The 60th anniversary of the Alliance for Progress: Lessons for a new partnership

On March 13, 1961, President Kennedy announced the Alliance for Progress, launching a major shift in U.S. engagement with Latin America as a response to the Cold War struggle with the Soviet Union. Though far from perfect, the Alliance for Progress was a positive, attractive partnership that spoke to the hopes and aspirations of our neighbors. On its 60^th Anniversary, the Alliance offers relevant lessons for addressing unfinished business in the region during a new era of great power competition.

The Alliance for Progress involved all Organization of American States members, except Cuba. The associated charter encompassed multiple tall orders for reform, including increasing economic growth rates to 2.5 percent, accelerating industrialization, pushing land reform, eliminating adult illiteracy, and improving life expectancy. Often compared to a Latin American Marshall plan, the Alliance for Progress was the largest American development package to date for the developing world in 1961, featuring a $20 billion U.S. commitment in grants and loans and an $80 billion commitment from Latin American countries in investment funds.

American soft power initiatives have consistently included a perspective of enlightened self-interest. In 1959, The Cold War had come to “America’s backyard,” when Communist Fidel Castro seized power in Cuba. American relations with countries in Latin America and the Caribbean had also generally declined post-World War II as many felt that the U.S. had ignored their development needs and war contributions. Exemplifying tensions, crowds in both Peru and Venezuela assaulted then Vice President Nixon on his “goodwill tour” of the region.

The Nixon visit was such a fiasco that it jumpstarted new thinking in the Eisenhower administration about the region. The Inter-American Bank (IADB), which had been considered on and off since the late 19^th Century, was launched in 1959 as part of the Eisenhower response. Kennedy would build on these efforts through the Alliance. Early events, such as the failed Bay of Pigs invasion in April 1961 were an embarrassment and raised the stakes.

Latin American leaders had incentives to join the Alliance. While Latin America had higher GDP growth rates than Asian or European countries before 1950, the region soon lost its advantage. Many countries simultaneously struggled with inflation, with rates over 30 percent in Argentina, Brazil, and Chile.

The Alliance soon provided major improvements in development conditions, such as the construction of infrastructure, educational initiatives, and industrial expansion. In addition, the Alliance provided the confidence to “crowd in” domestic resources and private capital with 87 percent of total gross investment in Latin America coming from domestic savings in 1967. Less tangibly, the Alliance for Progress also built greater political consensus on the value of institutional modernization.

However, the Alliance did not deliver on all of its reform goals. Dissonance between American messaging on the Alliance and some U.S. actions, especially towards Cuba and the Dominican Republic, muddied the message and contributed to faltering political commitment. The Alliance for Progress also enabled some unintended negative results, such as grand corruption in a few instances, that marred its record.

Political change within the United States also had substantial negative implications. After President Kennedy’s assassination, the initiative lost momentum with President Johnson’s decision to deploy troops to the Dominican Republic in 1965, which caused outrage across Latin America. As conflict in Vietnam escalated, LBJ’s attention was drawn to other parts of the world. The Alliance for Progress would be officially disbanded in 1973.

Fast forward to 2021, Latin American countries have made great strides. GDP per capita for the Latin America and Caribbean region has grown from $380 in 1961 to $8,900 in 2019. Extreme poverty has dropped from 13.7 percent in 1981 to 3.8 percent in 2018. Adult literacy rates have grown from 81 percent in 1981 to 94 percent in 2019. Insurgencies and state vs. state conflicts are largely absent from the region.

However, many problems remain — along with new challenges.

Organized crime and the illicit drug trade are substantial threats to peace and development. Countries in the region are some of the most violent.

The crisis in Venezuela, due to the repressive and criminally incompetent Maduro regime, has also provided an acute regional crisis: 5.4 million people have officially fled to neighboring states.

There is also an additional migration crisis in Central America, with more than 800,000 people displaced in 2020 alone. Underlying motivations are rampant violence, economic insecurity, natural disasters, and poor governance.

Beyond acute crises, the overall region faces structural economic challenges. The regional GDP growth rate was only 0.9 percent in 2019, labor productivity is low and stagnant, perceptions of corruption are high, and overall inequality is increasing.

Latin America also has been hit hard by COVID-19. The virus is now the top cause of death in Peru, Brazil, Chile, Ecuador, and Panama; economic contractions are estimated to be some of the most severe globally.

China is the region’s top trade partner when Mexico is not considered; 19 Latin American countries are Belt and Road Initiative participants, and there have been successive Chinese company investments in Panamanian ports. State-influenced tech giant Huawei has signed agreements with Mexico, Argentina, and Brazil to construct 5G networks.

While any new Alliance for Progress should emphasize improving economic development, it will be necessary first to contend with COVID-19. Cooperation could include supporting vaccine rollout in tandem with Covax/GAVI, providing medical supplies, and supporting small and medium sized enterprises that have suffered.

A new Alliance should prioritize strengthening democracy, education, and institutional reforms. Enhancing trade connectivity is an opportunity. The U.S. should utilize a new Alliance to push for the Americas to become more economically integrated. For example, the U.S. could build on the recent USMCA and, over time, seek a concerted push for a renewed Free Trade of the Americas Agreement. As digital transformation is accelerated by COVID-19, the U.S. should enable the development of Latin America’s digital backbone, independent of Chinese influence.

President Kennedy had the right strategy by offering a comprehensive, positive, and — most important — jointly designed agenda that was inspired by a shared vision and backed by adequate resources. Furthermore, he understood the connection between Latin America’s well-being and our own, and the implications of American inattention — other countries would fill the vacuum.

As a cornerstone of his Latin America strategy, President Biden should consider launching an updated version of the Kennedy era Alliance for Progress. America will be hosting the Summit of the Americas for the first time in 27 years this year, and the Biden Administration should utilize this forum to build a new partnership.