been undermined and their main agents within the country, the landowner class, had been abolished. More than 4 million hectares of farm land (approximately three quarters of all the land expropriated by the reform), and also the means of production (buildings, machines, and other implements) and

livestock were confiscated from the imperialist and semifeudal latifundia.^^1^^

The law deprived US companies of their dominant position in the sugar industry, which had meant that sugar production and its industrial refining were in the same hands. At the same time, the positions of the big Cuban bourgeoisie, who also controlled a considerable part of the production and refining of sugar cane, were undermined. The proprietors, share holders, and officials of the enterprises in the sugar industry were dispossessed of their lands.

The agrarian reform led to the disappearance of the stratum of absentee landowners, who lived in the towns and did not manage their own farms, and their lands were given to those who worked them. Moreover, as a result of the setting up of people's shops, and also the concentration in the hands of the state of credits and the buying up of agricultural produce, the various types of middlemen and suppliers-on-credit, who represented one of the supports of reaction in Cuba, were eradicated.

The working peasants gained tremendous benefit from the agrarian reform. The average-size plot of land for a peasant family with five members was established as two caballerias (27 hectares). In the main, the allotments granted the peasants made it possible for small (plots of up to 27 hectares) and medium (27-67 hectares) farms to be formed. The greater part of the land was given to the peasants free of charge (plots of up to 27 hectares), and the initially established payments by instalments over 20 years for plots of more than 67 hectares were cancelled in 1964. This was one of the main features of the agrarian reform in Cuba.

As a result of the agrarian reform, the lease-holding peasants were freed of the burden of repaying leases to a sum of 10 million pesos, and also of rent payments in kind to the extent of 40-50 per cent of the harvest which had been levied on more than 30,000 peasant share-croppers.^^2^^ The state freed the peasants of their debts to the buyers-up, the

~^^1^^ Panorama economito (Santiago), No. 228, 1962, pp. 41-43.

~^^2^^ Cuba Socialista, No. 21, 1963; Noticias de Hoy, September 12, 1963.

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money-lenders, and the foreign companies and banks. Arrears in payment of taxes were written off, and the small peasants were exempted from paying certain taxes. All this eased the peasants' financial situation considerably and meant that the peasant farms were now independent of the capitalist elements in the countryside.

Yet another important peculiarity of the agrarian reform consisted in the fact that within the limits established by the law the peasants were given possession of those plots of land that they had worked before the revolution under lease, as share-croppers, and so on (there were 100,000 such peasants). Consequently, after the reform was introduced, the number of private peasant farms increased negligibly, although the total area of land owned by the small and medium peasants more than trebled compared with the pre-revolutionary period. In 1961, more than 3.5 million hectares of land belonged to small private producers. On this area, which amounted to some 40 per cent of all the farm land, they produced approximately 30 per cent of all the agricultural output.^^1^^

As a result of all these measures, one of the main tasks of the revolution was carried out, namely, that of bringing together the working class and the toiling peasants. The union of these two main classes of Cuban society, which took shape in the years of the rebel struggle, was given a firm economic foundation.

In putting the agrarian reform into effect, the government of Cuba did not make it its goal to abolish all forms of private ownership of the land. The data cited expose the groundlessness of the slanderous fabrications of US propaganda to the effect that the agrarian reform had eliminated all peasant ownership of the land. As the facts show, when an end was put to ownership of the land by big local and foreign landlords, the positions of the working peasants in Cuba became very much sounder. Moreover, owing to the eradication of local and foreign latifundia and the formation of a state sector in agriculture, and also the measures to

restrict changes of land ownership in the private sector, the sphere of capitalist farming was drastically reduced as early as the first stage of the revolution.

A special section of the Law on Agrarian Reform dealt with the creation and development of collective forms of agriculture. Thus, Article 43 proclaimed that the National Institute of Agrarian Reform would in every possible case facilitate the setting up of farming co-operatives. The institute was charged with rendering assistance to and administration of the co-operatives. In 1961, the Asociacion Nacional de Agricultores Pequenos (The National Association of Small Farmers), a union of working peasants, was founded, based on strictly democratic principles. Right from the very start, it facilitated the introduction of the Revolutionary Government's agrarian policy, aimed at boosting agricultural production and strengthening the socialist elements among the peasantry, who made the greatest advances in various forms of co-operative farming.

