JUNE 1982 - VOLUME 3 - NUMBER 6
Corporate Officials Embrace Latin Dictators at Private Chamber of Commerce Session
by Robert Holden
What's your business in Haiti?"
"Booze. I sell booze." Stanley Urban gave a wide boyish smile, pleased by the jolting sound of the word in the refined atmosphere of the Terrace Room of the Plaza Hotel on New York's swank Fifth Avenue. "I keep people happy." Stanley Urban, the president of Haitian-American Chamber of Commerce and Industry, smiled again and dipped a silver spoon into his potage cultivateur lie (vegetable soup).
"I honestly believe," Urban told me and his five other luncheon companions, "that a dictatorship is the best form of government for these people [Haitians]. There are six million illiterates on that island. Think what the Russkies could do there."
Unlike conditions in the neighboring Dominican Republic, "we live in peace and harmony in Haiti," Urban said. One of the businessmen at the table wondered why, if "peace and harmony" prevailed, so many Haitians were risking their lives by crossing the sea to Florida. Urban had a ready answer. Pointing out that he himself was the son of a Polish immigrant, he explained that the Haitians "are going to Florida for the same reason our forebears left Ireland or Italy - to make a buck."
The government of dictator Jean-Claude "Baby Doc" Duvalier may not be particularly democratic, Urban acknowledged, but "paradoxically," he said, "there's more democracy for business in Haiti than for business in the United States," alluding to the lack of regulations on corporations in Haiti.
The room swarmed with red-jacketed waiters shuffling gold-rimmed china between courses of potage, braised beef bourguignonne, lemon sherbet au cassis and pet its fours. The waiters were serving 200 executives representing some of the most powerful U.S. corporations doing business in Latin America - banks, oil companies, retailers, manufacturers, accounting firms.
The occasion was the twelfth annual Corporate Briefing Session sponsored jointly by the Council of the Americas, an association of 200 U.S. corporations that make up most of the U.S. private investments in Latin America, and the Association of American Chambers of Commerce in Latin America (AACCLA), made up of the U.S. chambers of commerce that operate in 20 Latin American countries.
The entire one-day, $175-a-person session was closed to the news media and the public. The letters of invitation promised "frank and direct presentations" by the presidents of the 20 chambers of commerce, with "an off-the-record analysis and forecast of their respective countries' current economic, political and social situation." Somebody slipped up and sent me an invitation, which I happily accepted.
The Corporate Ambassador
Alexander Perry Jr., the president of AACCLA and the president and general manager of Pachon S.A. Minera, St. Joe Minerals' Argentina subsidiary, opened the session. "AACCLA is part of the U.S. Chamber of Commerce and we have over 18,000 company and individual members," he declared in a deep, authoritative voice. "Our opinion is sought after in Washington on many issues. . . We do get involved in not only the relationship between the United States and Latin America but in their problems with our administration in the United States."
Perry announced that General Vernon Walters, the Reagan administration's special Latin American envoy, was to have been the keynote speaker, but he was forced to cancel at the last minute. As a replacement, Perry brought George Landau, the former U.S. ambassador to Paraguay (1972-77) and since 1977 the ambassador to Chile.
In January, Reagan appointed Landau to head a presidential commission on broadcasting to Cuba. He is slated to be the next ambassador to Venezuela, Perry told the audience, a revelation that embarrassed Landau, since no one is supposed to know about it.
Landau's brief address focused heavily on his years in Chile and revealed much about the relationship he cultivated with U.S. business interests there, as well as the attitude of a career diplomat toward U.S. investment abroad.
"One of the highest priorities an ambassador has is the support of the business sector in the host country and the business interests of the United States abroad," he declared. Official U.S. relations with Chile during the Carter years were "exceptionally bad," but he was proud of his ability to "keep business fully posted in those four years. It was done in confidence and I was never betrayed."
Landau used his position, he explained, to keep U.S. businesspeople well informed about the political maneuvers of both governments and to warn them of government policies they should expect. He also helped to bring together U.S. companies doing business in Chile to exchange information. "It's been said that Macy's doesn't tell Gimbel's. Well, Macy's does tell Gimbel's," Landau told his audience, "because companies doing business abroad all have the same problems, and by exchanging information all are well served."
