May 15, 2006

The Pan-American Highway Report

By Dr. Frank J. Collazo

Motivation/Justification: In view that Hugo Chavez wants to be the Simon Bolivar who conquered New Granada, Spanish viceroyalty in the northwestern part of South America is the former name of the republic of Colombia. At one time New Granada included present-day Colombia, Venezuela, Ecuador, and Panama. Moreover, Hugo Chavez has arranged for Fidel Castro, Cuban Dictator, to furnish medical teams to Venezuela and the latest dispatch to Bolivia to reach the poor in rural areas.

Therefore, I have decided to become more knowledgeable about South America so that I can serve my country better and respond if the need arises. I have traveled to Central America and South America visiting the following countries: Costa Rica, Argentina, Uruguay, Ecuador, and Peru. During visits of these countries, a common denominator has surfaced when engaging in conversations with the common man of each country. The comments include the lack of support by the USA to complete the Inter-American Highway to include the Pan-American Highway that services Central America. The USA has financed the majority of the cost for the highway, but still they are not satisfied because they lack the resources to complete each leg for the respective country, which could expand international trade.

The acceptance of Venezuela’s doctrine in South America is meant to capitalize on the poor to promote policies to conquer the countries in the Southern Hemisphere. In some of the countries, the highway is comprised of unpaved road using gravel as a base for the pavement. Therefore, the purpose of this report is to present the facts to government officials for them to decide the best course of action to counteract Hugo Chavez's doctrine.

The great USA started the construction of the Pan American Highway to link Mexico to the Panama Canal Zone during the early stage of WWII. In 1941, an announcement was made about an all-weather "pioneer" road to be financed by the United States to extend from the railhead in Mexico to the Panama Canal Zone. The USA funded the Pan-American Highway from Laredo, Texas to Panama. Mexico did not want America's financial support to build the link from the Laredo side of Mexico to Guatemala. Its strategic importance was obvious. It should also relieve the acute transportation difficulties for the Central American countries. All of the nations of Central America have given their consent.

Introduction: The Inter-American Highway, name of the section of the Pan-American Highway extending about 5470 km (about 3400 mi) is over extremely rugged terrain from Laredo, Texas, to Panama City in Panama. Construction of the road was begun in the 1930s. The first span, 1205 km (749 mi) long, from Nuevo Laredo, on the Río Grande in Mexico to Mexico City, was completed in 1936. In April 1936 the rest of the span south to Panama was officially inaugurated. The United States was a major contributor toward construction costs of the Inter-American Highway. The Pan-American Highway is a system of highways extending from Alaska through South America. It extends all the way from Fairbanks, Alaska to the southern tip of South America. The monumental plan began in 1925 with the first Pan-American Highway Congress at Buenos Aires, Argentina. The United States has cooperated with Latin American countries in planning and building the international highway system so that now only a 160 km (about 100 mi) stretch between Panama and Columbia remains unfinished. In the early 1980's a land link was attempted, but construction is currently suspended. Nicaragua's section of the highway is in poor repair, but it is in the process of being improved.

Historical Background: Christopher Columbus established Spain’s claim to Central America in 1502, when he sailed along its coast from the Gulf of Honduras to Panama. His reports of great wealth beyond the mountains that ran the length of the heavily populated isthmus stimulated Spanish conquest, which was launched from Hispaniola under Columbus’s son, Diego. The charismatic Vasco Nunez de Balboa founded Spain’s first truly productive colony in America at Darien in 1510 and went on to reach the Pacific Ocean in 1513. His successor, Pedrarias Davila, who ordered Balboa’s death in 1517, extended the colony considerably, founding Panama City in 1519, from which he initiated the subjugation of Nicaragua and Honduras.

The subsequent conquest of Central America became a bloody struggle among Spaniards representing interests in Panama, Hispaniola, and Mexico. Eventually, Pedro de Alvarado, the loyal lieutenant of the conqueror of Mexico, Hernan Cortes, consolidated control over most of the isthmus. The conquerors killed many Native Americans, but the majority died from devastating epidemics of smallpox, plague, dysentery, and influenza, introduced by the Europeans. The Spanish reduced to serfdom those who remained, establishing an agricultural society based on institutions they had brought from Spain. Native American customs and traditions survived, however, because most of the relatively few Spaniards remained in the towns and cities.

Colonial Central America was divided into two jurisdictions. The captaincy general of Guatemala extended from Chiapas (present-day Mexico’s southernmost state) through Costa Rica. Although nominally part of the Viceroyalty of New Spain, it was relatively autonomous. Its capital city, Antigua Guatemala, became a center for bureaucrats, clerics, and the landholding and commercial elite of the colony. The rest of Central America (all of what is present-day Panama) with its important transit route became attached to New Granada (modern Colombia) in the Viceroyalty of Peru.

Spanish decline during the 17th century permitted increased autonomy for the colonial elite who, with the cooperation of church and state, dominated the oppressed Native American and “mestizo” (mixed Spanish-Native American heritage) working class. In the 18th century, Spain’s Bourbon kings, trying to regenerate the empire, inaugurated reforms that promoted new economic activity but also challenged the longtime accommodation between the landholding elite and the bureaucracy.

Mexico-Colombia Region: The region between Mexico and Colombia supported a large pre-Columbian population, the most important of whom were the Maya. The Maya civilization originated in the highlands of Guatemala before the 1st millennium bc and reached its greatest flowering between ad 300 and 900 in autonomous city-states in what are now northern Guatemala, Honduras, Belize, and Mexico’s Yucatan Peninsula. Maya unity was cultural rather than political, but the civilization’s influence was widespread. Maya artistic and scientific achievements surpassed those of contemporary Europeans. After 900, however, the Maya civilization declined, and its people came under the influence of the Toltec people from Mexico. Numerous peoples inhabited the remainder of the isthmus and traded with both South and North American tribes, making ancient Central America an archaeological bridge between the Americas. The population of the isthmus on the eve of the Spanish conquest may have been as large as six million, a figure not again achieved until the 20th century.

Central America: The Creole elite in the captaincy general of Guatemala followed Mexico’s lead and severed its allegiance to Spain in 1821. The area then became part of the Mexican Empire of Agustin de Iturbide, but when Iturbide’s conservative government fell in 1823, liberals seized control, declared independence from Mexico, and formed the “United Provinces of Central America.” Chiapas, however, remained with Mexico, and Panama joined the Republic of Colombia (also known as Gran Colombia) headed by Simon Bolivar.

The United Provinces embarked on an ambitious but unrealistic program of republican reform and economic development, rejecting the Spanish heritage. Intense regionalism, political intrigue among the elite, and civil war resulted. In 1834 the liberals moved the capital from Guatemala to El Salvador, but their policies still faced bitter opposition and rebellion from conservative members of the elite and the rural masses. After the Guatemalan peasant leader Rafael Carrera captured Guatemala City in 1838, the federation began to disintegrate; the federal president, Francisco Morazan finally resigned in 1840. Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica emerged as independent, conservative republics.

England, by this time, had replaced Spain as the dominant external force in the region. The British settlement at Belize had grown from a buccaneering and logging camp in the 17th century to become the principal port of Central America’s foreign trade. British influence extended along the Caribbean coast as far as Panama, and in 1862, Belize officially became a British colony (British Honduras). United States interest, however, rivaled British interest after 1849, for the isthmus offered the quickest routes to the gold mines of California.

The Clayton Bulwer Treaty of 1850 resolved some areas of this Anglo-American conflict, but in 1855 William Walker, a U.S. soldier of fortune, invaded Nicaragua with an army of followers. A united Central American conservative army drove him out with British assistance in 1857. Meanwhile, the completion of the Panama Railroad in 1855 caused Central American commerce to shift away from Belize to the more accessible Pacific coast ports, and British influence receded thereafter.

After 1870 liberal dictatorships arose which, in the name of order and progress, promoted the development of coffee as the region’s main export at the expense of a more diversified agriculture; banana cultivation, mostly controlled by foreign interests, also became important. After 1900, the U.S.-based United Fruit Company was a major force in Central America’s economy. Developing railroads, shipping, and other subsidiary interests, the company was known as the “Octopus” among resentful Central Americans. U.S. investment and government became the dominant force on the isthmus, beginning with the establishment of Panamanian independence in 1903. The United States helped form the Central American Court of Justice, but U.S. military occupation of Nicaragua from 1912 to 1933 undermined its effectiveness.

Discussion of Historical Events - The Quadruple Alliance

Quadruple Alliance: The Alliance is comprised of Argentina, Paraguay, Brazil and Uruguay. Brazil and Argentina have economic problems from defaulting with the IMF loans to de-evaluation of the currency creating a depression in corresponding countries. The two countries are intertwined with Paraguay and Uruguay. Brazil is the leading exporter with the largest economy of South America. Brazil and Paraguay launched the project of the biggest hydropower dam in the world. Paraguay provided the land and Brazil the technological know how. There are several cultural barriers with Argentina.

Argentina: Following independence from Spain in 1816, Argentina experienced periods of internal political conflict between conservatives and liberals and between civilian and military factions. After World War II, a military junta that took power in 1976 followed a long period of Peron’s authoritarian rule and interference in subsequent governments. Democracy returned in 1983, and numerous elections since then have underscored Argentina's progress in democratic consolidation.

