ABSTRACT
This chapter demonstrates how the Cold War dominated the Latin American policies of the Reagan administration at the same time when there were improving relations with China and the Soviet Union in the West Pacific Basin. With the advent of the Reagan administration, the emphasis of US policy towards El Salvador changed. Declining economic conditions following the Futbol War, the oligarchy's emphasis on commercial farming, and rising prices for oil and manufactured goods, coupled with falling agricultural prices had greatly reduced the average standard of living. The Government of Guatemala had become so vicious towards its own people that in 1981 the US Congress refused to sanction a decision by Reagan to rescind the Carter administration's prohibitions on military aid and arms sales to that regime. American-Japanese cooperation in Latin America continued when the Bush administration exhibited more keenness to promote Latin American economic growth, in 'A New Partnership for Trade, Investment and Growth'.
