The economic problems of these debt-ridden
countries gave the US some leverage in its battle
against the drug scourge. In return for aid and
trade concessions, President George Bush hoped
to cooperate with the governments of the three
Andean nations, Colombia, Bolivia and Peru.
Peru was in bad shape economically and polit-
ically. It was beset by a hardline active Maoist
guerrilla movement, the Sendero Luminoso or
Shining Path, which specialised in killing sup-
porters of the government. Peru also had a large
foreign debt equivalent to half its gross national
product. Neighbouring Bolivia was one of the
poorest countries of Latin America, with a crush-
ing foreign-debt burden. The armed forces of
these countries, with US help, destroyed some of
the plantations of coca in almost impenetrable
jungle clearings, but the growing of coca leaves
continued in many others. Medellín, the drug
capital of Colombia, became the centre of vio-
lence too, with determined government efforts to
strike against the drug barons being answered by
bombs and assassinations. In Paraguay, where the
dictator General Alfredo Stroessner ruled for
thirty-four years supported by the military, gov-
ernment enjoyed a cosy relationship with the drug
barons. A military coup finally overthrew him in
- It was uncertain whether his successors
would end the corruption and curb the trade in
drugs. Drug trafficking involved the whole of
Latin America in shipments to North America and
Peru from the Atlantic ports as well as those of
the Pacific. As long as so profitable a market
existed in the West, the chances of suppressing it
at its source were slim.
With the end of the Cold War and the demise
of the Soviet Union, the problems of Latin
America were viewed in less ideological terms. It
was an important world trading partner, most US
exports going to the region, and its debts were a
significant factor impeding trade and develop-
ment; to default on them would present a serious
problem to Western banking. Latin America was
also a vital source of raw materials, not least
Venezuelan oil. In Latin America, the Third
World and the Western world lived side by side.
But the enormous economic growth since the
1960s did not improve social justice; democracy
remained weak, the military strong; the rich
became richer, the poor benefited little, if at all.
Latin America presents a rich palette of cultures;
there is racial injustice but also much intermar-
riage and blending of races. As the twentieth
century neared its end, a demographic time-bomb
was ticking away: could the rapid population
growth be slowed to a manageable increase? The
problems of the continent were enormous, and it
was vital to find solutions for them. Latin America
was not likely to disappear from the agenda of
world history again.In the nineteenth century, investment in Latin
America became a profitable destination for the
venture capitalists of Western Europe and the US.
Britain built railways and became the principal
investor before the First World War, and the
US invested particularly in Cuba and Central
America, buying up many great plantations.
While coffee-growing remained largely in Central
American hands, American investment and polit-
ical influence at its height was epitomised by the
United Fruit Company, which monopolised the
banana plantations and trade, owning its own
shipping line and much else besides by the close
of the nineteenth century.
Despite this large influx of foreign money, the
masses of Latin America remained poor and the
disparity of wealth and poverty extreme. During
the first half of the twentieth century, moreover,
there was only a small manufacturing industry
throughout South America. Essentially there
existed an alliance between the Latin American
elites – the cattle-raisers of the Argentine, the
owners of the coffee plantations of Brazil and
local merchants – and foreign-owned enterprises,
from which both drew immense profits in good
times, to the exclusion of the subsistence masses.
For the consumption of manufactured goods and
luxuries the Latin American market remained
small, since 90 per cent of the population did not
earn enough to buy them. This has been one of
the principal impediments to the continent’s
industrial diversification. Without an adequate
domestic base the difficulties of establishing man-
ufactures that can be profitable at home and com-
petitive abroad are immense.