An International Monetary Fund-led group of lenders pledged $21 billion in new financing to Argentina less than two years after the country triggered the biggest debt default in history. The IMF will provide $12.3 billion in new loans over three years Argentine’s President Nestor Kirchner said at a news conference in Buenos Aires. The World Bank and Inter-American Development Bank will provide the additional financing. Argentina, which defaulted on a $2.9 billion loan payment to the IMF is supposed to pay the money before formal approval of the loan package on September19 in Dubai. Investors in Argentina bonds with a face value of 90B are concerned they will be left in the cold with the IMF currently restructuring their debt. Bondholders have not received interest payments in nearly two years. Bondholders were shocked at the Government’s initial offer to reduce the face value of the bonds by 75%.

It seems that Argentina was the victim of two terrorist attacks in 1992 at the Israeli Embassy and one in 1994 at a Jewish community center. At the Embassy in 1992 a car bomb exploded and killed 29 people and wounded over 250 more. Victims were Israeli diplomats, children and clergy from a church nearby, and other passersby. In 1994 the case once again got attention when the AMIA Jewish community center was bombed, killing 87 and injuring over 100. No one was ever convicted of the bombings, but in late 1994 six Lebanese and one Brazilian, who were drugs dealers, were captured by authorities and were found to be members of Hezbollah, the Iranian backed- Lebanese terrorist organization. They were released on lack of evidence. Finally in 1998 a phone call from the Iranian Embassy in Buenos Aries was intercepted, and it proved that Iran was involved in the bombings. Argentina immediately expelled six of the seven Iranian diplomats in the country, but that was the extent of their actions. It has never been determined which individuals were responsible for the attacks.

Argentina received terrorist threats through 1997-1999 while investigating the bombings, but no attacks were ever made. In 2002 members of Hezbollah and Al-Qaeda were reported to have met in or near the tri borders of Brazil, Argentina and Paraguay. Terror warnings were upgraded to strong. Also in 2002 terror warnings remained strong because of reports of eastern terrorist activity in Venezuela and in Colombia and Peru. The main terrorist organizations in the countries mentioned above is Hezbollah, Hamas, Al-Qaeda, Revolutionary Army of Colombia (FARC), the National Liberation Army (ELN), and the United Self-Defense of Colombia (AUC).

Incident of 1941 - German Submarine: When the German submarine surfaced at the Rio Plata, Uruguay had been neutral during the entire period of the war. The Uruguay government demanded a surrender by the crew and demanded they leave the country within 72 hours. The Captain of the submarine and the crew fled to Buenos Aires and hid in the city of Cordova. The Captain committed suicide after two days and the rest of the crew established residence in Cordova with different names or as disguised and married Argentineans. In fact, Cordova is a German community that has the siblings from the German Crews. However, at the end of the war when the USA was winning, the Argentines declared sides with the Western Alliance

Brazil: Following three centuries under the rule of Portugal, Brazil became an independent nation in 1822. By far the largest and most populous country in South America, Brazil has overcome more than half a century of military intervention in the governance of the country to pursue industrial and agricultural growth and development of the interior. Exploiting vast natural resources and a large labor pool, Brazil is today South America's leading economic power and a regional leader.

Highly unequal income distribution remains a pressing problem. Brazil took a count in August 2000 and reported a population of 169,799,170. That figure was about 3.3% lower than projections by the US Census Bureau and is close to the implied under enumeration of 4.6% for the 1991 census. Estimates for this country explicitly take into account the effects of excess mortality due to AIDS; this can result in lower life expectancy, higher infant mortality and death rates, lower population and growth rates, and changes in the distribution of population by age and sex than would otherwise be expected (2003 est.) (July 2003 EST).

The Diminishing of Brazil: Many Brazilians complain that their president, Luiz Inácio Lula da Silva, is being turned into an irrelevant bystander in his own backyard by Hugo Chávez, Venezuela's oil-rich populist leader. The immediate uproar was prompted on May 1 by the decision by Evo Morales, Bolivia's socialist president, to order the nationalization of his country's oil and gas industry. He was fulfilling a campaign promise. But he was advised, and apparently inspired, by Mr. Chávez.

The chief victim of his decision was Brazil. It is the largest consumer of Bolivian gas. Petrobras, the Brazilian national oil company, was the largest investor there. Brazil may now have to pay up to 60% more for gas. Lula's response looked feeble. Instead of asserting Brazil's contractual rights, he held a meeting not just with the Bolivian leader and Argentina's president, Néstor Kirchner, but also with Mr. Chávez on May 4th.

Lula said that Bolivia was acting within its rights. In return, Mr. Morales offered to refrain from cutting off gas supplies and to negotiate their price. Chávez's project is very different from Brazil's. He has signed up Mr. Morales to the “Bolivarian Alternative,” his political alliance with communist Cuba. He wants nothing to do with countries that sign trade agreements with the United States. Where Brazil wants to integrate, Venezuela wants to divide. Under Mr. Chávez, an elected autocrat, Venezuela has respected neither contracts nor democratic norms. Yet not only has Brazil remained silent about such conduct, it has encouraged Venezuela to join Mercosur. Such reticence to scold is partly because Brazilian construction firms have big projects in Venezuela, says Rafael Villa, a Venezuelan at the University of São Paulo. See Note 6.

USA Blocking the Sale of Brazilian Aircraft: A hard line against Venezuela would backfire countered Mr. Amorim. He says that within the limits of non-intervention Brazil uses whatever influence it has to reinforce democracy in Venezuela. That influence, he claims, is limited by the United States, which has blocked the sale of Brazilian aircraft to Venezuela. The “verbal cold war” between Mr. Chávez and George Bush's administration makes it much more difficult to build bridges between Venezuela's government and the opposition, he says. See Note 6.

Paraguay: In the disastrous Paraguayan War, also called the Triple Alliance, Spanish Guerra de la Triple Alianza, Portuguese Guerra da Triplice Alianca (1864/65-70), Paraguay lost two-thirds of all adult males and much of its territory. It was the bloodiest conflict in Latin-American history, fought between Paraguay and the allied countries of Argentina, Brazil, and Uruguay. It stagnated the country economically for the next half century. Paraguay had been involved in boundary and tariff disputes with its more powerful neighbors, Argentina and Brazil, for years. The Uruguayans had also struggled to achieve and maintain their independence from those same powers, especially from Argentina.

In the Chaco War of 1932-35, large, economically important areas were won from Bolivia. The 35-year military dictatorship of Alfredo Stroessner was overthrown in 1989, and, despite a marked increase in political infighting in recent years, relatively free and regular presidential elections have been held since then. Colonial Paraguay and the territory of present-day Argentina were ruled jointly until 1620, when they became separate dependencies of the Viceroyalty of Peru under Spanish monarchy.

Agriculture is prominent in the Paraguayan economy, contributing 29 percent of the gross domestic product (GDP). In 1999 the GDP was $7.7 billion, or $1,440 per capita. Agriculture is the most common economic activity, employing more than two-fifths of the workforce. It also accounts for about one-fourth of the gross domestic product (GDP) and the vast majority of exports. The economy is therefore highly dependent on the vagaries of climate and world commodity prices for its main agricultural products.

General Alfredo Stroessner Matiauda (president 1954–89) encouraged domestic and foreign private investment, particularly in commercial agriculture. Until the mid-1970s, public-sector investment was low by Latin American standards and was concerned mainly with improving roads, telecommunications, and air transport. This changed with the establishment of several state companies, most notably Itaipú Binacional, set up in 1973 to build a huge hydroelectric dam on the Paraná, and steel, cement, and alcohol-distillation plants.

Public-sector employment grew rapidly, making up about one-tenth of the labor force during the late 20th century. Until 1982, when the construction of the Itaipu Dam (the biggest in this Hemisphere) was completed, Paraguay was able to offset its current account and trade deficit with international loans. For the rest of the decade, the country was faced with a growing public-sector deficit, high debt repayments on commercial borrowing, and dwindling international reserves.

Paraguay has a market economy marked by a large informal sector. The informal sector features both export of imported consumer goods to neighboring countries as well as the activities of thousands of micro enterprises and urban street vendors. Because of the importance of the informal sector, accurate economic measures are difficult to obtain. A large percentage of the population derives their living from agricultural activity, often on a subsistence basis.

The formal economy grew by an average of about 3% annually in 1995-97, but GDP declined slightly in 1998 and 1999. On a per capita basis, real income has stagnated at 1980 levels. Most observers attribute Paraguay's poor economic performance to political uncertainty, corruption, and lack of progress on structural reform, substantial internal and external debt, and deficient infrastructure. Growth rebounded slightly in 2000. Paraguay is sandwich between Argentina and Paraguay. Its economy is driven by the economies of Argentina and Brazil.

Uruguay: Uruguay is considered the little "Switzerland of South America." It has a very strong financial Center for South America. Civilian rule was not restored until 1985. Uruguay's political and labor conditions are among the freest on the continent. An export-oriented agricultural sector, a well-educated workforce, and high levels of social spending characterize Uruguay’s economy. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from lower demand in Argentina and Brazil, which together account for nearly half of Uruguay's exports.

Total GDP in these four years dropped by nearly 20%, with 2002 the worst year. Unemployment rose to nearly 20% in 2002, inflation surged, and the burden of external debt doubled. Cooperation with the IMF and the US has limited the damage, which is still extensive. Moves to reschedule debt and promote economic recovery may help limit a further decline in output in 2003. In 2004, the people elected a new socialist President. His agenda is unknown but is driven by Argentina and Brazil economic goals.

