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Hemisphere in Crisis

December 29, 1987

The bald statistics of a report from an agency of the United Nations reveal the enormous economic, political, social and in the end human personal distress that afflicts Latin America and its 416 million people.

"In 1987, the economic crisis that Latin America has been suffering since the beginning of the present decade was aggravated," according to the U.N. Economic Commission for Latin America and the Caribbean.

The commission stated the obvious: "The deterioration of internal social conditions increases the challenges faced by the processes of building democracy in the region."

Brazil, which has half the population of South America, is going through a shaky economic and political period. Argentina is faltering. Mexico is in economic turmoil. Colombia has not seen such violence for 40 years.

Over all hangs the enormous--$410 billion--foreign debt. Servicing it costs much more than Latin America receives. From 1982 through 1987, the U.N. commission said, the region shipped out $145 billion more than it took in. That means there is not enough capital for development; that means big government deficits, which mean inflation that is sweeping the region.

And this despite the fact that some countries have not met their repayment schedules.

A successful Brazilian businessman told us a story he heard from his grandfather: "If you lend money to a man and he says he will pay you back, you can believe him or not. But if you lend money to a man and he says he will not pay you back, believe him."

The nations of Latin America have told the big banks they will not pay them back. They will not, because they cannot. So, as everyone knows but not everyone acknowledges, ways have to be found to restructure the debt so that the nations of Latin America can begin to grow and prosper again. Doing that will require a major international effort, as the U.N. commission suggested. Doing that will mean that the banks will not get back all the money they lent, but, as the commission said, it is in the long-term interest of the banks, and indeed of the United States, for Latin America to be put on a payment schedule that permits, indeed encourages, economic growth.

The hemisphere is in crisis. It should be demanding the full and serious attention of the U.S. government, which is instead mesmerized by the Sandinista regime in Managua. Little Nicaragua is not the crisis. It is only a symptom of the crisis.

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