Clear Day  
Laying the Foundations 1945-50
excerpted from the book
Confronting the Third World
United States Foreign Policy 1945-1980
by Gabriel Kolko
Pantheon Books,1988




The Wartime Image of the Future
p12 
More than any other branch of the government, the State Department under 
Cordell Hull, who was its secretary from 1933 to 1944, defined the U.S. vision 
of the ideal relationship of the colonized and poorer nations to the world 
order. Hull was a disciple of Wilson and his "Open Door" concept of an 
integrated world based on free trade that Wilson took from the Democratic 
Party's traditional policies and raised to a higher level of abstraction. Hull 
was, as well, both an ideologue and a pragmatist, ready to confront 
aggressively America's allies, particularly Britain, but also not to press 
issues too far with them if something tangible could be gained in return. He 
regarded the breakup of the world economy into isolated trading blocs after the 
1929-31 Depression as the single most important cause of the Second World War 
as well as the most likely source of future wars. Restrictive trade cartels, 
which had especially inflated the price of the United States' increasingly 
essential raw materials imports, were integral to this distorted world economy, 
and it was the British sterling bloc and empire that most epitomized these 
challenges to an open world economy based on free trade. From 1941 onward the 
United States never tired of stressing that "raw material supplies must be 
available to all nations without discrimination" after the war, and this in 
turn required complete access for U.S. capital to enter any nation to 
accelerate "the sound development of latent natural resources and productive 
capacity in relatively undeveloped areas."' But while there was a consensus on 
these essentially anticolonial objectives among key American decisionmakers 
during the war, they disagreed how and with what speed to apply them, 
especially because Britain, more than any other nation, was the object of the 
U.S. program, and the British after 1943 made no secret of their fears that 
America was trying to advance its interests in Asia and the Middle East at 
their expense.
But it was not only Washington's desire to keep Britain as an ally in Europe 
after the war that inhibited its pressing its anticolonial sentiments too far 
and too fast. The radical nature of many of the local political forces aspiring 
to replace the colonial powers especially disturbed American leaders, and 
particularly after 1945 they increasingly feared local Left parties that might 
presumably be friendlier to the Soviet Union or even aligned with it. But even 
in India, the United States supported British policy in repressing a thoroughly 
anti-Communist Mahatma Gandhi and the Congress Party because Gandhi was opposed 
to the war and because the British successfully demanded that the Americans 
respect their jurisdiction over India. In the Middle East, at least during the 
war, Washington retreated when Britain objected to its issuing a declaration 
favoring steps toward independence for Syria and Lebanon. The implicit 
recognition of British spheres of influence in the colonial world was extended 
to Africa also, where the United States kept silent on the future of mandated 
areas even though it insisted that it retained a residual right under the 1919 
Treaty of Versailles to have its trade interests there protected.
The United States did not pursue its nominal anticolonial ideology too ardently 
also because it expected the British to support American claims for the 
transfer of Japanese-held Pacific trusteeships to the United States after the 
war. Indeed, as the Cold War intensified after 1945, keeping Britain firmly on 
the United States' side quickly submerged any latent doubts Washington felt 
about the continuation of its imperial power in various forms. Both the U.S. 
Navy and the War Department wished to establish permanent bases on the formerly 
Japanese-controlled islands. The State Department, too, sought bases, but with 
UN sanction and theoretically under UN control. Simply to annex the islands, as 
the military urged, would allow the British to claim the same right elsewhere, 
particularly in the Middle East, and endanger, as Secretary of the Interior 
Harold Ickes put it, "our great stake in Middle Eastern oil."
p14
Whatever its political form, Washington unswervingly advocated an integrated 
world economy open to American interests. Independence, when and where it came, 
would be for states capable of playing a role in an integrated world order 
congenial to U.S. designs, a paternalist attitude that further subordinated 
anticolonialism to American needs. Self-determination as an absolute principle 
had no vocal spokesmen in Washington.