Uruguay is a highly politicized country. If there is not work on a political level, an issue appears to be unimportant. Members of the Partido del Sol share the spirit of the letter that Chief Seattle sent to President Franklin Pierce when he offered to buy the lands where his people lived: "We recognize that the Land is our mother and all inhabitants are our brothers. We recognize that the Land belongs to no man; all humans belong to the Land. Furthermore, any harm that befalls the Land will be inflicted upon humankind because all things are interrelated. We are obligated to safeguard the delicate balances of natural systems and to use and develop human resources for the welfare of all people. We devote our energy and spiritual resources to the preservation of our habitat on behalf of all inhabitants of the planet."

Venezuela Threat: Venezuela was one of three countries that emerged from the collapse of Gran Colombia in 1830 (the others being Colombia and Ecuador). For most of the first half of the 20th century, Venezuela was ruled by generally benevolent military strongmen who promoted the oil industry and allowed some social reforms. Democratically elected governments have held sway since 1959.

Current concerns include an embattled president who is losing his once solid support among Venezuelans. A divided military, drug-related conflicts along the Colombian border, increasing internal drug consumption, over dependence on the petroleum industry with its price fluctuations, and irresponsible mining operations are some of the problems endangering the rain forest and indigenous people.

Venezuela is 95% Catholic. Neither Communism nor socialism is compatible with Catholicism. Venezuela is the main threat where the national government images the government of Fidel Castro. President Chavez is a socialist and wants to be a maverick. The recent drop in oil production from 3 million barrels/day to 2.6 million barrels/day beats all analyst predictions in restoring production. The oil companies are still recoiling from the upheaval and restructuring at a cost of 18,000 jobs. Still Venezuela supplies about 15% to the USA oil imports.

There are some Muslims moving into Venezuela on an Island north of the Venezuela Coast. On the border of Brazil and Paraguay there are some Muslims who are anti-Western. Argentina had a terrorist experience around 1992. The motives of the country of Suriname, whose population is about 20% Muslim, should be kept under a watchful eye. The border disputes between several countries in South America are ancient history.

In 2005, President Hugo Chavez proposed again the creation of an Andean energy initiative called Petroandina. Chavez will use the AnCom presidency to promote the regional expansion of his Bolivarian revolution and the Bolivarian Alternative for the Americas initiative that Venezuela and Cuba are sponsoring as an alternative to the Free Trade Area of the Americas. Venezuela has assumed the rotating presidency of the Andean Community (AnCom). Chavez used this forum to launch the Petro-Andina initiative. The Petroandina initiative offers AnCom countries the same preferential payment plans that Venezuela and co-sponsor Cuba offered late last month to Caribbean Community countries in their Petrocaribe regional initiative: "It would allow buyers to finance up to 50 percent of the oil they buy for up to 15 years at 2 percent annual interest." In addition, Venezuela will invest in AnCom oil-refining and production capacity.

Two AnCom members have already expressed their support for the plan -- namely Ecuador and Colombia, who are experiencing problems in their own oil industries, a weakness that Chavez is exploiting. AnCom was originally established as the Andean Trade Pact in 1969 by Bolivia, Chile, Colombia, Ecuador and Peru. Venezuela joined the organization in 1973, and Chile decided to abandon it in 1976 to pursue its own economic objectives. Little progress was made until the early 1990s, when the member governments made a push for greater economic integration in the region. This resulted in the Andean Free Trade Zone and the establishment of a Common External Tariff in 1994.

Chavez, however, criticized the organization at the AnCom summit for its lack of progress toward economic integration and improved social well being in the region. He attributes social exclusion, inequality, poverty and political instability to the "neo-liberal" market values the organization advocates. Chavez will seek to change this by promoting his Bolivarian agenda, which includes the creation of an emergency social fund to aid poverty in the region.

Arms Deals, Big and Small, April 5, 2005, Summary: Venezuelan President Hugo Chavez announced the planned expansion of his Bolivarian military reserve force from its current level of 80,000 members to nearly 2.3 million armed volunteers. Reportedly, he also hosted a quiet visit by a delegation from North Korea the week of March 27 to April 2. As Chavez weighs the costs of arming and equipping his military reserves, he could be thinking about buying fewer MiGs in favor of adding a North Korean missile deterrent to Venezuela's national armed forces. See Note 1

On Sept. 15, 2005, as Stratford anticipated, U.S. Undersecretary of State for Political Affairs Nicholas Burns announced that in its annual review Washington had decertified Venezuela as an ally in the war on drugs. In a written statement, U.S. President George W. Bush cited decisions by Caracas to end cooperation with U.S. drug enforcement agencies and to fire many of Venezuela's qualified law enforcement officers. The only other country to be decertified in 2005 is Myanmar. See Note 2.

On March 11, 2005, Iranian President Mohammed Khatami met with his Venezuelan counterpart in Caracas on March 11 on the second day of his three-day trip to the South American country. Khatami, who received a personal invitation to visit from President Hugo Chavez, arrived in Caracas within hours of Chavez's return from a weeklong alliance-building trip to Uruguay, India, Qatar and France. Khatami's visit represents part of Chavez's accelerating efforts to build a global network of strategic alliances aimed at strengthening Venezuela economically and politically for what the Chavez government perceives as a long-term political confrontation with the United States.

Chavez is seeking alliances not only with Iran and those countries on his recent tour, but also with China and Russia. Specifically, Chavez intends to open new markets for Venezuelan energy exports and to secure new sources of foreign direct investment to finance the expansion of Venezuela's oil and natural gas industries. Chavez also hopes to insulate Venezuela from international sanctions promoted by the United States through such venues as the United Nations and the Organization of American States. See Note 3.

Fidel Castro dispatched 718 Cuban doctors and donated medical equipment in response to an accord between the Governments of Bolivia and Cuba endorsed by Hugo Chavez. The program images the one in effect in Caracas reaching the poor in rural areas. Newly elected President Evo Morales, Bolivia, and Dictator Fidel Castro negotiated the arrangement, Cuba financed by Venezuela. See Note 4.

Venezuela's Central Bank is fighting what could be a losing battle for its autonomy, as President Hugo Chavez seeks direct control over the country's foreign exchange reserves. If Chavez succeeds, he would burn through billions of dollars in "loans" to the poor in exchange for their support during a possible recall vote, and he would severely damage Venezuela's international creditworthiness in the process. Venezuela's Central Bank decided January 27 to let commercial banks use its reserves to fund new agricultural loans. The decision is a nonstarter. Although this would free about $325 million in possible loans to farmers, the problem is a lack of qualified borrowers, not a lack of liquidity.

For weeks, President Hugo Chavez has been demanding that the Central Bank hand the Treasury at least $1 billion so that cash loans can be given to farmers between February and May 2004. A presidential recall vote, if held, likely would take place in May or June. Chavez wants to distribute the money to hundreds of thousands of poor rural dwellers before that. Hence the titanic struggle between the Central Bank and Chavez over control of the country's foreign exchange reserves -- which currently total more than $22 billion. See Note 5.

Hugo Chávez's Meddling Backfires: On May 8, Ollanta Humala, the nationalist former army officer who won most votes in the first round of Peru's presidential election last month, met Evo Morales, Bolivia's socialist president. Opening an eye clinic staffed by Cuban doctors at Copacabana, a small town on Lake Titicaca just inside Bolivia's border with Peru, the two men proclaimed their fraternity.

So will Peru be the next domino to fall to the Bolivarian Alternative for the Americas, an anti-Yanqui political alliance sponsored by Cuba and Hugo Chávez, Venezuela's president, and recently joined by Mr. Morales? Probably not. Opinion polls suggest that Mr. Humala will lose a run-off election on June 4th to Alan García, a former president, by a margin of ten to 20 percentage points. And far from helping Mr. Humala, the vocal support of Messrs Chávez and Morales seems to be hurting him.

Last month, Chávez launched a verbal broadside against García, calling him a “swine” and “thief.” That may be because Mr. Garcia’s moderately populist APRA party has links with Democratic Action, a social-democratic party that is the Venezuelan president's oldest political foe at home. Mr. Chávez has called on Peruvians to elect “Comrade Humala,” though he denies financing him. Last month, Peru withdrew its ambassador to Venezuela, for the second time in four months, in protest at Chávez's “persistent and flagrant interference” in the election.

According to the pollsters most Peruvians dislike Chávez and his meddling. One poll, by Apoyo, found that only 17% had a positive view of him, and 75% disapproved of his comments. Only 23% approved of Morales, and 61% objected to his calling Peru's outgoing president, Alejandro Toledo, a “traitor” for signing a free-trade agreement with the United States.

Concept of the Pan-American Highway, Alaska to Chile: Since the Conference of American States in 1923 there have been plans to build a Pan-American Highway -- a continuous roadway running the full 25,800km (16,000 mi) from Alaska to the bottom of Chile. Now, all but 88km (54mi) are complete, so aside from a time-consuming detour, it's possible to drive from above the Arctic Circle down to Puerto Monte, nearly 1000km (600mi) south of Santiago, Chile. The road cuts through pretty much every kind of geography and climate possible, so make sure your vehicle, clothing and state of mind are all-terrain.

Few people attempt the drive from top to bottom. Getting to and from the extremes usually makes people think again, the difficult conditions in Alaska and along the Colombia-Panama border also discourage travelers, and the logistics of crossing 13 national borders are usually enough to put even the most persistent Yellow Brick Road devotee off for good. Still, it's good to know it's possible...