The starting-point for the formation of state property in Cuba's agriculture was the transfer into the hands of the state of the large farms of the capitalist type, which had belonged to local and foreign owners, and the organisation on the basis of them of co-operatives of farm workers (in August 1962, they were transformed into sugar plantations) and public estates. They were set up on the lands of the latifundia formerly used for livestock-breeding, on the former large rice-growing farms, and sugar plantations, and also on what were formerly uncultivated lands.

The possibility and need to nationalise the large landed estates in Cuba arose from the whole of the country's preceding development: on the one hand, large capitalist farms had taken shape on the latifundia and the sugar plantations, and, on the other hand, the process of " depeasantisation (descampesinizacion)" had led to the main mass of the peasants becoming members of the proletariat. Before the revolution, the agricultural proletariat comprised two thirds of all the rural population. The most numerous contingent of the workers in the countryside, the sugar plantation workers, were in its vanguard. The government of Cuba believed that the sharing up of such farms among the

~^^1^^ Veliky Oktyabr i kubinskaya revolyutsiya (The Great October Revolution and the Cuban Revolution), Nauka, Moscow, 1977, p. 133.

ECONOMIES OF LATIN AMERICAN COUNTRIES

CUBA: EXPERIENCE OF TRANSFORMATIONS

workers employed on them would mean losing the advantages that could be gained from large-scale, organised farming, would prevent the further improvement of the technology of agricultural production and the setting up of large farms on a modern scientific basis, and the farm hands themselves would become small proprietors, which would mean they would regress from the point of view of social development.

``The striving of the peasants to own the lands," emphasised Fidel Castro in his report to the First Congress of the Communist Party of Cuba, "that they themselves have worked, had been satisfied. The rest of the rural workers were farm hands. To turn them into individual peasant farmers or even into members of co-operatives would have been a step backwards of a militant section of our proletariat, a section which had always consisted mainly of workers employed on the sugar plantations. From a political point of view, the Revolution was on a firm footing, and such a measure, which might have been justified in certain circumstances for tactical reasons, was not indispensable in our situation. Consequently, the large areas of land worked by the farm hands were not divided up into small plots, and the co-operatives initially set up by the workers of the sugar plantations were then transformed into state farms at the wish of the overwhelming majority of the workers..." '

This means that at the first, national democratic, stage of the revolution a drastic change occurred in the country's agriculture. The nationalisation in the initial period of the revolution of 40 per cent of the farm lands, or 70 per cent of the expropriated land, and of a large number of other means of production facilitated the further process of socialist construction and freed a large contingent of workers in the countryside from exploitation. A firm foundation was laid for the restructuring of agriculture on a socialist basis. Drawing attention to this peculiarity in solving the agrarian

question in Cuba, in the Fourth Report to the UN "The Course of the Land Reform", it was noted: "Until recently the introduction of a collective system of agriculture as the predominant system has invariably been achieved by merging the small peasant farms, and this has been the reason for many difficulties. Cuba and Algeria are countries where the large collective sector of agriculture could be set up by expropriating large and usually highly productive farms. Consequently, the newness of these countries' experience is of special interest." '

The struggle against the system of latifundia could not fail to become a fight against imperialism and the whole system of capitalist exploitation. Nationalisation of property owned by US monopolies and the Cuban bourgeoisie followed in the wake of the agrarian reform.

The expulsion of the monopolies of the United States from industry and the banking system, which was a vital condition for the country's economic liberation, was carried out in several stages. Initially, the government of Cuba pursued a policy of limiting the super-profits of the foreign monopolies. It established control over the country's national wealth and introduced workers' control over the large industrial enterprises belonging to US companies (laws passed in 1959: No. 122 of March 3rd,^^2^^ No. 201 of March 31st,^^3^^ No. 207 of April 3rd,^^4^^ No. 617 of October 27th/' and law No. 817 of May 20, 1960.^fi).

