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A Small, Bold Step

August 01, 1986

In the context of Latin America's massive foreign debt--more than $300 billion, and counting--the $3-billion trade agreement signed last week by Argentina and Brazil looks small. But the pacts could set a precedent that will benefit the entire Western Hemisphere.

The trade protocols were signed during a state visit to Argentina by Brazilian President Jose Sarney. He gets on well with his Argentine counterpart, Raul Alfonsin--a relationship no doubt aided by the fact that both men are moderate civilian politicians leading their nations back to democracy after years of military dictatorship. The pacts aim to double the trade between South America's two biggest economies by 1990. They grant preferences in the purchase of industrial and agricultural goods from each country over goods from third countries, and commit the nations to integrating their energy, transportation and communication systems.

That is a small step toward a very big dream, expressed most recently at the Punta del Este summit conference of 1967 but dating back to the liberators who defeated the Spanish Empire in the early 19th Century: setting aside Latin American rivalries to give peace and prosperity to a region that has never achieved its full potential.

Latin American political leaders of all views have long agreed that a key to progress for the region is the exploitation of its many resources. But the process has been carried out in fits and starts, with short-term considerations like immediate profits or political rivalries taking precedence over broader vision. Thus Argentina used agriculture to become rich during World War II, but could not carry that prosperity into the modern era. And Brazil created the most impressive industrial network in the developing world while half its people remain poor and ill-nourished.

A major reason for this economic retardation is the fact that South American economies aimed to fill the needs and demands of North America and Europe--and now Japan--before trying to provide goods and services for their closest neighbors. If that attitude can be changed, the economic growth that results will lift up not just Brazil and Argentina but also smaller nations like Uruguay, Bolivia and Paraguay.

North Americans have a vested interest in this process, for economic prosperity in South America would provide the political stability that this nation wants there, and would create new markets for the goods and services that the United States has to sell. We should all wish Sarney and Alfonsin ggood luck in their bold economic experiment.

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