Although the Pan-American Highway, or Interamericana, is more of a concept than an actual route, most say that it starts in the tiny Alaskan town of Circle, some 150km (93mi) west of the Canadian border and about 100km (62mi) south of the Arctic Circle (from which the town gets its name). Since 1994, however, the Dalton Highway has allowed drivers the option of starting their trip further north, from the shores of the Beaufort Sea in Dead-Horse. This oilfield town has a population of anywhere between 3000 and 8000 people, so there are plenty of places to stock up for the rough road ahead.

And it is rough. Dead-Horse isn't just a cute name for the town, it was practically a guarantee earlier this century, and a summer drive along the dusty, potholed gravel surface will be the toughest test of your vehicle's suspension. But an hour or two after Fairbanks you'll hit the Alaska Highway, and it's pretty much plain sailing then for the trip all the way through the Yukon and British Columbia and down the west coast of the USA.

Choose your own route through the States - desert, ocean or a mix - then head via Palm Springs and Calexico into Mexico. Border delays and bandits aside, the roads remain pretty good through Mexico, Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. Before choosing your route, however, you should check information on mudslides and flooding, which often close roads for weeks.

The one sticking point on the Pan-American is along the border between Colombia and Panama, where the Darien Gap -- a lush rain forest with one of the highest degrees of biodiversity in the entire world forms a natural, virtually impassable border. While the completion of the highway would make these countries more accessible to trade and tourism, it would not come without a price; many experts say that a road through this region would effectively destroy it. So road trippers now have to pull over in the grimy, muggy town of Yaviza. The only option to motorists is to somehow get to the Caribbean Sea port town of Puerto Obaldía (best done by boat) check in with the police, then boat-hop to Turbo, San Juan or Cartagena, where you can hit the road again.

After the long drive along the foot of the mountains in western Colombia, you bisect Ecuador - crossing the equator and passing through the charming, beautiful capital of Quito - then along the almost 2000km (1250mi) coast of Peru and, finally, Chile. Reach the strangely Nordic-style town of Puerto Monte, and you will have completed perhaps the most extraordinary inter-continental car trip possible.

Inter-American Highway.

FDR Initiative: President Roosevelt on May 1, 1941 asked Congress to appropriate funds for completing a 1550-mile stretch of the Inter-American Highway, from the southern border of Mexico to the Panama Canal, of which the United States would finance about two thirds of the construction with a maximum governmental expenditure of $20,000,000 over a period of five years. The importance of this inter-continental road is now increased by reasons of military strategy, continental solidarity, and the development of new lands and natural resources. Various aspects of the completed road were discussed at Buenos Aires in May during a conference of highway engineers from Argentina, Bolivia, Chile, and Peru. Construction of different parts of the road in those states was agreed upon formally, and other countries are expected to meet regionally in order to lay out the whole system.

In mid-summer the Pan-American Union reported that the highway includes between Mexico and Panama 62 percent of road suitable for all weathers, 16 per cent for dry weather only, and 22 per cent of trails impassable for vehicular traffic. The part through Costa Rica, Nicaragua and Panama is still unfinished. In South America the road has advanced further; from Caracas through Bogotá to beyond Quito it is drivable; between southern Ecuador and northern Peru much work has been done on both the north-south Pan-American route, and eastwards over the Andes to the headwaters of the Amazon. The sections in Chile and Bolivia are open throughout; Argentine roads are good. Paraguay and Uruguay are developing their sections, as is Brazil. From South America it is reported that the highway is about 80 percent all weather and paved road, the rest dry-weather, and that there are no trails except in Colombia and Ecuador. When completed, the Pan-American Highway will stretch for 15,000 miles, from Alaska to Magellan’s in Chile.

Launching The Inter-American Highway (IAH) Project: The Inter-American Highway (IAH) is the Central American section of the Pan-American Highway and spans the 3,400 miles (5,470 km) between Nuevo Laredo, Mexico, and Panama City, Panama.

The idea of a road being built across all of Central America became a tangible goal in 1932 as the U.S. began conducting aerial surveys using the U.S. Army’s new photoreconnaissance and photographic aerial mapping technology. However, the aerial mapping effort was not directly tied to the upcoming Inter-American Highway project and was conducted with the cooperation of several of the Central American republics.

By 1940 the United States had a strong presence in Central America, especially in Panama. The U.S. owned and operated both the Panama Canal and the Panama Railroad, but with the looming war in Europe, the U.S. felt it necessary to establish a more direct connection with Panama. Therefore, the U.S. and Panamanian governments agreed to begin the construction of a trans-isthmus highway located outside of the Canal Zone. Thus, the construction of the actual Inter-American Highway was instigated by the United States as a safety precaution at the beginning of World War II.

Like with the Panama Canal project, the principle engineers and administrators of the highway construction were supplied by the United States. Working and living conditions varied depending on the location and season, but they were described by the North American crew as ‘primitive’ and they recall their experiences as both ‘hilarious and tragic.’ For those stationed in larger cities, their families were allowed to come and stay with them as an incentive to keep them from returning to the U.S.

Many pieces of what is now the Inter-American Highway were constructed independently by individual countries prior to 1940. However, these roads only existed between large cities and were not in very good condition. Unlike in the United States, transportation in Central America had progressed rapidly from “ox-cart” paths to air transport creating numerous ‘gaps’ in the ground transportation network. One of the greatest challenges faced by the workers was in bridging these gaps.

Progress on the IAH was painstakingly slow due to the isolation of the building sites and frequent natural obstacles such as mountains and rivers. Nonetheless, construction on the IAH was hastened as the threat of the German U-boats in the Atlantic and Caribbean increased. As part of the U.S. war effort, the U.S. Army Corps of Engineers began the construction of a ‘Military Road” in conjunction with the IAH. This group of engineers was allowed access to all the Central American nations involved in the original highway project due to the war emergency status of the Military Road.

The construction of both the IAH and the auxiliary military road progressed at a breakneck speed, and construction supplies quickly ran out. The scarcity of construction material only served to augment local unease concerning project since local merchants had no precedence over imported materials from the U.S. or shipping rights, and therefore made little profit from the whole affair. Although construction did not directly benefit local business, it did provide employment of many of the local people. However, this positive impact only lasted as long as the construction team was in an area. For example, after the German submarine threat subsided (due to the presence of the U.S. Navy) the Army Corps ceased construction on the Military Road project, suddenly leaving many people unemployed and upset.

After the Army engineers left Central America, IAH construction started back up at full steam, having inherited a significant amount of supplies and equipment from the abandoned project. By 1946, the IAH was ready for inspection by U.S. diplomats and engineers, but was far from being finished. Most of the road was only passable by jeep, but the basic road outline had been carved out of the surrounding jungle and mountains. The road was finally finished in 1967 and existed as a continuous strip of gravel, dirt, or asphalt between Panama and the Mexico. The only section of the IAH that was constructed without any form of U.S. aid was the 1,600 mile Mexican strip between Nuevo Laredo and the Guatemalan border.

Alaska-Argentina Highway: The Alaska Highway, which was opened to traffic late in 1942 by the use of much temporary construction, was largely rebuilt in 1943, including the relocation of many miles to reduce grades or obtain a better sub-grade. The relocation reduced the length from Dawson Creek, British Columbia, to Fairbanks, Alaska, by about 100 miles to 1,518 miles. All but 20 of the 164 permanent bridges were completed during the year. Many of these are of timber construction.

Also built this year was a 165-mile access line from Haines, on tidewater near the head of the Inside Passage along the West Coast, to a point 108 miles west of Whitehorse in Yukon Territory. The Alaska Highway has a gravel surface throughout, a minimum width of 24 ft. and a minimum depth of 12 in.

The Inter-American Highway Commission on July 28, 1941 announced arrangements with the five Central American countries and Panama for constructing a pioneer road, to be replaced later by the contemplated highway. For military reasons work on the unfinished sections of the highway from Alaska to Argentina is being rushed for completion before the end of 1943. The Alaskan (Alcan) highway, opened December first, runs from Dawson Creek, British Columbia, to Fairbanks, Alaska, and connects with railways and highways at both ends; army engineers under the Joint Board of Defense of the United States and Canada built it.

Another military road-building operation put under way during 1942 was completion of the missing links in the Inter-American Highway from southern Mexico to Panama. About 1,000 miles of the proposed road from the southern border of Mexico to Panama have been completed and there remains about 625 miles yet to be built. In July the United States Government came to an agreement with the governments of the Central American states for the completion of a "pioneer road" at the earliest possible date. The work is to be financed by the United States Government, and American contractors have been engaged to take charge of part or all of the work, but it is believed that local labor will be used as far as possible. Possibly some United States Army engineer units will be used, as in the case of the highway to Alaska. The proposed road is to be made passable in all weathers. It will have a width of from 10 to 16 ft., with an 8-in. gravel surface. Grades will be held to 10 per cent and curvatures to a radius of not less than 66 ft.

Mexico has built hard-surfaced roads from the United States border to Mexico City and south to a point near Oxaca. It is actively engaged on completion of a road from that point to the Guatemala border.

Construction of a highway across the Isthmus of Panama to connect the two ends of Panama Canal, begun in 1941, was completed in the spring of 1942. It extends from the end of the highway built some years ago from the city of Panama to Madden Dam, about halfway across the Isthmus, through virgin territory to Colon, a distance of about 25 miles.

