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Of Help and Hope

June 23, 1985

The battered economies of Latin America need a 1980s version of the Marshall Plan that saved the battered economies of postwar Europe.

So writes former Secretary of State Henry A. Kissinger elsewhere in these pages today. He makes a most persuasive case that the United States should draft such a plan and then press for help from other industrial countries in financing it. The very survival of democratic Latin American political institutions is at stake, Kissinger writes, but the response so far to their distress signals has been "ritualistic and evasive."

Kissinger's suggestion that the United States organize an effort to resolve the Latin American debt crisis is important, partly because he has some specific ideas about how to put such a plan together and partly because he reflects a growing realization in this country that Latin America's stability is vital to the Western world.

Kissinger likens his proposal to the American aid program designed by former Secretary of State George C. Marshall at the end of World War II. There are stark differences between Europe then and Latin America now, but the situations are starkly similar in one respect. European governments had massive debts at a time when their weakened economies could barely generate enough wealth to care for their own people, much less pay back the money that they owed. Wisely, the U.S. government did not insist that Europe tighten its belt and impose austerity on a war-weary population, because Marshall knew that it would be political suicide to do so. Instead, the United States provided much of the aid that Europe needed to rebuild. There was still hardship, but it was not destabilizing, because the Europeans knew that things could eventually improve.

Kissinger argues that a similar effort, shared with other industrial democracies, is now needed in Latin America. Many Latin American governments facing massive foreign debts are fragile democracies whose leaders have recently taken over from military dictatorships (Brazil, Argentina and Peru) or nations where festering social problems are outpacing a stable political system's ability to respond to them (Mexico, Colombia and Costa Rica). In every case the governments are trying to meet their obligations, but the cost of repayment is so great that they cannot provide for the immediate needs of their people, let alone save enough capital to stimulate future economic growth.

Many observers have warned that such a politically untenable situation cannot go on for long. Kissinger insists that the United States stop looking at the Latin debt crisis as an economic issue and realize that it is also a political problem. Many of the indebted Latin governments are fighting to survive, and if they get no help from nations that are better off they will collapse, creating a series of political crises that could destabilize the world's financial system and weaken the United States' ability to handle responsibilities in other parts of the world. Kissinger does not cite Central America as an example, but the continuing crisis there illustrates how destructive Latin America's problems can become, and how distracting they can be to the United States.

Latin American thinkers and political leaders have proposed ideas similar to this in the past. But, because Kissinger's proposal was drawn up by a respected foreign-policy analyst in this country, perhaps the Reagan Administration, Congress and other Western governments will give it more serious consideration.

Kissinger notes that money was not the only thing that the Marshall Plan provided for Europeans. It also gave them hope. And hope is an ingredient in desperately short supply in many Latin American nations today.

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