During World War II, a number of significant economic, political, and military changes took place in Latin America. The war caused considerable panic in the region as large portions of their economies depended on trade with the European market, which was completely disrupted due to the war. Latin America tried to stay neutral at first but the warring countries were endangering their neutrality. In order to better protect the Panama Canal, combat Axis influence, and optimize the production of goods for the war effort, the United States through Lend-Lease and similar programs greatly expanded its interests in Latin America, resulting in large-scale modernization and a major economic boost for the countries that participated.
Strategically, Panama was the most important Latin American nation for the Allies because of the Panama Canal, which provided a link between the Atlantic and Pacific Oceans that was vital to both commerce and defense. Brazil was also of great importance because of its having the closest point in the Americas to Africa where the Allies were actively engaged in fighting the Germans and Italians, as well as being a vital source for strategic raw materials such as rubber, iron ore and quartz crystals, while Argentina and Uruguay were critical suppliers of foodstuffs to the Allies accepting deferred payment by Britain, which was acknowledged as a major contribution to the Allied war effort. For the Axis, the Southern Cone nations of Argentina and Chile would remain neutral until the last year of the war, an advantage which the Axis utilized to the fullest by interfering with internal affairs, conducting espionage, and distributing propaganda.
Brazil was the only country to send troops to the European Theater, was instrumental in providing air bases for the resupply of the combatants, and had an important part in the anti-submarine campaign of the Atlantic. Several other countries also had skirmishes with German U-boats and cruisers in the Caribbean and South Atlantic. Mexico sent a fighter squadron of 300 volunteers to the Pacific, the Escuadrón 201, known as the Aztec Eagles (Águilas Aztecas). Additionally, over 4,000 Argentine volunteers fought for the Allies during WWII, even though Argentina was officially a neutral country for most of the war.
The Brazilian active participation on the battlefield in Europe was sought after the Casablanca Conference. The President of the U.S., Franklin D. Roosevelt on his way back from Morocco met the President of Brazil, Getulio Vargas, in Natal, Rio Grande do Norte. This meeting is known as the Potenji River Conference, and defined the creation of the Brazilian Expeditionary Force.
History United States role
In 1940, after he expressed his concern to President Franklin D. Roosevelt over Nazi influence in Latin America, Nelson Rockefeller, grandson of Standard Oil tycoon John D. Rockefeller and later U.S. Vice President, was appointed to the new position of Coordinator of Inter-American Affairs (CIAA) in the Office of the Coordinator of Inter-American Affairs (OCIAA).Cary Reich, The Life of Nelson A. Rockefeller: Worlds to Conquer, 1908-1958 (1996), pp 260-373; the standard scholarly biography;Cramer, Gisela; Prutsch, Ursula, "Nelson A. Rockefeller's Office of Inter-American Affairs (1940–1946) and Record Group 229", Hispanic American Historical Review 2006 86(4):785–806; . Rockefeller was charged with overseeing a program of U.S. cooperation with the nations of Latin America to help raise the standard of living, to achieve better relations among the nations of the western hemisphere, and to counter rising Nazi influence in the region. He facilitated this form of cultural diplomacy by collaborating with the Director of Latin American Relations at the CBS radio network Edmund A. Chester.Time, June 1, 1942
Anti-fascist propaganda was a major U.S. project across Latin America, and was run by Rockefeller's office. It spent millions on radio broadcasts and motion pictures, hoping to reach a large audience. Madison Avenue techniques generated a push back in Mexico, especially, where well-informed locals resisted heavy-handed American influence.Kornel Chang, "Muted reception: US propaganda and the construction of Mexican popular opinion during the Second World War." Diplomatic History 38.3 (2013): 569-598. Nevertheless, Mexico was a valuable ally in the war. A deal was reached whereby 250,000 Mexican citizens living in the United States served in the American forces; over 1000 were killed in combat. In addition to propaganda, large sums were allocated for economic support and development. On the whole the Roosevelt policy was a political success, except in Argentina and Chile, which tolerated German influence, and refused to follow Washington's lead until the war was practically over.Reich, pp 270-75, 305-17.Randall B. Woods, "Hull and Argentina: Wilsonian Diplomacy in the Age of Roosevelt" Journal of Interamerican Studies and World Affairs 16#3 (1974) pp. 350-371 online
Economics According to author Thomas M. Leonard, World War II had a major impact on Latin American economies. Many countries were raising prices on their exports so that they could support themselves economically. Following the December 7, 1941 Japanese attack on Pearl Harbor, most of Latin America either severed relations with the Axis powers or declared war on them. As a result of the disruption of pre-war trade with Europe, many nations (including all of Central America, the Dominican Republic, Mexico, Chile, Peru, Argentina, and Venezuela) suddenly found that their dependency on the United States for trade increased. The United States' high demand for particular products and commodities during the war further distorted trade. For example, the United States wanted all of the platinum produced in Colombia, all of Chile's copper, and all of Peru's cotton. The parties agreed upon set prices, often with a high premium, but the various nations lost their ability to bargain and trade in the open market. Chile was a major exporter of nitrate to the US during the war.