Precisely because the United States entered the postwar era with its earlier 
experiences and obsessions profoundly coloring its perceptions of the future, 
there was a continuity between its policies after 1945 and its earlier 
problems. Indeed, while its fear of the Left increased dramatically after 1944, 
culminating in its Cold War fixations, the United States prewar definitions of 
its goals and needs remained, so that it was not at all surprising that they 
later deeply influence its policies and action in various nations where the 
Left was either weak or nonexistent. And because it believed profoundly in the 
efficacy of its institutional proposals for an integrated postwar world 
economic and political structure, it assumed that the implementation of this 
program would prevent the growth of the radical Left everywhere in the world, 
the Third World included. If one looks at the plans for the World Bank or 
International Trade Organization (ITO) formulated and made public during 1945, 
one is immediately struck by the fact that they subordinated the problems of 
the Third World to the reconstruction of a world economy in which the United 
States and Western Europe are the principal partners, while the needs and 
problems of Asia, Latin America, and Africa were incidental and, implicitly, to 
be dealt with as a by-product of solving difficulties elsewhere.
For the United States, given its official belief in the allegedly complementary 
nature of national economies that are open to each other and trade freely, this 
indifference to developments in the poorest regions was logical. The United 
States was not, in reality, concerned chiefly with either the 
economic or political problems there.

Confronting Turbulent Asia
p25 
As America's only true colony in the twentieth century, the Philippines is the 
single best example of its impact on the political and economic life of any 
nation because only there could it freely impose its desires. And it is the one 
case ... to translate the ambiguities of American ideology and proclamations 
into realities that reveal best the complex interactions among local social 
forces and economic changes, U.S. interests, and the needs of the Filipino 
people.
It was in the Philippines, too, that America's colonial domination produced an 
economic and political structural legacy that was profoundly to define all of 
the important issues of Filipino life after 1945. The United States built upon 
the landed oligarchies it found in place after its conquest of the islands in 
1899-1901. Regional politics, with its largely family-based local alliances, 
became the hallmark of the American-imposed political structure after 1907 as 
United States-style boss politics and patronage merged naturally with the 
existing social order, co-opting some new members into the local ruling class 
but leaving its basic institutional role unchanged. In most of the fifty-one 
provinces, many isolated by the sea and languages, oligarchies with economic 
and political power entrenched themselves permanently so that the only 
significant political party, the Nacionalistas, constituted little more than 
ever-shifting coalitions of regional political machines with scarcely any 
commitments save to their own immediate economic needs and the control of 
power. Patron-client relations mitigated some of the exploitive edges of such a 
system for the masses, as family and patronage ties or outright vote-buying 
provided for a few of the urgent economic needs of the politically loyal poor m 
a highly stratified social and economic structure; but while residues of this 
system persist even today, it began to break down in a number of strategic 
provinces during the 1930s.
The main factor eroding the paternalistic, oligarchical political order the 
United States chose to call democracy in the Philippines was the commercial 
transformation of the overwhelmingly dominant agricultural economy on which the 
oligarchy's power was largely based and that employed the vast majority of the 
nation. From 1909 onward the United States imposed reciprocal free trade on the 
Philippines and greatly stimulated the production of export-oriented 
commodities geared to the highly profitable American markets. To satisfy the 
demand for sugar, coconut products, and the like, capital investments 
transformed labor and land utilization in ways that made the new rural social 
conditions far more exploitive and eliminated many small farmers. In central 
Luzon, in particular, growing population pressures also produced land 
shortages, and the collapse of the U.S. market for Philippine commodities 
during the 1930s began to radicalize large sectors of the poor peasantry as 
purely commercial considerations replaced the agricultural system's 
paternalism. Usury, excessive dependence on cash crops with unstable prices 
rather than production for family consumption-all the typical forces that 
sharply reduce living standards and transform peasants from being acquiescent 
beasts of burden into angry activists-were already in motion before the Second 
World War.