Concrete Pavements: Because of the scarcity of steel, state highway departments in 1941 began to build concrete pavements without reinforcing steel and without steel load-transfer devices at expansion joints. That trend gained acceptance in 1942, being formalized by the issue of tentative designs for such pavements by the Highway Research Board. Slabs are thickened, expansion joints are spaced farther apart, and planes of weakness to concentrate cracking and reduce slab movement at expansion joints are formed in the pavement at close intervals. The volume of highway construction in 1942 was lower than any since 1938, but still totaled above $530,000,000 due in large part to Federal expenditures for access roads.

Mexico-Panama Link: Announcement was made in July of an all-weather "pioneer" road, to be financed by the United States, to extend from the railhead in Mexico to the Panama Canal Zone. This undertaking does not modify the plan for a permanent Inter-American highway, authorized December 26, 1941, but is an emergency measure to promote the movement of freight and possibly of troops. Its strategic importance is obvious. It should also relieve the acute transportation difficulties of the Central American countries. All of the nations of Central America have given their consent, and in August surveying was reported to have begun, with the expectation that construction would soon follow. It is estimated that only 625 miles of totally new road would be required.

Work on the uncompleted sections of the Inter-American Highway, extending 1,569 miles from the Mexican border to the Panama Canal, was carried forward during the early part of the year, chiefly under the direction of the Corps of Engineers, U. S. Army, but during the latter part of the year the Army forces were largely withdrawn due to changes in the military situation. Subsequently, work being done by the U. S. Public Roads Administration, chiefly on bridges, and work being done by government forces of the countries through which the highway passes was continued. At the end of the year the road was open across Guatemala and El Salvador, and some work remained to be done in Honduras, Nicaragua and Panama. In Costa Rica, where the road climbs to an elevation of about 10,000 ft., a considerable amount of work remains to be done before the highway can be opened for traffic.

Opening of the Inter-American Highway: Since 1934, at a cost of about $250 million, the Inter-American Highway connecting South America with Alaska has been under construction. In April government officials and highway engineers joined in a ten-day caravan trip of 2,600 miles from Panama to Mexico City to officially open the nearly completed highway to through traffic. The United States has matched on a 2-to-1 basis the cost of the highway to each country except Mexico. Mexico accepted no outside help. Although the route is open from Panama City to Laredo, Texas, the construction of numerous bridges and retaining walls, additional grading, and all weather paving of unpaved sections remain to be done.

Between Colombia and Panama, the Pan-American Highway in South America has not been connected with the Inter-American Highway in Central America. The projected route passes through 500 miles of nearly inaccessible jungle, the Darien Gap. Financing, estimated at $150 million, does not seem likely without heavy U.S. contribution.

Pan-American Highway is a system of highways extending from Alaska through South America. The northern section of the route, beginning in Fairbanks, Alaska, and continuing to the city of Dawson Creek, B.C. is called the Alaska Highway. In Mexico and Central America, the segment known as the Inter-American Highway runs from Laredo, Texas, to Panama City, Panama. Routes in the United States and Canada connect the Alaska and the Inter-American highways. One section of the Pan-American Highway ends in Panama's southernmost province and begins again across the border in Colombia.

In South America the highway follows the western coast of the continent to Santiago, Chile, turning east across the Andes to Buenos Aires, Argentina. The Simon Bolivar Highway forms an important northern branch of the highway system, connecting the Atlantic port of La Guaira, near Caracas, Venezuela, with Bogotá, Colombia. From Buenos Aires, the main highway extends up the eastern coast of South America through Montevideo, Uruguay, to Rio de Janeiro, Brazil. A central branch leads from Buenos Aires to Asunción, Paraguay, where the highway joins a transverse route that makes possible a coast-to-coast connection from Paranaguá, Brazil, via Asunción and La Paz, Bolivia, to Lima, Peru.

Another transverse route will connect Lima and Brasília, the capital of Brazil. The Bolivarian Highway extends from Maracaibo, Venezuela, and links the inner regions of Bolivia, Colombia, Ecuador, Paraguay, and Peru. Other new highways will reach Punta Arenas, Chile, on the Strait of Magellan, and Ushuaia, Argentina, near the southern tip of South America, in Tierra del Fuego.

Pan-American Highway Congress: Since the first Pan-American Highway Congress at Buenos Aires in 1925, the U.S. has cooperated with Latin American countries in planning and building the international highway system. Subsequent congresses have been held to plan the system and to facilitate the movement of international traffic.

Pan-American Union (1938): On March 9 the Board approved recommendations relative to the Pan-American Highway, for creating a commission of technical experts, a finance committee, and a permanent public office designated by each country which would make available information on the highway's status. At a special meeting on July 21 the Board adopted a resolution proclaiming that public opinion in the Americas demands an end of war. In its session of June 1 it adopted the program for the Eighth International Conference of American States at Lima. It also recommended that the Eighth American Scientific Congress be held in Washington in 1940 as part of the commemoration of the fiftieth anniversary of the founding of the Pan-American Union. The Board has asked the states of the Union what sums they will contribute for the erection of the Columbus Memorial Lighthouse, to be built in the Dominican Republic by 1942, the four hundred and fiftieth anniversary of the discovery of America.

Mexico and Brazil in the War (1942): Two more states declared war, making a total of 12 American states — 13, including Canada — at war and 8 others having broken relations with the Axis. Mexico did this May 30, following the sinking of two tankers by German submarines, and Brazil entered the war August 22 after a period of excitement caused by the sinking of six Brazilian ships off its coast. Mexico's chief contribution as a belligerent is economic, since it supplies the United States with much-needed raw materials, principally graphite, antimony, mercury and other metals, and fibers.

But its belligerent status facilitates the work of the Joint (Mexico-United States) Defense Commission (announced February 27) in protecting its long Pacific coastline and Guatemala to the south; and it has manpower, from which it has already supplied several thousand agricultural workers to gather crops in the United States. The latter is aiding Mexico with loans for developing mines, steel mills, and guayule rubber, and for extending the Pan American Highway to the Guatemalan border and improving the overloaded Mexican railroad system.

The United States and Mexico have concluded a lend-lease agreement and a new consular convention, and Mexico has begun its payments under the Claims Convention ratified April 2, 1942. In November an arrangement was announced for Mexico to resume payment on its foreign debt, mostly in default since 1914. The plan provides a substantial scaling-down of principal and interest until 1968, so that, with United States' assistance through silver purchases and currency stabilization, Mexico can pay its debt, thereby furthering its economic rehabilitation and generally improving its foreign relations.

Inter-American highway between Nicaragua and Costa Rica: In 1940, similar criticism has been made of the Costa Rican section of the Pan-American highway, to be constructed with a $4,600,000 Export-Import Bank loan, announced September 24, practically 60 per cent of the proceeds of which are to be used for the purchase of equipment in the United States. This was the first commitment under the increased Congressional appropriation to the Export-Import Bank and is assigned to an undertaking, which is of strategic importance in connection with Canal defense. It will benefit Costa Rica by partially meeting the unemployment problem due to the drastic curtailment of the Republic's coffee market. The Communist attack on the road maintains, however, that the country needs a highway running from the Atlantic to the Pacific, not a military road southward.

In 1941, a new Export-Import Bank loan totaling $4,600,000, was contracted, superseding that of 1940. It provided for the early completion of the Costa Rican link in the Pan American highway. Costa Rica is obligated to pay only $2,500,000 of the construction costs. The new loan, bearing interest at 4 per cent, is to be serviced, beginning in 1945, with a gasoline tax.

The opening of a new section of the inter-American highway between Nicaragua and Costa Rica was a period of gay festivity in the border town of Liberia. The new highway connects San José and Managua and runs all the way to Guatemala City, some 812 miles to the north. There are now only about 25 miles on the Guatemalan border of unfinished road, which prevents connection of San José to the United States.

South of San José there are about 150 miles of highway to be constructed in Costa Rica. Severe floods cost the economy an estimated $10,000,000 in 1955, but a resounding comeback was likely in 1956. The coffee crop was expected to be the finest ever, totaling 750,000,000 lbs. (some five million above the previous year's record harvest). Standard Fruit Company launched a reclamation project on 10,000 banana plantation acres. Contracts for the final link in the Pan American Highway to Panama were let; nearly $3,000,000 was allotted for road construction in 1956. An internal loan of over $2,000,000 was made to build a hydroelectric plant at La Garita. For $1,300,000, Costa Rica acquired 14 new diesel-electric locomotives from the United States.

Costa Rica/USA Relations: Military and economic cooperation between the United States and Costa Rica, the first Latin American nation to declare war on all the Axis powers, was extensive during 1942. The Costa Rican army, numbering not much over 500 men a year ago, has been expanded and is being trained by a United States military mission, which arrived in February. United States military units are stationed in the country. By an agreement signed January 16, lend-lease funds of $550,000 were allocated for the purchase of arms for the new army. Costa Rican bases have been put at the disposal of the United States.

Finally, the all-weather "pioneer" road is being rushed to completion through Costa Rica by the United States. Designed to supplement the still incomplete Inter-American highway, it will provide uninterrupted overland communication to the Panama Canal. It would have great strategic significance in the event of a blockade of the Canal; in the face of the submarine menace it will serve a very useful function in providing freight transportation facilities from Central America to the United States.

Work on the permanent Inter-American highway is being speeded up in all five Central American Republics as the result of a $20,000,000 loan approved January 16 out of a special fund set up by the United States Congress. Of this amount Costa Rica was to receive $8,000,000 towards the completion of 250 miles, which, at the beginning of the year, were still impassable. An additional $4,000,000 was to be taken from the Costa Rican treasury for this purpose. The extension of the Pan American Highway in 1957 was expected to bring not only development of the interior but expansion commercially toward the north and south.