The measures taken by the Cuban government met with bitter resistance on the part of US capital. Sabotage, blatant breaches of the new laws, blackmail, the cutting down of work, the cessation of oil deliveries, and refusals to purchase sugar were all employed to exert pressure on the Revolutionary Government of Cuba.

~^^1^^ UN Economic and Social Council. The Course of the Land Reform. 4th Report, Chapter II, Point 367, New York, 1965.

~^^2^^ Leyes del Gobierno Provisional de la Revolucion, Vol. V, p. '2'2.

~^^3^^ Ibid., p. 268.

~^^4^^ Leyes..., Vol. VI, p. 5.

~^^5^^ Leyes..., Vol. XIII, pp. 197-200.

~^^6^^ Leyes..., Vol. XX, 1960, p. 94.

~^^1^^ Primer Congreso del Partido Comunista de Cuba. Informs del Comite Central, Institute Cubano del Libro, Havana, 1976, p. 47.

ECONOMIES OF LATIN AMERICAN COUNTRIES

CUBA: EXPERIENCE OF 1'RANSFORMATIONS

By the decree of August 6, I960,^^1^^ the Cuban government nationalised the 36 giant sugar refineries belonging to US companies, the electricity and telephone companies, and also the oil refineries. By the end of August, another 26 US companies whose overall value was 650 million dollars were nationalised. This sum was to be repaid in government securities to be cancelled over a period of 30 years and to be paid with 25 per cent of value of the Cuban sugar sold on the US market.

The branches of the biggest US banks, through which the financial oligarchy of the United States exercised its sway over Cuba, remained a mighty buttress of foreign capital in the Cuban economy. On September 17, 1960, all banking matters were proclaimed the domain of all the people, and on the next day all the branches of banks of the United States were nationalised.^^2^^

On October 19, 1960, the government of the USA adopted a decision to completely cease its exports to Cuba. In response to this (Resolution No. 3 of October 24, I960),^^3^^ the Cuban government nationalised another 166 US trade and industrial enterprises, including chemical and metal-working plants, mining enterprises, flour mills, and so forth. As a result, the Cuban state took over the property of US monopolies in Cuba to the tune of some 1,000 million dollars.

The liquidation of the economic foundations of the dominion of the US imperialists and of the local landowning oligarchy, and the execution of other general democratic transformations completed the stage of the anti-imperialist, democratic revolution. The country acquired the opportunity to develop its economy independently.

The Cuban big industrial and trading bourgeoisie sabotaged the government measures, resorting to every possible machination to do so. In the preamble to the law of October 13, 1960, it is stated:

``Many large enterprises in the country, far from adopting

a course of conduct corresponding to the objectives and tasks set with regard to the revolutionary transformation of the national economy, have been pursuing a policy contrary to the interests of the Revolution and economic development, the most evident and best known manifestations of which have been the sabotage of production, the removal of capital without adequate reinvestment, excessive use of finance, without using private working capital, which is invested abroad.... This course of conduct is absolutely contrary to the interests of the Revolution, which has it as its aim to expand the internal market for all the above-mentioned enterprises in order to satisfy the country's needs at home." '

For the purpose of protecting the national economy, and also taking into account that development "cannot be achieved without adequate planning of the economy, the increase and progressive rationalisation of production, and national control over the country's basic industries"," the government took resolute measures. It nationalised 382 enterprises, including 105 sugar refineries, factories, railways, power stations, private banks, large shops, warehouses, and other enterprises belonging to the local big bourgeoisie.^^3^^

The interests of preserving and fortifying the revolutionany transformations, and the advance along a socialist path required further measures to limit, and then oust the private capitalist sector, first from the sphere oi domestic trade and public services (decree on nationalisation, December 1962), and then from agriculture (decree on the nationalisation of the property of the rural bourgeoisie, October 1963).

In accordance with Law 1076, some 5,000 retail enterprises selling hardware, footwear, clothing and other goods for personal use were nationalised. Only those enterprises were not subject to nationalisation where at the moment when the law was issued only their owners themselves or the members

~^^1^^ Leyes...,Vol. XXII, 1960, p. 185.

~^^2^^ Leyes..., Vol. XXIV, p. 130.

~^^3^^ Leyes..., Vol. XXVII, p. 138.