These structural changes created increased mass pressures for social and 
economic reforms in the years prior to World War Two, when "with few 
exceptions," to quote a CIA report, the normally highly opportunistic economic 
and political elite chose to protect its interests by collaborating as loyally 
with the Japanese as they had with the Americans, thereby delegitimizing itself 
both in the eyes of the people with social grievances as well potentially, as 
those of their colonial masters.' The most important puppet the consummately 
ambitious Manuel A. Roxas, had been the chief prewar rival of President Manuel 
Quezon and Vice President Sergio Osmeha, both of whom went into exile. But a 
large majority of the Japanese-controlled National Assembly were former senior 
political figures, and Quezon's prewar cabinet simply continued to work for the 
new occupiers. While some collaborators also tried to hedge their interests by 
maintaining discreet contacts with the guerrillas who formed throughout the 
country under both U.S. and Communist leadership, most played their new roles 
loyally, made fortunes and survived as comfortably as possible the exceptional 
ravages the war and occupation imposed on the nation.
The question of how to treat these collaborators was, in essence, one that 
touched fundamentally the future of the traditional ruling class, the nature of 
those who might replace them, as well as the Philippines' postwar role as a 
bastion of American power in East Asia. General Douglas MacArthur, commander of 
the campaign to recapture the Philippines, had lived there for decades and knew 
the elite well. While he preferred initially to rely upon those who had worked 
with the guerrilla groups directly under U.S. control, they were too 
inexperienced and small in number, and he was determined above all to keep the 
Hukbalahap guerrillas, comprised of radicalized poor peasants concentrated in 
central Luzon and with important though not exclusive Communist leadership, out 
of power. Whatever official Washington's position for removing collaborators 
from authority, MacArthur ignored it when he disagreed with it, and he was 
allowed to define and implement the policy. As American forces began to retum 
to the islands after October 1944, they fired most collaborators, and 
eventually fifty-five hundred were charged, though wealthier ones were freed on 
bail, and their trials were to be the responsibility of the Philippines 
government, whose independence was then being negotiated. Meanwhile, at the 
beginning of 1945, the Americans used their local allies to attempt to disarm 
the Huks, and in February arrested their leaders.
On April 18, 1945, it was announced that a "liberated" Roxas had been released 
from prison while his colleagues remained behind bars. Restored to his prewar 
brigadier generalship in the United States-controlled army, the close friend of 
MacArthur now had his highly dubious wartime secret contacts with Americans 
used as an excuse to impose a United States-approved political solution on the 
dangerously fragmented and unstable struggle for power and legitimacy in the 
Philippines then taking place. Roxas won American approval because in 1945 he 
confided to key U.S. officials that he was not for the basic principle of 
independence. As Paul V. McNutt, who had been U.S. high commissioner during 
1937-39 and who was reappointed in 1945 reported, "Roxas has indicated by word 
and deed his desire to follow American pattern of government and retain closest 
ties with us in all matters. ,, ,"2 Signs of America's benediction quickly won 
the ever-accommodating Roxas the support of ambitious politicians and members 
of the economic elite who regarded him as a winner, and soon he was restored to 
his position as president of the Senate. In April 1946 he was elected the first 
postwar president and, parenthetically, two years later was to grant amnesty to 
all accused collaborators. It was in this political context, so completely 
under U.S. control, that the United States negotiated the ostensible legal 
independence of the Philippines to which it had committed itself a decade 
earlier. These negotiations had to take into account the economic interests 
that had been built up by both sides during the entire colonial period. On one
p29
With the Philippines nominally an independent state but in fact still 
economically and politically a U.S. colony, the Roxas coalition of 
opportunistic politicians and factions interested in the boodle essential to 
their machines' cohesion proceeded to reimpose the same exploitive politics 
that had marred the nation's political life consistently until then. The 
coalition was completely devoid of nationalist impulses or broader social goals 
in a war-torn nation plagued with vast human misery and now sinking more deeply 
into the vortex of civil war. Roxas' first years were characterized by the 
return to traditional vote-rigging and buying, which began with the Senate 
election of November 1947, and corruption in the allocation of all-too-scarce 
government funds. The Huks and its peasants' union were outlawed in March 1948. 
By the time Roxas died suddenly on April 15, 1948, the exclusion of the Left 
from the political process and the absence of any reforms to deal with massive 
poverty guaranteed the spread of civil conflict, and as many as ten thousand 
people took up arms with the Huks.