United Fruit Company: The torpedoing of a United Fruit Company steamer in the harbor of Puerto Limon in July 1942 causing the death of a number of Costa Rican workmen, led to violent anti-Axis demonstrations in Costa Rica, which resulted in the wrecking of some eighty Axis-owned business establishments. In November, Costa Rican coastal defenses "repulsed" a German submarine, which was foraging for food and supplies only about 200 miles from the Panama Canal.

By an agreement announced June 16,1942 with the Rubber Reserves Corporation, similar to pacts concluded with Brazil, Peru, and Nicaragua, the United States will purchase all exportable rubber produced in Costa Rica in the next five years. Costa Rica, like Brazil, has also been stocked with seeds from the Firestone rubber plantations in Liberia. A contract for the planting of hemp by the United Fruit Company on abandoned banana lands was the subject of a special session of the Costa Rican Congress in February. The loss of the Philippines supply of Manila hemp would make this abaca development significant to the United States.

On August 9, 1942 final Congressional approval was accorded to the $2,000,000 loan from the Export-Import Bank, which will be used to consolidate the floating debt as well as to finance public works. Economic growth in the 20th century produced new middle classes that began to challenge the continued rule of traditional elites. Beginning in Costa Rica, reformist and revolutionary parties had emerged in every country by the middle of the century.

20^th Century Modernization: The second half of the 20th century has seen persistent poverty, political instability and social injustice in many of the Central American republics still undergoing modernization. In Nicaragua, the Sandinista guerrilla movement overthrew the Somoza dynasty in 1978 and 1979. The United States then became involved in a major effort to support the counter-revolutionary (contra) forces against the leftist Sandinista government, leading to many deaths and great suffering on both sides.

El Salvador’s people and economy were ravaged by civil war through the 1980s. Guatemala witnessed 36 years of fighting between alleged left-wing groups and a repressive military. Thousands of people were killed and hundreds of thousands migrated to escape this conflict, which ended with the signing of a peace agreement in December 1996. Political repression and corruption in Panama prompted the United States to intervene in 1989 to remove Panamanian leader Manuel Noriega, who was allegedly connected to Colombian drug cartels.

One of the most significant problems confronting all Central American countries is the difficulty of bringing about significant socioeconomic development without affecting the democratic rights of their populations. Given its geo-strategic significance (especially because of the Panama Canal and U.S. military bases, which reverted to Panamanian control in 1999) Central America is inevitably a key zone for U.S. foreign policy. In the past, political stability has often been allowed to outweigh democratic and human rights. With the formation of new hemisphere-wide trading blocks, Central America may find itself once again left behind in the competitive Latin American struggle to achieve true development.

In 1969, good news came in February when the permanent executive committee of the Pan American Highway Congress unanimously recommended a shorter route to complete the last link of the Inter-American Highway from Fairbanks, Alaska, to the southern tip of South America. The unfinished part is in the Darien Gap. A previously planned route would have had to penetrate mountains and rain forest, but surveys showed that if the route were to cross the Atrato swamp and river it would be 205 miles shorter. The swamp had been thought to be bottomless; however, new engineering studies showed that what once was the ocean floor is only 7 to 10 yards below the surface of the swamp.

Mexico: In 1938, Mexico was hoping to complete in 1938 a highway from Mexico City to Nogales, Arizona, via Guadalajara, a distance of 1,533 miles. The extension of the Pan American highway from Mexico City to Suchiate, Guatemala, a distance of about 900 miles, was also worked on.

Nicaragua: Less than 13 percent of Nicaragua’s roads are paved. The paved roadways include part of the Pan-American Highway, which runs the length of the country from Honduras to Costa Rica. The road system, like much of the nation’s infrastructure, deteriorated during the conflicts and economic difficulties of the 1980s and 1990s. Most of Nicaragua’s railroad tracks are not in operation.

Colombia: In 1970, Colombia continued to receive substantial foreign assistance in its development efforts. Among the major grants of aid were two loans amounting to $70.8 million approved by the World Bank. These funds are to help in the construction of a new power plant and in the improvement of the water and sewer system of the city of Cali. The World Bank also announced a $32 million loan for highway construction. This loan complements a $16.1 million Inter-American Development Bank (IADB) loan for highway improvements between Bogotá and Medellín, and a $15.2 million IADB loan for construction on the Pan American Highway. On March 12 the IADB approved a $1 million grant for assistance to 700 low-income farmers.

Ecuador (1943): The United States Export-Import Bank lent Ecuador $780,000, which it was understood would be later enlarged to $5,710,000 to complete the Pan American Highway in that country. This road had already been opened from Caracas, Venezuela, through Colombia via Bogotá, and from the Colombian border to Quito, Ecuadorian capital. The new financing will take the road to the Peruvian border, where it will connect with the already completed Peruvian section. In 1941, The Export-Import Bank credit of $1,150,000, designed, in part, to promote completion of the Pan American highway, will contribute to the fulfillment of this need.

Honduras: The government, backed by the Chamber of Commerce, announced a new construction program, including the paving of the Honduran section of the Pan American highway, roads to semi-isolated sections of the republic, and the building of a hydroelectric dam across the Lindo River. This was developing greater co-operation between people and government. President Gálvez supported the Pan-American Highway project by visiting construction sites to inspect work on highways, also traveling to Marcala, where the Pan-American Highway was being constructed.

Plantation owners were enthusiastic supporters of President Gálvez because of the new highways, which aided in developing their export trade. New sections of the Western Highway united Tegucigalpa and San Pedro Sula with the rich sections of the Western region. Early in 1957 Honduras joined the other Central American states in signing a multilateral commercial treaty whose aim was to extend the practice of free trade among and between the Central American nations. The Central American Economic Union offered a common market to each of the producing nations, while the rapidly developing Pan American Highway promised a finished north/south communication line which would put Honduras — the most central of the Central American States — in a favored position for commerce with the other countries.

El Salvador: In 1941, El Salvador is in the market for a $1,250,000 Export-Import Bank loan to complete the Salvadorian section of the Pan American highway. At present the Republic has had no Export-Import Bank credits. Northwest from the capital, the Pan American Highway coils among volcanoes rising to more than 6,000 feet, upon whose slopes dark foliage marches with drill-team precision.

Guatemala: In 1954, the United States promised Guatemala $6,450,000 in economic aid, to be allocated as follows: Pacific Highway, $3,400,000; Pan American Highway, $1,250,000; technical assistance, $1,300,000; Roosevelt Hospital, $500,000. The funds sent for the Pacific Highway in December were expected to relieve growing unemployment. Guatemala's section of the Pan American highway from the Mexican border to El Salvador is completed.

In 1948 the government allotted $3 million for its first large-scale paving project. A 190-km. highway between Palín and San José, and between Taxisco-Escuintla and Escuintla-Popoy will be surfaced. A United States firm was the successful bidder. A contract was also signed with a United States firm to initiate the first large-scale mining venture in the republic's history. Principal minerals are lead and zinc.

The incorporation of the Standard Fruit Company of Guatemala with $500,000 capital to engage in banana planting, cattle raising, and mining was approved in 1948. The sum of $3,251,000 was spent to build the Roosevelt Hospital in Guatemala City. In 1958, President Ydígoras allocated most of the government's budget to the public works program in the hope of completing the Pan American Highway, which had been hit by slides in the area of El Tapón Canyon. The government expected that the newly opened highway would give impetus to the ever-increasing tourist trade in Guatemala and the other Central American states. Construction and extension of the Pan-American Highway, from north to south, continued to push across unbelievable natural obstacles.

A major United States bank established a branch in Guatemala City. In 1957 the share of the United States in helping bring about both the stability and the prosperity of Guatemala amounted to $68,000,000. Official statements as well as negotiations tended to indicate that Guatemala would continue to seek the aid and friendship of the United States, as Acting President Gonzalez Lopez made clear in his first news conference late in July.

Chile: Chile has a network of about 79,814 km (about 49,594 mi) of roads, of which 19 percent are paved. In the mid-1990s Chile was seeking private investors to improve a 1,600-km (1,000-mile) section of the Pan-American Highway, and then to operate the section as a toll road. Railroad lines total 4,814 km (2,991 mi) in length and are confined to the northern two-thirds of the country. The main north-south system is connected by spur lines to important coastal towns and by trans-Andean lines to points in Argentina and Bolivia. Because of the difficult terrain, many coastal cities rely on water transportation. In 1946, the construction of the section of the Pan-American Highway from Santiago to Serena and plans for a new tunnel through the Andes were pushed.

Paraguay: In 1999 Paraguay had 29,500 km (18,330 mi) of roads. Paraguay is served by a section of the Pan-American Highway, and the Trans-Chaco Highway links Asunción with Bolivia. Highways completed during the 1980s improved travel between Paraguay and neighboring Argentina and Brazil. Paraguay has about 440 km (about 275 mi) of operated railroad track.

Peru: Peru’s system of railroads, highways, and airports was expanded considerably in the second half of the 20th century. The country’s mountains make surface transport difficult, however. In 2003 Peru had about 78,672 km (about 48,885 mi) of roads, of which 13 percent were paved. The main artery is a section of the Pan-American Highway, which traverses Peru from Ecuador to Chile, covering a distance of about 2,495 km (about 1,550 mi).