~^^1^^ Leyes..., Vol. XXV, Havana, 1960, p. 81.

~^^2^^ Ibid., pp. 38-57.

~^^3^^ Ibid.

ECONOMIES OF LATIN AMERICAN COUNTRIES

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of their families worked, i.e., they were not using hired labour.^^1^^ At the beginning of 1968, all the small retail trade and cottage industries were nationalised.

In the years immediately following the revolution, the economic policy of the revolutionary government in the countryside was aimed at restricting private capitalist forms of farming. Owing to the specific historical conditions obtaining in the initial period of the revolution, the rural bourgeoisie were not dispossessed of their property. However, later on, drawing strength from their economic position, the rural bourgeoisie acted as the main social support of imperialism and internal counter-revolution.^^2^^ The rich farmers began to sabotage the plans for agricultural development with the aim of undermining the country's economy, sold agricultural produce at inflated prices, exerted pressure on the small peasants, assisted counterrevolutionaries sent from the USA, murdered rural activists, and so forth. The existence of this class was " incompatible with the interests and goals of the Socialist Revolution".^^3^^

The law on the nationalisation of the large capitalist farms of October 3, 1963, was proclaimed the Fundamental Law of the Republic, having the force of a constitution. This law applied to farms with an area exceeding five caballerias (67 hectares). These farms became the property of the people, and it was proposed to use them mainly for livestockbreeding. It is important to note that the rural bourgeoisie held in their hands the bulk of the cattle, and also 2.1 million hectares of land, the greater part of which comprised pastures for livestock.

The declaration of the Executive Committee of the Confederation of Workers of Cuba in support of the law on the nationalisation of large capitalist farms states: "The working class of Cuba welcomes the law on the nationalisation of farms with allotments of more than five caballerias,

which the people have justly called the Second Agrarian Reform....

``Now the people will have more land at their disposal for agricultural development, which will facilitate increased agricultural production to improve food supplies to the population as a whole.

``As the Second Agrarian Reform is implemented, the class of the rural bourgeoisie will be abolished, the alliance between the working class and the peasantry will be strengthened, and the socialist revolution will be consolidated." '

The economic and political significance of nationalising the property of the rural bourgeoisie in Cuba amounted to the following. Firstly, the economic positions of the last exploiter class in Cuba were eliminated. Not only land but also livestock, agricultural machines and implements, farm buildings and other equipment, and also financial means, cash or in current bank accounts (Article 8 of the law), were subject to nationalisation.

Secondly, the share of the state socialist sector in agriculture grew sharply (up to three fifths of the farm land and produce). The socialist sector has not only become the leading one, but also the predominant one in the country's agriculture. The consolidation of the state socialist sector has led to further changes in the social and economic structure of the Cuban countryside in favour of the socialist sector, and the economic and political role of the rural working class has grown.

Thirdly, the corrupting ideological and political influence of the rural bourgeoisie on the working peasants was eliminated, and this made it possible to channel all the efforts of the latter into increasing production and gradually going over to collective forms of farming. The introduction of the nationalisation law thus fortified the basis for boosting agricultural production as a whole, both in the state and small peasant sectors.

Naturally, the enactment of the law was accompanied by an intensification of the class struggle, for it affected the

~^^1^^ Cuba Socialism, No. 61, 1966, p. 33.

~^^2^^ Noticias de Hoy, October 4, 1963; ANAP, No. 5, 1966, p. 5.

~^^3^^ Las Leyes de Reforma Agraria en Cuba, Unklad Cesar Escalante, Havana, 1963, p. 40.

Noticias de Hoy, October 6, 1963.

ECONOMIES OF LATIN AMERICAN COUNTRIES

CUBA: EXPERIENCE OF TRANSFORMATIONS

interests of a greater number of property owners than the first agrarian reform did. To weaken the resistance of the rural bourgeoisie, their property was nationalised with partial compensation, which was fixed individually in each case according to the size of the plot of land and of a number of other factors.