The new president, Elpidio Quirino, proved no better than Roxas, and his 
successful reelection effort in 1949 was the most fraudulent and expensive in 
the Philippines until then. While senior American officials in early 1948 had 
hoped that the Philippines would continue as a primary base in the region and 
take care of its own internal affairs, by 1949 the economic consequences of the 
existing political leadership as well as the terms of the Bell Act, which in 
order to tie up bilateral trade had also pegged the peso to the dollar and made 
them freely convertible at a rate the Filipinos could not alter, had produced 
economic chaos that threatened also to undermine U.S. security interests. With 
fully four-fifths of its imports coming from the United States and nearly that 
proportion of its exports directed to it, the Philippines was still as much of 
an economic colony as it had been before independence. Rampant inflation and 
rising unemployment, the excessive importation of U.S. goods, and then massive 
capital flight were too much to bear, and at the end of 1949 the United States 
was forced to concede Manila the right to impose exchange controls. "The center 
of this [Far Eastern] circle is the Philippines," an exasperated Dean Acheson 
told a closed meeting of senators in February 1950. "The Philippines are our 
particular interest and ward. We brought them up," but their behavior was still 
"childlike," their economic problems "very severe," the risks coming less from 
the Huks, which "I do not think started out" as Communists, than from 
"disintegration." With the men it selected implementing the policies it 
imposed, the United States' most ambitious venture in the Far East after 1945 
and showcase for its ability to transfer the American way of life to a new 
nation was heading toward disaster.

Latin America: The Nationalist Challenge
p35
The United States' main problems in Latin America from the end of World ~ War 
Two until 1960 differed dramatically from those in the other major Third World 
regions, for they involved not the alleged menace of Russia and communism but 
rather the emergence of conservative forms of nationalism-a challenge that has 
persisted in various guises since then. Precisely because this movement grew 
out of specific Latin American conditions and was unrelated to the United 
States' far greater preoccupations with communism, the Left, and the legacies 
of the demise of European power elsewhere, Washington preferred virtually to 
ignore its hemisphere during this period as much as possible.
What the United States confronted in Latin America was an alternative concept 
of national capitalist economic development that rejected fundamentally its 
historic objective of an integrated world economy based not simply on 
capitalism but also on unrestricted U.S. access to whatever wealth it 
desired-hegemony rather than cooperation. Nowhere else were the underlying 
bases and objectives of U.S. foreign policy revealed so starkly, without the 
obfuscating intercession of the problems of either communism or socialism. 
Rather than some amorphous concept of an Open Door accessible to all capitalist 
nations, power and gain for the United States in economic terms from the 
inception was the foundation of both its policies and its actions in the 
Western Hemisphere.
Of a number of Washington's efforts to reverse the trend toward nationalism, 
those involving oil were the most important. It was official policy that it 
would always "encourage and facilitate" U.S. firms' involvement in oil 
development "not merely because of the readier access which such participation 
would guarantee to us but also because . . . the technical and managerial skill 
of the American petroleum industry is preeminently competent to insure the 
prompt and efficient development of resources anywhere." Whatever the sovereign 
right of a state to nationalize, it was formally opposed to it in oil as being 
confiscatory in practice. In Mexico, where the government had nationalized U.S. 
firms in 1937, Washington persisted relentlessly in attempting to get American 
producers back into the country, systematically preventing loans or spare parts 
from reaching the state oil company. And in Brazil it actively opposed the 
creation of a national oil company.
But it was in Venezuela, whose oil output far exceeded that of the entire 
continent, that Washington's efforts to protect its oil firms brought to the 
fore the larger issue of the possible role of the region's military in 
attaining U.S. objectives and protecting its interests. The Accion Democratica 
party of moderate liberals had taken power there in late 1945 with the 
cooperation of junior officers, and it overwhelmingly won the fair December 
1947 elections. While thoroughly anti-Communist, it also had a reform program 
that threatened the U.S.-owned oil companies, the traditional oligarchy, and 
the army. In November 1948 a junta, with oil companies' support, overthrew the 
government, and U.S. producers continued to profit handsomely under a 
dictatorship that was to last ten years. Despite the fact that the State 
Department had in December expressed concern about military coups against 
democratically elected regimes, the following month it recognized the new junta.
