Eric
Tousaint’s study of the odious debt doctrine
by
Eric Toussaint
Part
14 - The USA’s motivations regarding the two repudiations (Cuba and
Costa Rica)
The United
States’ motivation in the two repudiations that have just been
analysed (Cuba in 1898 and Costa Rica in the 1920s) is clear: to
increase their influence and power in the region. Cuba was in a
strategic location for Washington; the rich island was just a stone’s
throw from the coast of the United States. With Puerto Rico, which
the United States had also taken from Spain in 1898, Cuba was the
last Spanish colony in the Americas.
As for Costa
Rica, it is part of Central America, which the United States
considers its own “back yard”. Until then, Britain had been the
dominant financial power in the entire region. The United States was
very pleased to oust a large British bank from the country and send a
warning to everyone else: other repudiations could take place, since
the British banks, like the French banks, had dirtied their hands in
highly irregular affairs that kept Latin American countries in debt.
And the US banks were chomping at the bit to take over that action
themselves.
In 1912,
Taft, then president of the United States, had said in a speech: “The
day is not far distant when three Stars and Stripes at three
equidistant points will mark our territory: one at the North Pole,
another at the Panama Canal, and the third at the South Pole. The
whole hemisphere will be ours in fact as, by virtue of our
superiority of race, it already is ours morally.”
President
Taft actively backed the extension of North American banks into Latin
America in general and Central America in particular. In December
1912, he declared before Congress: “[…] the Monroe doctrine is
more vital in the neighborhood of the Panama Canal and the zone of
the Caribbean than anywhere else. There, too, the maintenance of that
doctrine falls most heavily upon the United States. It is therefore
essential that the countries within that sphere shall be removed from
the jeopardy involved by heavy foreign debt and chaotic national
finances and from the ever-present danger of international
complications due to disorder at home. Hence the United States has
been glad to encourage and support American bankers who were willing
to lend a helping hand to the financial rehabilitation of such
countries […]”
Thus Taft’s
ruling in favour of Costa Rica was highly calculated. He refused to
support Costa Rica’s argument concerning the despotic and
unconstitutional nature of the Tinoco regime, whereas it would have
been easy to put that argument forward, since Washington and London
had both refused to recognize that regime. He chose other arguments.
He wanted
to avoid establishing a precedent based on the democratic or
non-democratic nature of a regime. He knew perfectly well that
Washington and US corporations were supporting dictators, and would
continue to support dictators in the future – not to mention
actively contributing to putting them in power.
Source
and references:
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