It is important to emphasise that, when nationalising private capitalist enterprises in the key branches of the national economy, the Revolutionary Government did not fear a temporary drop in production. This did, in fact, occur where no efficient administrative and technical management was provided at first, and where the state did not have a real basis for managing the nationalised small and medium enterprises. For the sake of the success of the revolution, the government consciously embarked on a course that involved temporary economic difficulties. When analysing the correlation of economics and politics in the course of revolution, Lenin wrote: "...the proletariat should not shrink from a temporary decline in production... What is most important to the bourgeois is production for the sake of production; what is most important to the working and exploited population is the overthrow of the exploiters and the creation of conditions that will permit the working people to work for themselves, and not for the capitalists. It is the primary and fundamental task of the proletariat to ensure the proletarian victory and its stability." '

The development of a democratic, anti-imperialist revolution in Cuba and its turning into a socialist revolution have confirmed yet again the well-known thesis that at certain stages revolutionary politics is bound to be of greater importance than economic policy. In the initial period of the revolution, the Revolutionary Government of Cuba put into effect measures which were primarily of political significance (for example, the nationalisation of the property of the Cuban bourgeoisie in December 1962 and October 1963).

At the same time, these measures were of paramount importance for the economy. Owing to the revolutionary

transformations new, socialist production relations became firmly established in all spheres of production and exchange in Cuba.

One of the main indicators in appraising the level achieved in socialist construction is the ratio of the share of socialist and private property in the principal means of production, and also the economic efficiency of both sectors. In 1975, in agriculture, the state sector embraced some 70 per cent of the farm land and produced almost 85 per cent of the gross agricultural output (the remainder was produced by the small landowners). The regulating influence of the state on the development of agricultural production in the private peasant sector is being exercised by the furnishing of credits and supplies of equipment to peasant farms and the purchasing of their produce for fixed prices on the contracting basis.

It is important to note that the Revolutionary Government gave the small and medium landowners a guarantee that any further changes in the system of landed property would be effected on a strictly voluntary basis. Fidel Castro underlined this in his report to the First Congress of the Communist Party of Cuba.'

In the remaining branches of the national economy, the share of the socialist sector in 1968 already comprised 100 per cent.^^2^^

Thus, in Cuba, two social and economic structures have remained---socialist and small-scale production, representing two friendly classes: the workers (industrial and agricultural) and the toiling peasants (small and medium).

In the years of the revolution, these classes themselves underwent tremendous changes. Once freed of exploitation, the proletariat became a class which concentrated in its hands important political and economic levers. The fruits of the workers' labour no longer serve to enrich a handful of foreign and local exploiters, but are used to satisfy the needs of the workers themselves and the whole of society. As the

~^^1^^ V. I. Lenin, "Preliminary Draft Theses on the Agrarian Question", Collected Works, Vol. 31, 1974, p. 160.

~^^1^^ Primer Congreso del Partido Comunista de Cuba..., p. 47.

~^^2^^ Granma, December 19, 1975.

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national economy grows and becomes stronger, the material and cultural standard of living improves.

From among the poor leaseholders, share-croppers and other formerly cruelly exploited groups of the peasantry, a large stratum of small and medium peasant landowners has grown, which, including the other members of their families, comprises approximately a million people, or one third of the rural population of Cuba. The working class and the toiling peasants have become the main classes in the new Cuban society.

The economic development strategy worked out after the radical social and economic transformations had been effected in the country and designed for the first stage of the creation of the material and technical basis of socialism envisaged the rapid development of agriculture, first and foremost, the export-oriented branches, on a modern industrial basis, with the subsequent transition to accelerated industrialisation, for the purpose of evolving a rational economic complex within the framework of the international socialist division of labour. In substantiating the economic development strategy for the sixties and seventies, the head of the Revolutionary Government, Fidel Castro, said in 1963: "Now we are absolutely convinced that agriculture forms the basis of our growth, and we have very good conditions for developing it.... Industry should rotate around it: the production of chemical fertilisers, and the building of farm machines." '

This mode of economic development meant that the transition of the whole of the national economy to large-scale automated production in that particular case did not begin with the creation of large-scale industry, but with the technical re-equipment of agricultural production; that, consequently, this sphere of production would by its very nature, technology, organisation, and so forth, become a variety of modern industrial production; that a highly developed agricultural production, which is, on the one hand, a step towards the creation of the material and technical basis of socialism, would serve, on the other hand, as a foundation upon which to establish large-scale automated production in all branches of the national economy. This was precisely one of the peculiarities of the creation of the material and technical basis of socialism in Cuba.

