NATIONALIZATION: Carrying a Small Stick

Just as the U.S. has given up gunboat diplomacy in international politics, it is also setting aside the old big-stick approach in international economics. Until recently, when a foreign government nationalized U.S. companies, Washington retaliated by pressuring the World Bank, the International Monetary Fund and other agencies to withhold credits from the offending nation. This approach, known as the Connally Doctrine, after former Treasury Secretary John Connally, is being replaced by the ameliorative tactics of Secretary of State Henry Kissinger, who preaches negotiation instead of confrontation.

The shift became most visible after Peru's leftist military government on...

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