In 1945, The Santa Corporation was engaged in building a road, which will connect the Pan American Highway with San Juan Bay, passing by the Marcona iron ore deposits. In 1955, the comprehensive road-building program, including the Pan American Highway from the northern to the southern borders and the miracle road from Lima over the Andes to the Amazon Valley section, has compelled the government to organize a well-equipped maintenance service.

The World Bank, on August 5, 1955, announced a loan to Peru of $5,000,000 for this purpose, with interest at 4¼ per cent per annum. This brings to a total of $36,000,000 the Bank's loans to the Lima government. For fiscal 1957 only 108 miles of the Pan American highway were improved; only 690 miles of new roads constructed. A special 5-year plan (1958-1962) of badly needed roadwork has been launched, calling for 2,042 miles of new roads and 2,103 miles of improvement at a cost of $78,700,000.

Central America Common Market: In 1970, The Central American Common Market, which has been the outstanding example of Latin American regional development and cooperation since its inception in 1960, ran into difficulties because of the outbreak of armed conflict between El Salvador and Honduras in July 1969. Trade relations still have not been restored between the combatants, and Honduras has continued to blockade Salvadoran goods on the Pan American highway, the only overland route from El Salvador to Costa Rica and Nicaragua.

Impediments to Completion: Darien Gap, Panama. Here, where Central and South America come together, lies a rain forest containing one of the richest ecological regions on Earth. It is also an obstacle to the completion of the Pan-American Highway, more than 16,000 miles of continuous road from Alaska to the tip of South America. The route from Yaviza (Panama) to Colombia is surveyed but not constructed. The only missing link is a 54-mile stretch through two national parks -- one in Panama, the other in Colombia -- that contain the Darien Gap's more than 3 million acres of unspoiled wilderness.

The region is a "mother lode of biodiversity ... (and) ... one of the most important tracts of forest remaining in the Americas," says Hernan Arauz of Ancon, a private, non-profit organization dedicated to the conservation of Panama's natural resources.

Panama-Colombia Commitment: There is now a tentative commitment between Colombia and Panama to finish the Pan-American Highway. The public works Ministries of both countries have also asked the US Federal Highway Administration for the funds (est. $80-200 million) agreed to in The May 1971 agreement. The point of contention is not if the highway should be completed, but if the plan for doing so should be reworked to avoid damaging the Darien Gap Rainforest. While many agree that something should be done to protect the region, few highway proponents want to commit the time, resources, and effort necessary to completely revise the plan. Instead they offer

mitigating options such as Gomez guard suggestion. Opponents insist that any plan, which goes through Darien Gap, will inevitably result in the parks destruction, and is therefore unacceptable.

Road Completion Debated: Supporters of the highway cite both symbolic and economic reasons for completing it. It's outrageous, they say, that at the dawn of the 21st century the Americas are still not united because of a few miles of missing road.

The Pan-American Highway cuts a wide swath through the Americas, but it's an argument ANCON opposes. We don't need this road," says Juan Carlos Navarro, another member of the group. We don't want it, and we will never have it."

Completing the Pan-American Highway here, say conservationists, would attract thousands of poor immigrants looking for land and guarantee annihilation of the remaining forest. Leaders of indigenous Indian tribes in the gap fear the influx of immigrants would destroy them economically and culturally. Conservationists also point to the nearest stretch of the highway, already completed as far as Yaviza, Panama. The area, heavily forested only 20 years ago, is now mostly stripped of timber for miles on both sides of the highway. Many local farmers seem unconcerned by the controversy, saying they just want the existing road improved so they can use it in the rainy season to get their produce to market.

Panama's Government in No Rush: Latin American diplomats have called for completing the highway, but Panama's government, concerned about political and drug-related violence moving north from Colombia, seem to have given the project a low priority. The road threatens the native people of the Darien Gap. In fact, having the Darien Gap as a buffer zone on the Colombian border comforts many Panamanians. Other factors working in favor of highway opponents:

Having the Darien Gap as a buffer zone on the Colombian border comforts many Panamanians. There's no money for building the road anytime soon, and the United States is no longer interested in financing it.

Good Travel Alternatives, Especially Coastal Shipping: Carlos Navarro says: "The people who still talk about a highway between Panama and Colombia were passed by history ... they're dinosaurs." So the Pan-American Highway may remain incomplete for some time to come.

Grabbing Occidental, an American Company: On May 15th, the weak caretaker government of Alfredo Palacio said that it was taking over the oilfields in the Amazon jungle run by Occidental Petroleum, an American company. Occidental was producing around 100,000 barrels per day of oil, around a fifth of Ecuador's total output. It has invested $1 billion in the country since 1999. The government accused it of breaching its contract by failing to register its sale of a stake in another field -- a claim the company rejects. This came on top of a dispute about tax. Occidental said its assets have been expropriated; it has filed for international arbitration.

Ecuador's Congress passed a law raising taxes on oil companies to 50% when prices go above the levels stipulated in contracts. That looked moderate compared with recent actions by Bolivia and Venezuela. Now, the future of private investment in Ecuador's oil industry looks in doubt. Petroecuador, the state company, will take over Occidental's fields. But it is poorly run; its output is declining. Foreign state-owned firms may be invited in.

That may be a decision for the next president, to be elected later this year. Most of the leading candidates for the presidency support the government's action. Most also say they oppose a free-trade agreement with the United States. They may have been relieved when the United States' immediate response to the Occidental takeover was to cancel long-running trade talks. That leaves many of Ecuador's businessmen fuming. Peru and Colombia have both concluded such talks. If trade agreements with those countries are ratified, Ecuador will lose out. But long before then, Mr. Palacio will have disappeared from the scene. See note "X”.

The USA government should pay more attention to South America. Ecuador decided to expropriate the oil fields managed by the Occidental company after a one billion dollar investment. It is getting to the point that no corporation will go to South America to do oil exploration to have those kind of consequences. Ecuador is following Chavez, Evo Morales and now Palacio of Ecuador, although he is up for re-election.

Summary: In 1923, the 5th conference of the Pan American States passed a resolution calling for the formation of the Pan American Highway Congress. The Road was to be modeled after the system utilized in the US. Costa Rican coffee farmers supported the system, eager to profit from the prosperous markets the road would open. The mountains of Central America present a major obstacle to overland transport, and the only surface transportation artery linking all the countries of the region is a section of the Pan-American Highway.

Railroads connect the Caribbean and Pacific coasts in Guatemala, Costa Rica, and Panama. Inland water transportation is of little economic importance, but Central America has several important seaports such as Puerto Santo Tomas de Castilla and Puerto San José in Guatemala; Puerto Cortes in Honduras; Acajutla in El Salvador; Corinto in Nicaragua; Puerto Limon in Costa Rica; and Bahía las Minas in Panama. The highway is still not yet completed (and maybe never will be). The highway travels 26,000 km between Alaska and the Tierra del Fuego, Argentina.

The only gap in the highway is found in Panama. The Darien Gap Rainforest is one of the world's most biologically diverse regions. The Embera, Wounaan, and Kuna peoples own much of the land. Over 30,000 indigenous people live in the area. The Kuna depend on the forest for medicine and their livelihood. The area has been declared a biological and cultural World Heritage Site. There is a correlation between road construction and destruction of forests. Panama and Colombia have both lost about half of their original forest cover. This has been an important economic issue for Latin America. The North American Free Trade Agreement has ignited urgency among business and government leaders.

In 1997, leaders from six countries, including Costa Rica, signed a letter of agreement to begin to repair and modernize the highway. The political changes, liberalization, and economic opportunities were cited as reasons to modernize the highway. Panama opposes the completion of the road, for fear of drug trafficking along the road.

The Panama Canal is a major shipping link between the Atlantic and Pacific oceans; Panama took over its operation from the United States in 1999. A crude-petroleum pipeline across western Panama was completed in 1982. Airlines provide transportation among the big cities of Central America and serve some remote mountain communities.

Significant Findings: The Spanish conquerors killed many Native Americans, but the majority died from devastating epidemics of smallpox, plague, dysentery, and influenza, introduced by the Europeans.

The United States has cooperated with Latin American countries in planning and building the international highway system so that now only a 160 km (about 100 mi) stretch between Panama and Columbia remains unfinished.

In the early 1980's a land link was attempted, but construction is currently suspended. Nicaragua's section of the highway is in poor repair, but it is in the process of being improved.

Brazil is today South America's leading economic power and a regional leader. Highly unequal income distribution remains a pressing problem.

Paraguay has been involved in boundary and tariff disputes with its more powerful neighbors, Argentina and Brazil, for years.

Venezuela is the main threat where the national government images the government of Fidel Castro. President Chavez is a socialist and wants to be a maverick. The recent drop in oil production from 3 million barrels/day to 2.6 million barrels/day beats all analyst predictions in restoring production. The oil companies are still recoiling from the upheaval and restructuring at a cost of 18,000 jobs. Still Venezuela supplies about 15% to the USA oil imports.

There are some Muslims moving into Venezuela on an Island north of the Venezuela Coast. On the border of Brazil and Paraguay there are some Muslims who are anti-Western.

The motives of the country of Suriname, whose population is about 20% Muslim, should be kept under a watchful eye.

When the construction of the Itaipu Dam (the biggest in this Hemisphere-1982) was completed, Paraguay was able to offset its current account and trade deficit with international loans.

The Petroandina initiative offers Andean Community (AnCom) countries the same preferential payment plans that Venezuela and co-sponsor Cuba offered late last month to Caribbean Community countries in their Petrocaribe regional initiative: "It would allow buyers to finance up to 50 percent of the oil they buy for up to 15 years at 2 percent annual interest."