This method of effecting the country's economic development was determined by a number of closely interlinked factors: its agriculture was the principal and decisive branch of the economy, in which, as well as in the industries directly connected with it (sugar, tobacco, food, and others), the bulk of the means of production was concentrated, manpower,

CREATING THE FOUNDATIONS OF A SOCIALIST ECONOMY

As the radical social and economic changes were being effected, a task of paramount importance came to the fore, namely, that of creating foundations for a socialist economy. "The principal difficulty," Lenin pointed out, "lies in the economic sphere, namely, the introduction of the strictest and universal accounting and control of the production and distribution of goods, raising the productivity of labour and socialising production in practice."'

The accomplishment of this task consisted primarily in doing away with the country's economic backwardness, inherited from the past.

To overcome these difficulties, the material and technical base of socialism had to be created, which is one of the general laws governing the transition period and a component of the general process of building socialism. In Cuba, this difficulty was a particularly grave one, because of the backwardness typical of its economic development before the revolution. Being a condition of building socialism, the creation of the material and technical basis of socialism in that country, did simultaneously become a process of the country's economic rebirth, and a leap from a semi-- colonialtype economy to a socialist one.

~^^1^^ V. I. Lenin, "The Immediate Tasks of the Soviet Government", Collected Works, Vol. 27, 1965, p. 241.

~^^1^^ Cuba Socialista, No. 65, 1967, p. 135.

ECONOMIES OF LATIN AMERICAN COUNTRIES

CUBA: EXPERIENCE OK TRANSFORMATIONS

including skilled workers, and other resources; moreover, Cuba has optimal conditions for the development of agriculture.

Pursuit of a policy aimed at the primary development of agriculture was helped by the fact that the socialist state sector had occupied a dominant position in that branch of production from the very beginning of the transition period. Consequently, the state was able to steer its development. Finally, the development of Cuba's agriculture was facilitated by the existence of the world socialist system, the countries of which could serve as markets for its agricultural produce and as the source from which the republic could obtain the goods it needed.

However, not just any form of agricultural development may serve as the foundation of a country's economic advancement. The course of the development of agriculture presupposed only advances that would ensure a growth in the country's real accumulation and progressive changes in the structure of its economy.

The development of agriculture could serve as a factor and source of the country's economic revival, if the following conditions obtained: firstly, if the production for export (above all, of sugar) were stepped up, so that the means the state had at its disposal to satisfy import needs, would rise; secondly, if with a certain cost (sum of the prices) of exported goods, that part of it increased which contributed to accumulation, and to boosting the country's economic potential; and, finally, if the labour expended on the production of a certain quantity of a particular commodity in Cuba, in undergoing circulation on the foreign market, would have an increasing effect, for example, it would be materialised in larger amounts of means of production acquired. Naturally, the above said applies, first and foremost, to sugar production, although, in principle, it is valid for the production of other agricultural output.

The growth in the output and exports of sugar presupposes the extension of the sown area, the improvement of the sorts of sugar cane, the application of fertilisers, the setting up of irrigation works, an increase in the sugar refineries' capacities, the expansion of industries directly

connected with sugar production, such as power generation, construction, transportation, the chemical industry, the timber industry, the manufacture of agricultural machines, and hydraulic engineering.

Furthermore, the use of a growing part of the exported sugar to acquire means of production is made possible by improving the production in the country of many of the formerly imported goods, primarily consumer goods. This presupposes the development of multi-branch agricultural production, and also the organisation or expansion of the production of numerous industrial items. Finally, the only way in which Cuba can improve conditions for exchanging its sugar on foreign markets, is that of attaining an overall growth in labour productivity, which presupposes rapid advances in technology in all the stages of the production and marketing of this commodity.