Shortages of consumer goods and other products were also a problem during the war years. The demands of the American war industry and a scarcity of shipping caused many goods to be unavailable in Latin America, and so the prices for what was available increased. Gasoline and other oil products were expensive and difficult to obtain. Food shortages were a problem in the cities. Ultimately, all of these factors resulted in inflation.
Most of Latin America used the war to their advantage by siding with the United States and receiving aid. Peru, however, was an exception. In Peru, the government placed price controls on various products; hence, its foreign reserves did not increase as much as some of the other Latin American states and it lost badly needed capital. Panama also benefited economically, mainly because of increased ship traffic and goods passing through the canal.
Petroleum-rich Mexico and Venezuela benefitted from the elevated price of oil. Mexico was able to leverage favorable terms on a deal with U.S. and European oil companies for the nationalization of its oil industry in 1938. Mexican President Manuel Ávila Camacho capitalized on the situation to improve Mexico's bargaining position with the United States in general.
Lend-Lease Under Lend-Lease, Latin America received approximately $400 million in war materials in exchange for military bases and assisting in the defense of the Western Hemisphere.
Out of all of the Latin American nations, Brazil benefited the most from Lend-Lease aid, mainly because of its geographical position at the northeastern corner of South America, which allowed for patrolling between South America and West Africa, as well as providing a ferry point for the transfer of American-made war materials to the Allies fighting in North Africa, but also because it was seen as a possible German invasion route that had to be defended. New and favorable trade treaties were signed with the United States, providing loans and military aid. Of more importance was the drop in competition for Brazil's manufacturing industry. Brazil received three-quarters of the Lend-Lease assistance distributed in Latin America. Ecuador received some, mainly for the building of an airbase in the Galapagos. Colombia and the Dominican Republic received Lend-Lease funds to modernize their militaries so they could assist in the defense of the Panama Canal and the Caribbean Sea lanes.
In contrast, Argentina and Chile received very little military aid, because for most of the war neither accepted American terms accompanying the aid that they sever relations with the Axis powers. Peru received some aid, but by 1943 the west coast of South America had lost all strategic significance, being so far away from the war's main theaters ending the justification for sending Peru Lend-Lease armaments. Central American states followed suit in declining the terms of the aid. By 1943, the Pan-American Highway, built by the United States in part for defense purposes, ceased to be a priority, and so work on the road, as well as military aid, was halted.
According to Leonard, Lend-Lease changed the balance of power in Latin America and "rekindled old rivalries." The Chilean government, for example, was very concerned about its lack of military assistance, not out of fear of an attack by Axis forces, but because it was concerned that Bolivia and Peru might attempt to use their newly acquired weapons to take back territory lost to Chile sixty years before during the War of the Pacific. Ecuador also was wary because, at the end of the Ecuadorian–Peruvian War in 1941, it had lost to Peru. Finally, Argentina was threatened by its old rival, Brazil, because of the latter's access to the latest American weaponry. Leonard says that the Argentine President Juan Perón came to power partially by claiming that he would "redress this change in military status".
Axis activity
At the beginning of World War II, fascism was seen as a positive alternative by some Latin American leaders and groups that were impressed by Germany's Adolf Hitler, Italy's Benito Mussolini, Japan's Hirohito, and the dictators of the minor Axis powers. President Rafael Trujillo of the Dominican Republic, for example, admired Hitler for his style and his militaristic rallies. Similar views were held by Jorge Ubico, Tiburcio Carias Andino, and Maximiliano Hernández Martínez, the dictators of Guatemala, Honduras, and El Salvador, respectively. According to Leonard, in Brazil, Argentina, and Chile, the strong sense of unity and purpose created by fascism was quite attractive. All three nations had an influential fascist political party. Brazil's Integralists dressed in jackboots and green military-style shirts, and were open admirers of Mussolini.
In the pre-war years the Germans also enjoyed growing economic penetration using strict binational trade agreements to ensure that the economic relationship with various Latin American nations would be equal. Brazil, Mexico, Guatemala, Costa Rica, and the Dominican Republic all had trade agreements with Nazi Germany. Brazil's trade with Germany, for example, doubled between 1933, when Hitler came to power, and 1938, the year before the war began. In 1938 the contribution of South America to German imports had increased from 7.7 percent to 12.8 percent.
With the start of the war in September 1939, trade between Latin America and the Axis states almost completely ceased in the face of the Royal Navy blockade; hurting Latin American economies to varying degrees. In most cases, the United States was the only country able to replace the Axis as a trade partner.