REVIEW & OUTLOOK (Editorial): Beyond Argentina
Anyone who tires of thinking about the mammoth Latin American debt problem ought to keep in mind that, for better or worse, the United States government and United States banks are going to be held responsible for how this thing comes out. If Argentina, Brazil, Venezuela, or even Mexico descend toward political and economic anarchy, both the U.S. political interests and the banks' financial interests will be damaged -- in the long run probably severely so.</br></br>We make these remarks against a backdrop of Argentina speeding toward crisis on the wings of inflation estimated by some now at more than 104,000% and with debt talks resuming in New York tomorrow between Mexico and its bank creditors. There were reports Wednesday out of the Madrid International Monetary Conference that the World Bank, IMF and Japanese banks had agreed to put up $5.5 billion for Mexico. Presumably some of that could be used to reduce debt principal, in line with the Brady Plan. Debt spokesmen for Mexico and Citibank said the commitment could produce rapid progress.</br></br>We hope that's true. The U.S. banks no doubt have to pursue their interests in this matter as they see them, but we've worried for some time that the banks, the international institutions, and some parts of the U.S. government often can't see the forest for the trees in this issue. Whatever any particular set of numbers looks like for the Americans, the U.S. simply can't fail to produce a positive political outcome for the Latin continent. That is the responsibility of leadership that currently rests on the United States, and if the U.S. can't produce that leadership, the Latins and other countries as well will look for someone who can -- the Japanese, if we're lucky, or the Cubans or the drug lords or home-grown demagogues.</br></br>Which brings us specifically to the role, or non-role, of the U.S. administration in this process. Suffice it to say that Latin American policy under George Bush and in the late stages of the Reagan administration hardly has been crowned with success. What little policy the U.S. has is mostly made at Treasury, which is charged with responsibilities for keeping Latin debt problems under some semblance of control. It hardly can be said that Treasury has been succeeding.</br></br>Brazil may be forced to declare another debt-service moratorium soon, according to banking circles, and that will do nothing to improve the deteriorating political situation in that country. Venezuela is hard pressed. Mexico's Carlos Salinas de Gortari is under heavy political pressure to come up with a good deal with the banks. The ultimate solution to these countries' economic problems lies at home, but the U.S. should be exerting some leadership to bolster reformers working in the right directions.