Chavez, however, criticized the organization at the AnCom summit for its lack of progress toward economic integration and improved social well being in the region. He attributes social exclusion, inequality, poverty and political instability to the "neo-liberal" market values the organization advocates. Chavez will seek to change this by promoting his Bolivarian agenda, which includes the creation of an emergency social fund to use the poor as an accessory -- the aid poverty program for the region.

Venezuelan President Hugo Chavez announced the planned expansion of his Bolivarian military reserve force from its current level of 80,000 members to nearly 2.3 million armed volunteers.

President Hugo Chavez, hosted a quiet visit by a delegation from North Korea the week of March 27 to April 2. As Chavez weighs the costs of arming and equipping his military reserves, he could be thinking about buying fewer Migs in favor of adding a North Korean missile deterrent to Venezuela's national armed forces.

In a written statement, U.S. President George W. Bush cited decisions by Caracas to end cooperation with U.S. drug enforcement agencies and to fire many of Venezuela's qualified law enforcement officers.

Khatami's visit to Venezuela represents part of Chavez's accelerating efforts to build a global network of strategic alliances aimed at strengthening Venezuela economically and politically for what the Chavez government perceives as a long-term political confrontation with the United States. Chavez is seeking alliances not only with Iran and those countries on his recent tour, but also with China and Russia.

Chavez also hopes to insulate Venezuela from international sanctions promoted by the United States through such venues as the United Nations and the Organization of American States.

Fidel Castro dispatched 718 Cuban doctors and donated medical equipment in response to an accord between the Governments of Bolivia and Cuba endorsed by Hugo Chavez. The program images the one in effect in Caracas reaching the poor in rural areas.

The one sticking point on the Pan-American is along the border between Colombia and Panama, where the Darien Gap, a lush rain forest with one of the highest degrees of bio-diversity in the entire world, forms a natural, virtually impassable border. The only option to motorists is to somehow get to the Caribbean Sea port town of Puerto Obaldía (best done by boat) check in with the police, then boat-hop to Turbo, San Juan or Cartagena, where you can hit the road again.

The 1550-mile stretch of the Inter-American Highway, from the southern border of Mexico to the Panama Canal, of which the United States would finance about two thirds of the construction, with a maximum governmental expenditure of $20,000,000 over a period of five years.

The U.S. owned and operated both the Panama Canal and the Panama Railroad, but with the looming war in Europe, the U.S. felt it necessary to establish a more direct connection with Panama.

The construction of the actual Inter-American Highway was instigated by the United States as a safety precaution at the beginning of World War II.

Many pieces of what is now the Inter-American Highway were constructed independently by individual countries prior to 1940. However, these roads only existed between large cities and were not in very good condition. Unlike in the United States, transportation in Central America had progressed rapidly from “ox-cart” paths to air transport creating numerous ‘gaps’ in the ground transportation network.

The construction on the IAH was hastened as the threat of the German U-boats in the Atlantic and Caribbean increased. As part of the U.S. war effort, the U.S. Army Corps of Engineers began the construction of a ‘Military Road” in conjunction with the IAH.

After the German submarine threat subsided (due to the presence of the U.S. Navy) the Army Corps ceased construction on the Military Road project, suddenly leaving many people unemployed and upset.

The only section of the IAH that was constructed without any form of U.S. aid was the 1,600 mile Mexican strip between Nuevo Laredo and the Guatemalan border.

For military reasons work on the unfinished sections of the highway from Alaska to Argentina is being rushed for completion before the end of 1943.

In July 1942, the United States Government came to an agreement with the governments of the Central American states for the completion of a "pioneer road" at the earliest possible date.

Since 1934, at a cost of about $250 million, the Inter-American Highway connecting South America with Alaska has been under construction.

The United States has matched on a 2-to-1 basis the cost of the highway to each country except Mexico. Mexico accepted no outside help. Although the route is open from Panama City to Laredo, Texas, the construction of numerous bridges and retaining walls, additional grading, and all weather paving of unpaved sections remain to be done.

Between Colombia and Panama, the Pan-American Highway in South America has not been connected with the Inter-American Highway in Central America. The projected route passes through 500 miles of nearly inaccessible jungle, the Darien Gap. Financing, estimated at $150 million, does not seem likely without heavy U.S. contribution.

Mexico's chief contribution as a belligerent is economic since it supplies the United States with much-needed raw materials, principally graphite, antimony, mercury and other metals, and fibers.

Costa Rica, the first Latin American nation to declare war on all the Axis powers, was extensive during 1942.

The unfinished part is in the Darien Gap. A previously planned route would have had to penetrate mountains and rain forest, but surveys showed that if the route were to cross the Atrato swamp and river it would be 205 miles shorter. The swamp had been thought to be bottomless; however, new engineering studies showed that what once was the ocean floor is only 7 to 10 yards below the surface of the swamp.

Less than 13 percent of Nicaragua’s roads are paved. The paved roadways include part of the Pan-American Highway, which runs the length of the country from Honduras to Costa Rica. Most of Nicaragua’s railroad tracks are not in operation.

In 1970, Colombia continued to receive substantial foreign assistance in its development efforts. Among the major grants of aid were two loans amounting to $70.8 million approved by the World Bank.

Northwest from the capital of El Salvador, the Pan American Highway coils among volcanoes rising to more than 6,000 feet, upon whose slopes dark foliage marches with drill-team precision.

Guatemala's section of the Pan American highway from the Mexican border to El Salvador is complete.

The main north-south system is connected by spur lines to important coastal towns and by trans-Andean lines to points in Argentina and Bolivia. Because of the difficult terrain, many coastal cities rely on water transportation.

In 1955, the comprehensive road-building program, including the Pan American Highway from the northern to the southern borders and the miracle road from Lima over the Andes to the Amazon Valley section, has compelled the government to organize a well-equipped maintenance service. The World Bank, on August 5, 1955, announced a loan to Peru of $5,000,000 for this purpose, with interest at 4¼ per cent per annum.

The only missing link is a 54-mile stretch through two national parks -- one in Panama, the other in Colombia -- that contain the Darien Gap's more than 3 million acres of unspoiled wilderness.

There is now a tentative commitment between Colombia and Panama to finish the Pan-American Highway. The public works Ministries of both countries have also asked the US Federal Highway Administration for the funds (est. $80-200 million) agreed to in The May 1971 agreement. The point of contention is not if the highway should be completed, but if the plan for doing so should be reworked to avoid damaging the Darien Gap Rainforest.

The highway cites both symbolic and economic reasons for completing it. It is outrageous, they say, that at the dawn of the 21st century the Americas are still not united because of a few miles of missing road.

Latin American diplomats have called for completing the highway, but Panama's government, concerned about political and drug-related violence moving north from Colombia, seems to have given the project a low priority.

The road threatens the native people of the Darien Gap. In fact, having the Darien Gap as a buffer zone on the Colombian border comforts many Panamanians.

Bibliography

Notes:

1: Stratford Report: Venezuela: Arms Deals, Big and Small, Apr 05, 2005

2: Stratford Report: Chavez's Agenda Gets a Regional Push, Jul 21, 2005

3: Stratford Report: Venezuela: Tying the Knot with Iran, Mar 11, 2005

4: El Nuevo Dia Orlando, 25 April 2006, Bolivians Esperan Cuban Doctors (Bolivians are waiting for the arrival of Cuban Doctors)

5: Stratford Report Venezuela: The Battle Over Foreign Exchange Reserves, January 28, 2004

6: Reference: Economist Magazine, Mission Impossible, Feb 16, 2006

Sandra W. Meditz and Dennis M. Hanratty (eds.), Panama: A Country Study, 4th ed. (1989), comments on all aspects of the country.

Tom Barry et al., Inside Panama (1995).

Physical geography is covered by Robert A. Terry, A Geological Reconnaissance of Panama (1956). Institute Geographic National “Tommy Guardia,” Atlas national de la Republic de Panama, 3rd ed. (1988) graphically presents information on the geography, resources, economy, social conditions, and administrative and political divisions.

Brief overviews and thorough statistics are provided in Direction de Statistical y Census, Panama en cifras: años 1993–1997 (1998), a publication of the Panamanian government.

Stanley Heckadon-Moreno, Naturalists del Isthmus de Panama (1998), traces the development of scientific studies of Panama's wildlife and vegetation.

William C. Merrill et al., Panama's Economic Development (1975) presents the role of agriculture in the country's economy.

Burton L. Gordon, A Panama Forest and Shore: Natural History and the Amerindian Culture in Boca’s del Toro (1982), is a useful examination of the Boca’s del Toro area.

Christopher Ward, Imperial Panama (1993), chronicles Panama's history until 1800.

David McCullough, The Path Between the Seas (1977), is the classic study of the building of the Panama Canal.

John Major, Prize Possession (1993) covers U.S. administration of the Canal Zone and U.S. relations with Panama. The fall 1993 issue of the Journal of Inter-American Studies and World Affairs examines the future of the canal and related issues.

Mark Falcoff, Panama's Canal (1998) covers contemporary politics and relations with the United States.

Margaret E. Scranton, The Noriega Years (1991) is the most reliable account of that period.

Thomas L. Pearcy, We Answer Only to God (1998) reflects on Panama's military and political history.

Grabbing Occidental, May 18th 2006, Quito, Ecuador, The Economist, print edition.

http://www.economist.com/world/la/displaystory.cfm?story_id=E1_GJVQDTP

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