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Latin America: Living Without a U.S. Presence

December 27, 1987|Tad Szulc | Tad Szulc is a veteran foreign correspondent based in Washington.

WASHINGTON — Because Nicaragua has become a U.S. obsession, the Administration and Congress contribute--by omission and commission--to an alarming deterioration of long-term relations with the rest of Latin America, resulting in a growing isolation of the "colossus of the north" in the hemisphere. Last month, presidents of eight nations--including Brazil, Argentina and Mexico--gathered in Acapulco to discuss inter-American problems without U.S. presence.

While the Administration ignores the perils implicit in the latest wave of Latin American crises, Congress is guilty of thoughtless policies that unnecessarily damage fragile economies.

U.S. policy-makers seem unable to concentrate on the proved proposition that economic distress is the worst enemy of democracy. At year's end, as Congress and the Administration fought over Contra-aid amendments in the $600-billion spending bill, there was a larger picture--depressing and dangerous--of Latin American reality:

Mexico, the nearest neighbor, wound up 1987 in economic and financial chaos. President Miguel de la Madrid has been unable to devise workable plans for coping with payments on the $105-billion external debt. Late in November the peso plunged 40% (the value of Mexican currency had by then declined 86% for the year). In mid-December the government officially devalued it by 22%, supposedly to help exports. Under pressure from organized labor, however, De la Madrid granted a 38% wage increase to unionized workers, making matters even worse. Last week, inflation was running at a record 145% annual rate.

The new crisis wholly undermined confidence in the president during the final year of his term and also in the ruling Institutional Revolutionary Party (PRI), a bad omen for 1988 and beyond. Carlos Salinas de Gortari, the PRI's designated presidential successor, may be unable to control the economy and attendant tensions when he assumes office. Until recently Salinas has served as minister of planning and budget, thereby inheriting blame for the current breakdown. He is a somewhat lackluster figure; neither the Mexican elite nor the savagely impoverished masses are likely to cheer his leadership in harder times.

The latest drop in world oil prices makes matters worse for Mexico, a major exporter. Foreign banks are no longer willing to lend new funding, thereby paralyzing debt service.

This month several U.S. banks made provisions to write off part of the debt owed them in the Third World, mostly in Mexico--a dramatic move that could lead to further upheavals in the international financial community.

Brazil has its own financial woes. The country stopped interest payments last February on more than one-half of its $112-billion debt, yet the economy went out of control again in mid-December. Three finance ministers in a row have resigned; inflation has soared, politicians cannot agree on taxes, a new constitution is still in dispute and Brazil may have to reconsider the most recent repayment agreement with its creditors. Brazil is not alone: Argentina, Peru and other Latin American countries find themselves unable to service external debts.

All such debtor nations face internal structural crises with grave external consequences. Intense nationalism and loud "anti-Yankeeism" develop because the United States is the easy target when Washington is without constructive assistance and when leadership at home fails. Then what can the United States do?

The first step is a U.S. recognition that Mexico's debt problem is larger than a reshuffling of repayment terms; any solution must be part of a program addressing the broader Mexican economic and social drama. While Washington cannot tell the Mexicans to abolish the corrupt elements of the PRI organization and invent a new leadership, it can enter into a far-reaching joint analysis effort with the Mexican government and outside groups to determine how best the two countries can cooperate in solving Mexico's fundamental problems.

Nothing so ambitious has been attempted by the United States with another nation but such mutual involvement is more than neighborly, it is necessary. As each domestic crisis propels millions of Mexicans across the U.S. border, the Mexico situation is our legitimate business. Mexico-bashing, tried earlier in the Reagan Administration, is not the solution nor is preaching. What is required is a comprehensive plan--not simply U.S. aid--to put Mexico's natural and human resources to the best use. A joint venture from both sides of the border is the best mechanism to ameliorate the lot of impoverished Mexicans. There will be 80 million Mexicans by the year 2000; if nothing is done to help the poor among them soon, the pressures on the U.S. border may become intolerable--and very ugly in terms of policing.

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