The purpose of this article is to analyze the evolution of economic relations between Latin America and the United States in the 1970s and to suggest the implications of this evolution. The central proposition is that a shift in relative strength took place during this period that created the potential for achieving a new balance of economic power. This shift also created tension in the old pattern of inter-American security links. The process of transforming potential power into real power had relevant implications for economic, political, and security interests.

In recent years, a violent social and political upheaval has been underway in Central America. A revolutionary regime has taken power in Nicaragua, and leftist guerrilla forces have begun to threaten the survival of the existing governments in El Salvador and Guatemala. Geographically surrounded by these three politically unstable countries, Honduras, in contrast, has remained remarkably free of serious internal revolutionary pressures. Although Honduras shares many of the problems of poverty, inequality, dependency, and authoritarian tradition that are associated with its neighbors, Honduran authorities have managed to maintain political order.

Between 1945 and 1947, Argentina posed a complex and exasperating problem for the United States as it endeavored to develop policy to guide its relations with Latin America. Among the questions involved were how to deal with an alleged neofascist dictator in Argentina, how to preserve the aura of the so-called Good Neighbor policy, whether to provide arms and economic aid to Latin America, and whether to enter into a collective security agreement for the western hemisphere.

During most of its history, the Brazilian Catholic Church has been closely allied with the dominant classes and the state. Conversely, the Church traditionally has had tenuous linkages with the popular classes, and its practices with these classes generally have been paternalistic and authoritarian. This situation began to change somewhat in the 1950s as the institution made new efforts to reach the popular sectors.