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Regional Outlook : After the 'Lost Decade,' a Strong Latin Spirit : Forecasts for prosperity and stability were surprisingly rosy at a Mexican summit.


Bolivian President Jaime Paz Zamora, whose country belongs to four different subregional alliances, envisions these accords as "streams flowing into one great river of integration."

The potential is great: Latin American nations trade just 4% of their gross national products with each other, according to the Inter-American Development Bank, compared to the 14% traded inside the European Community and the 17% across the Pacific Rim.

Although the Latin embrace of trade liberalization was under way by the end of the 1980s, the announcement of President Bush's Enterprise for the Americas initiative in June, 1990, gave it a sense of urgency and direction.

The initiative calls for free-trade pacts between the United States and Latin American countries that could transform the entire hemisphere, from Alaska to Argentina, into a common megamarket; the creation of a $1.5-billion fund to help move state-owned industries to private hands, and a reduction in the $12-billion debt that Latin nations owe the U.S. government.

For the Record
Los Angeles Times Tuesday August 13, 1991 Home Edition World Report Page 4 Column 4 World Report Desk 1 inches; 22 words Type of Material: Correction
Nobel--In an article on Latin America last Tuesday, World Report incorrectly referred to Mexican poet and novelist Carlos Fuentes as a Nobel Prize winner.

Not since President John F. Kennedy's Alliance for Progress 30 years ago has any U.S. initiative drawn more praise in Latin America. Fifteen nations have signed framework agreements to negotiate free-trade treaties with Washington.

"It is an ambitious business proposition," says Argentine President Carlos Saul Menem. "Latin America is considered this time as a new entity, as a valid player able to talk in terms of mutual interests."

At the same time, leaders of small countries like Ecuador, which is heavily dependent on mining, have criticized the United States for demanding too much privatization in return for benefits of the initiative. Articulating a solitary view among presidents but a lingering phobia among the region's nationalists, Castro branded the initiative a "siren song" that will end in disillusion.

"The policies of the great economic powers and the international financial institutions under their control have not produced development, but have brought poverty to more than 250 million people," Castro warns. "The world is heading in a still worse direction, toward political hegemony by a superpower that has often made excessive use of force."

A more common worry is that Mexico, with a long U.S. border and a head start in negotiating its own agreement with the United States and Canada, will grab most of the benefits of North American trade and distance itself from its Latin neighbors.

"We're always looking north and expecting everything from the north, and we forget that a more intense interchange among ourselves will help us definitively to solve many of our difficulties," says Ecuadorean President Rodrigo Borja.

In that spirit, Mexican President Carlos Salinas de Gortari convoked last month's summit and limited outside invitations to the leaders of Spain and Portugal, Latin America's former colonial rulers, as a way of diluting Washington's influence and reaffirming Mexico's solidarity with the region.

The summit quickly became a soapbox for dreamers. President Perez of Venezuela got up and proposed an elected Latin American parliament by 1995. Argentina's Menem asked why Latin America cannot have a single currency. Fujimori of Peru revived Arias' vision of a continent without armies.

None of these proposals was acted upon, but they'll no doubt be heard again, now that the region's presidents have agreed to meet every year. As the Argentine writer Soriano observed: "A step away from the 21st Century, the utopia of Bolivar . . . is intact in an unfinished America."

Latin America's Lost Decade

Charts show the year-by-year progression of the total gross domestic product, per-capita GDP and foreign debt of 23 Latin America countries (Argentina, Brazil, Chile, Guyana, Peru, Venezuela, Paraguay, Uruguay, Bolivia, Colombia, Ecuador, Barbados, Haiti, Jamaica, Trinidad and Tobago, Dominican Republic, Mexico, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama.)

Source: U.N. Economic Commission for Latin America

Trade Blocs

Regional alliances envisioned this decade and their populations:

* NORTH AMERICAN FREE TRADE ASSN: Canada, Mexico, United States. 360 million

* CENTRAL AMERICAN COMMON MARKET: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua. 28 million.

* ANDEAN COMMON MARKET: Bolivia, Colombia, Ecuador, Peru, Venezuela. 92 million.

* SOUTHERN CONE MARKET: Argentina, Brazil, Paraguay, Uruguay. 190 million.

SOURCE: U.N. Economic Commission for Latin America

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