Consequently, the policy aimed at the priority development of agriculture as the basis of overcoming economic backwardness and creating the material and technical base of socialism meant from the very first not only a considerable increase in sugar production, not only the considerable growth of agricultural production as a whole and of its individual branches, but also the substantial development of industry. The material and technical base of socialism is created mainly by means of real accumulation, which should be considerable in scale. In solving the problems of accumulation during the first stage of socialist construction, Cuba came up against a situation, which usually arises in economically backward countries: economic backwardness can only be overcome by making big capital investments in the national economy, and, at the same time, this backwardness restricts opportunities for accumulation. However, the solution of this problem was effectively facilitated by the substantial assistance rendered by the countries of the socialist community. One can judge of the growth of accumulation in Cuba's national economy from the fact that from 1960 to 1975 it amounted to one third of the country's gross social product and displayed a manifold growth as compared with the pre-revolutionary period. The policy aimed at the rapid and priority development of

ECONOMIES OF LATIN AMERICAN COUNTRIES

Cl HA: EXPERIENCE OF TRANSFORMATION'S

agriculture has been clearly reflected in the manner that accumulation has been used, the bulk of inputs going into agriculture and related branches before the mid-seventies. Thus, by 1976, the total capital investments in agriculture had reached 40 per cent of the overall capital investments, while inputs in industry had only amounted to 25-30 per cent. What is more, the greater part of the investments in industry over that period was directed at fulfilling the plan for the development of agriculture, above all, at increasing sugar production.

Accumulations were primarily used to create a new material and technical base for agricultural production. To accomplish these tasks, a considerable amount of modern machinery was needed, which Cuba acquired from the USSR and other socialist countries. Thus, over the period from 1958, to 1975, the country's tractor fleet increased from 9,000 to 54,000.' A large number of mechanical loaders, agricultural aircraft, powerful truck tractors, and other machinery, as well as spare parts, and so forth, were acquired. By way of comparison, it may be noted that from 1959 to 1975 Cuba imported machines and equipment in considerably larger amounts than in the entire period from 1902 to the revolution.

The high-powered machines made it possible to carry out the huge task of clearing the land, building roads, setting up hydro-engineering installations, and also mechanising farm work all in a quite short period. As a result of clearing land, new tracts of land were brought under cultivation, which doubled the farmed area.^^2^^

By 1975, more than 17,000 kilometres of highways and other roads had been built, i.e., 1.7 times more than under capitalism. The figures on the construction of hydroengineering installations are even more indicative: in 1975, there were reservoirs containing 4,000 million cubic metres of water, as compared with 29 million cubic metres in 1958. The building of hydraulic engineering installations is of exceptional importance in Cuba as a necessary measure in

combatting the elements, which constantly threaten agricultural output. This construction work formed the basis for an extensive irrigation system. At the beginning of 1975, the area irrigated amounted to 580,000 hectares, as compared to 160,000 hectares in 1959.'

The most important and difficult agricultural operations to be mechanised were those involved in sugar production. However, the tremendous efforts put into this sphere by Cuban and Soviet designers and by those employed in sugar production brought forth fruit: by the mid-seventies, the planting of the sugar cane and the loading of the cm stalks had been mechanised almost completely. During the Zafra (sugar cane harvest) of 1975 and 1976 harvesters operated on almost a third of the plantations. Rice production has been mechanised fully, and substantial advances have been made in mechanising livestock-breeding, poultry farming, tobacco and potato production, and so forth.

Particular note should be taken of Cuba's progress in the application of fertilisers in agriculture, the production of which had increased from 195,000 tonnes in 1958 to 1.2 million tonnes in 1975.^^2^^ On the whole, taking account of domestic production and imports, five times as many fertilisers and three times as many pesticides were used in agriculture in 1975 than in 1958. Herbicides are being applied on an increasing scale; in 1974, half of the plantations were sprayed with herbicides.

In the pre-revolutionary period, animal-drawn transport was used in agriculture. Now, most agricultural transport has been mechanised. As of January 1, 1976, Cuba's agriculture had at its disposal 11,000 lorries and 5,000 tractors. As of the same date, 3,000 specialists with highereducation, 23,000 with secondary education and more than 50,000 other specialists were employed in agriculture.

Efforts to intensify agricultural production at the first stage of effecting the country's economic development strategy resulted in substantial advances in boosting agricul-

^^1^^ Granma, December 19, 1975.