The relationship of the United States to the Latin American military in this 
period was made more complex by the fact that in many nations the military was 
frequently a crucial supporter of nationalist economic strategies, as in Brazil 
and Argentina. In such cases nationalism and the absence of basic democratic 
rights frequently were synonymous. The United States issued declarations 
against oppressive regimes in the hemisphere and even opposed an Argentine 
suggestion in August 1947 to make anti-Communist agreements for fear they would 
be used as a justification by quasi-fascist governments not only to squelch 
internal dissent and retain power but also to pursue their economic programs. 
With officers found in both the pro- and anti-U.S. camps, it was inevitable 
that U.S. policies appear tortured as Washington began to explore after 1946 
the possibility of gaining the maximum possible from the Latin American 
military's growing role as a political mediator as well as its potential for 
becoming the dominant force throughout the hemisphere.
The issue of relating to the Latin American officers corps could not be delayed 
indefinitely because the military's importance led many of these nations also 
to seek to modernize their armies' equipment, and in the period after 1945 the 
United States was the only possible source. The War Department in 1946 favored 
allowing such purchases, while the State Department thought most Latin American 
nations could not afford them. But the War Department argued that if the United 
States did not supply the arms these states would eventually turn to Europe, 
which would then send military training missions and would only further 
undermine existing U.S. influence. Keeping these armies standardized to its 
equipment and advisers was justified also because it would neutralize a 
transmission belt for European ideas- ideas that had in the past included, 
among other things, fascism. More to the point, as a War Department 
representative explained to a secret hearing of Congress, "In those cases where 
the army or the navy does not actually run the government, they come so close 
to it that any influence on them has great national importance to those 
countries. Our military missions there are working with the most influential 
people in those governments." And at the very least they were good 
anti-Communists. Immediately after the so-called Greek-Turkey crisis of March 
1947, Acheson reversed the State Department's opposition, and the strategy of 
integrating and wooing the Latin American military was initiated. While the 
State Department developed disingenuous justifications for its convoluted 
recognition policy and de facto support for military dictators, real or 
incipient, Washington's most senior leaders assiduously avoided thinking about 
the problems of the region and the paradoxes of their assorted policies. , -
Latin America was closest to the United States and of far greater economic 
importance than any other Third World region, but senior U.S. officials 
increasingly dismissed it as an aberrant, benighted area inhabited by helpless, 
essentially childish peoples. When George Kennan was sent to review what he 
described as the "unhappy and hopeless" background there, he penned the most 
acerbic dispatch of his entire career. Not even the Communists seemed viable 
"because their Latin American character inclines them to individualism [and] to 
undiscipline," and he was certain that Moscow regarded them, as he himself did 
all Latin Americans, "with a mixture of amusement, contempt, and anxiety." In 
the end, he advised, where popular governments could not cope with the 
Communists, "then we must concede that harsh governmental measures of 
repression may be the only answer" from authoritarian regimes, and the United 
States would have "to be satisfied if the results are on balance favorable to 
our purposes." While Kennan's brutal analysis caused the department to bury his 
report, his successor as head of State Department policy planning, Louis Halle, 
at the same time published an anonymous essay in Foreign Affairs arguing for an 
attitude of noblesse oblige. Pursuing the motif of the "childish" nature of the 
area, he condescendingly argued that if the United States treated the Latin 
Americans like adults, then perhaps they would learn to behave like them.
Whether Washington's increasingly petulant mood toward Latin America would be 
translated into policy remained to be seen, depending as it did on what other 
issues it had to consider elsewhere in the world. Implied in it, however, was 
that the hegemony the United States exercised over the economic domain would 
also have to apply to politics in order to protect the most critical aspect of 
the U.S. relationship to the hemisphere. In brief, during the first postwar 
years Washington opposed the main thrust of hemispheric political life toward 
nationalism, which as yet possessed only a minor leftist, much less Communist, 
dimension. The fact that large sectors of both the Center and Right especially 
disturbed the United States and challenged its interests revealed most about 
its hegemonic objectives in the Third World where neither geopolitical 
considerations nor nominal European allies constrained it.
Best Regards

Jopi Peranginangin



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