Obviously pleased to be working for the Reagan administration, Landau added that "the future is bright" as "the U.S. government will increasingly be able to support U.S. interests abroad."
After Landau's comforting words, the Briefing Session proceeded with a country-by-country assessment of "the business climate" - a pet phrase corporate officials invoked throughout the day.
Nicaragua and Central America
The tone of the day's briefing became more ominous when the subject of Central America was addressed by speakers representing U.S. business interests in the region. The message was clear: the Sandinista government of Nicaragua must be toppled.
Central America "is in a crisis unparalleled in our time," said R. Bruce Cuthbertson, AACCLA's regional vice president for Central America and secretary-treasurer of the Nicaraguan-based Interamerican Builder's Associates. At the root of the crisis, explained Cuthbertson, is the Sandinista government of Nicaragua.
"Either the Sandinistas will take over the rest of the area or they will be thrown out," Cuthbertson warned, adding that "everyone in the area fears a Cuba-like takeover of their country. They've all seen what happened in Nicaragua and fear they're next." The entire future of Central America, he insisted, depends on "neutralizing and eliminating terrorists" and "the removal of the Sandinistas in Nicaragua."
As for the Sandinistas' domestic policies, Cuthbertson was no less shrill. "They are Marxist-Leninist terrorists," he said of the government's leaders. "There is a reign of terror, the divine masses vandalize and terrorize. . . The human rights situation is worse than in the worst days of the Somoza regime" - a claim denied by international human rights organizations.
Economically, the Sandinistas have brought disaster as well, Cuthbertson continued. The economy is in ruins, there is no money for imports, agricultural production has plummeted and local manufacturing is virtually non-existent, he said. Almost all private businesses have been confiscated or have come under government control, he asserted. In fact, 60% of the country's gross domestic product actually is accounted for by private industry).
"There is no future in the country," said Cuthbertson, repeating his main point, "unless the Sandinistas are thrown out."
When Cuthbertson sat down, to very warm applause, it was hard not to consider the possibility that his overblown characterization of Nicaragua was deliberately designed to frighten away potential investors in order to further weaken an embattled economy. That was the tactic adopted against Chile's Allende government by the Nixon administration and its big-business cronies after they decided to "make the economy scream."
El Salvador provided an opportunity for exaggeration of a different order. Harlow Newton, the general manager of Aluminio de Centro America, S.A., reported that the election of a constituent assembly in March represented "one of the greatest victories of democracy this hemisphere has ever witnessed." While the election didn't solve the problem of the "Marxist-Leninist movement," it "confirmed support for the free enterprise system" of El Salvador.
Clearly pleased by the Constituent Assembly's right-wing majority, he predicted that the private sector would be a "partner" in the new government. The Christian Democratic Party, a right wing faction of which has been holding power as a figurehead for the military junta, "represents a very leftist, very liberal" position, Newton said.
Following the briefings by Cuthbertson and Newton, the audience heard a strong pitch for Honduras, presented as a country bursting with money-making opportunies but vulnerable to the "domino effect" of advancing communism. Ted Steiner, president of Testco, S.A. de C.V. of Honduras, claimed that 86% of the population "answered positively" when asked about U.S. business and the U.S. business presence in Honduras by pollsters last year. The "leftist movement" is practically nonexistent, so "if terrorism begins in Honduras, believe me, it will come from the outside, no matter how they present if in Newsweek."
Bullish on the potential for good investment in Honduras, Steiner urged his audience to visit there. "You already have a representative in Honduras - the Honduran-American Chamber of Commerce. Come on down and we'll take care of you!"
Stephen O. Martin, a vice president of the Bank of America, confidently predicted that the government of Panama would announce a new policy to encourage foreign investment, including the removal of some price controls and the easing of laws that now make it difficult and expensive to fire employees.
"Because of the need to promote private investment," the National Guard will play a bigger role in the civilian government, Martin said.