^^2^^ Ibid.

^^1^^ Ibid.

2 Primer Congreso del Portido Comunista de Cuba..., p. 42.

ECONOMIES OF LATIN AMERICAN COUNTRIES

CUBA: KXl'KRIENCE OF TRANSFORMATION'S

tural production, especially in the first half of the seventies. Thus, in the period from 1970 to 1974, the output of crop farming (except sugar cane) grew by 38 per cent, and that of livestock-breeding, by 10 per cent. Pork production trebled since 1963, and that of poultry increased fourfold. Egg production reached 1,700 million eggs, which was six times the figure for 1958.

Over the years being considered, industrial production expanded substantially, especially those industries involved in creating an up-to-date base for agriculture, and also exportoriented sectors. By 1976, the output of the basic industry rose by 2.9 times with an annual growth of 6.4 per sent.' In 1974, industrial output was almost one third than that in 1970. Its value (5,400 million pesos in 1974) amounted to approximately 41 per cent of the gross social product.^^2^^

The actual capacity of the power stations in 1974 was thrice that of 1958. The amount of capital investments in that industry amounted to 250 million pesos. Electricity generation grew from 2,600 million kwh to 6,500 million kwh.^^3^^ Per capita electricity consumption rose from 406 kwh in 1959 to 705 kwh in 1975. The length of the electricity transmission lines increased from 13,100 km to 32,100 km from 1958 to 1975. The unco-ordinated power network, which existed in 1959, was united into a single grid. More than 70 per cent of the dwellings in the country had electricity (in this indicator Cuba occupies one of the leading places in Latin America).

In the mining industry, nickel output was boosted substantially; on average, from 12 to 16 per cent of the value of Cuba's exports is accounted for by nickel-containing products.^^4^^ In 1975, the volume of this output was twice the 1958 level, having reached 36,800 tonnes. At present, with the assistance of the Soviet Union, enterprises in this industry are being re-equipped and expanded, and the

building of new enterprises with the participation of the socialist countries is planned.

Before the revolution, there was hardly any iron and steel and metal-working industry, but in 1975 this industry comprised 70 enterprises. The value of that industry's output increased from 29 million in 1959 to 271 million pesos in 1975.' The average yearly production growth rate in this industry since the revolution had been 15 per cent. In that period, the output of steel had grown tenfold (from 24,000 to 240,000 tonnes), and the volume of metal-working had trebled.

Since the revolution, 300 million pesos had been invested in the chemical industry. The volume of finished products of that industry grew from 303 million pesos in 1958 to 694 million pesos (estimated) in 1975. The annual increase in the output of the chemical industry since 1970 was 8.7 per cent.^^2^^

The production capacities in the oil refining industry had expanded almost twofold. The volume of the industry's output grew from 3.6 million tonnes in 1958 to 5.9 million tonnes in 1975.^^3^^ Over this period, the production of lubricants increased from 6,000 tonnes to 135,000 tonnes.

The output of paper and cardboard had increased 2.5 times since the revolution.

The building industry also developed rapidly: the value of its output in 1975 reached 1,400 million pesos, which is more than thrice the 1970 level, i.e. the growth rate amounted to some 25 per cent per year.

Since the revolution, cement production had grown from 742,000 tonnes to 2 million tonnes.

After the victory of the revolution, big capital investments were made in the light industry. Over the first half of the seventies, the growth rates of that industry reached 12 per cent.^^4^^ The value of the finished products grew from 410 million pesos in 1970 to 738 million pesos in 1975. Since the revolution the output of textiles had increased from

~^^1^^ Ibid., p. 44.

~^^2^^ Desarrollo y perspectives de la economic cubana, Edicion Pedro Alvarez Tabio, Institute Cubano del Libro, Havana, 1975, p. 60.

^s Primer Congreso del Partido Comunista de Cuba..., p. 44. ^ Desarrollo y perspectivas de la economia cubana, p. 62.

~^^1^^ Primer Congreso ..., pp. 45, 42.

~^^2^^ Desarrollo y perspectivas de la economia cubana, p

i. 68.

~^^3^^ Primer Congreso ..., pp. 45, 42.

~^^4^^ Ibid., p. 46.