In Mexico, a possible turn to the right gives grounds for "cautious optimism," reported Robert W. Chandler Jr., vice president and country manager of Chase Manhattan Bank and AACCLA's regional vice president for Mexico. The "medium prospects are largely encouraging" because the Partido Revolucionario Institutional (PRI) - which has ruled Mexico for decades - seems to be questioning its role as a "revolutionary" party and to be advancing technocrats at the expense of politicians. PRI may soon quit trying to be "all things to all people,"' a transformation that Chandler believes will be embodied in PRI's candidate in the July 4 presidental election, Miguel de la Madrid. Madrid, who represents the ascendancy of the technocrats, will probably be more "low-key and pragmatic" than his predecessors. "The new government will be in a position to disavow the activities of its predecessors," said Chandler. "There will be less charisma and flamboyance."
The Southern Cone
The report on Chile was provided by Jorge Schneider, a Chilean national who is the vice president of the Banco Industrial y Comercio.
"The government," he said, "is in the firm hand of a popular but authoritarian government," whose most impressive achievement has been the fostering of an atmosphere favoring private investment. Schneider, agreeing with Landau, predicted ` that notwithstanding Chile's widely-reported economic troubles, "the ;' present economic model, which has been so successful over the past few years," will be preserved by President Pinochet.
In Uruguay, according to Harry Marples, director of the American Chamber of Commerce in Argentina, "the military regime has achieved significant success since it took over in 1973... It is hoped that Uruguay's politicians have learned the lessons conveyed by the achievements of the military junta."
Much genial laughter greeted the prediction by Jose A. Fernandez, the Paraguayan national who is general manager of Xerox de Paraguay, S.A., that in Paraguay "there is a likelihood that ' General Alfredo Stroessner will be nominated again" for the presidency in the 1983 election. (Stroessner, whose government has institutionalized the use of torture on political opponents, has been dictator since 1954.) "I think you are right," Fernandez said with a smile in response to the laughter. In any case, he assured his audience, the general's political party "is in total control of the population," and the country is eager for more foreign investors.
The Andean Countries
The situation in Venezuela was described by Rodger E. Farrell, president and general manager of General Electric Company's "Andean Countries Division." Despite the fact that the conservative government of President Luis Herrera Campins has allowed the private sector more freedom and has taken steps favored by business, it still isn't pro-business enough, Farrell said. High taxes, high interest rates and price controls still irritate businessmen.
Farrell saw "real improvements on the labor front," with better employee attitudes, although Venezuelan unions remain very strong and influential. "We all feel Venezuelan workers are overpaid, underdisciplined and underproductive," he lamented. Still, "for the astute investor, Venezuela presents a good opportunity for low risks and prospects for long term growth."
Peru remains "virgin territory" for foreign investors, who are welcomed by the government, observed Fred A. Leisering, the president of Sears, Roebuck del Peru, S.A.. The Chamber of Commerce there is "standing up to be heard." In neighboring Bolivia, a weak and unpopular government has nevertheless taken some steps that brighten the business outlook considerably, reported Kathryn M. Brault, general manager of Banco Hipotecario Nacional. The peso has been devalued, price subsidies have been eliminated, public spending has been curbed and a new investment law provides tax incentives and further profit repatriation. The huge illegal drug trade, which she estimated deposits $200 million to $400 million a year into the country, continues to be a source of concern to investors, however.
In Brazil, "any change in the country's current pro-free enterprise and pro-investment policies is highly unlikely," declared Michael W. Liddle, the president of Tudor-Marsh & McLennan Corretores de Seguros, S.A. He pointed out that elections scheduled for November posed no threat to the military-dominated clique that has governed Brazil since 1964. "No multinational corporation can afford to disregard Brazil in its investment plan. It's a great country."
Stanley Urban, the booze seller, closed the session with a strong pitch for investment in Haiti, where "everybody speaks English amongst the learned class" and where even the poorest folks will exchange a smile and a greeting with foreigners. Urban boasted of the $2.64 daily minimum wage law, the discipline of the work force, and the abundance of cheap labor and concluded breathlessly, "In other words, the whole country is virtually a free trade zone!"
With a farewell from Alexander Perry, the executives retrieved their overcoats and briefcases from the checkroom and departed. Strolling down a circular staircase decorated with marble walls and a mahogany balustrade, they could hear a pianist and violinist performing a delicate piece of nineteenth-century chamber music in the Palm Court, a cafe oozing fin de siecle charm and refinement.
Robert H. Holden is a freelance writer based in Cleveland, who specializes in Latin American affairs.