
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, July 5, 1990                   TAG: 9007050195
SECTION: EDITORIAL                    PAGE: A-8   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

LATIN AMERICA, TOO, TRIES RADICAL REFORM

NOT ONLY Eastern Europeans are recognizing the merits of free-market solutions to economic woes. Much of Latin America also is experimenting now with radical reforms to revive stagnant economies.

That President Bush recognizes these efforts, and wants to help, are among the promising signals he offered in a call last week for more aid as part of a hemispheric free-trade zone.

Signals, of course, are not enough. But if U.S. and Latin leaders follow up rhetoric with a strong economic alliance and sustained market reforms, the plan outlined by the president could prove more important ultimately to American prospects than the revolution under way in Eastern Europe.

The increasing maturity of Latin America's political and economic leadership no doubt helped prompt President Bush's initiative.

A decade ago, many Latin nations might have responded to Bush's announcement by accusing him of trying to extend the Monroe Doctrine and U.S. hegemony over the hemisphere. A decade ago, most Latin countries had developed elaborate systems of protection against cheap foreign imports, particularly U.S. imports.

Today, a new generation of Latin leaders is committed to reforms based on free enterprise and market forces. And it sees the United States as a natural partner and ally.

In Mexico, Brazil, Argentina and elsewhere, governments are selling public companies to private investors, encouraging foreign investment in their economies and opening their nations to imports. At the same time, they are directing government efforts away from patronage and economic control and toward pressing needs in health and education.

The new Latin leadership, with good cause, fears being left behind as Europe moves toward full economic integration and Japan increases investment in other Asian nations. Fears of being left out have also grown as South Americans watch the United States move toward a free-trade zone with Canada and Mexico. Bush's plan, announced last week, offers needed assurance that he is interested in the entire Western Hemisphere.

Under the president's proposal, the Inter-American Development Bank would adopt lending practices that encourage market reforms. The United States would provide $100 million toward creation of a fund to provide up to $300 million a year in grants to encourage market reform. The free-trade zone would stretch "from the port of Anchorage to Tierra del Fuego."

Granted, the plan's specifics don't go nearly far enough. While a $300 million investment fund would be helpful, it is a small amount compared with Latin America's $200 billion debt to commercial banks. President Bush did not say where the money for the Inter-American Development Bank's would come from. If from existing resources, that would be only a reshuffling of funds.

Ultimately, free trade would benefit the United States as much as Latin America. By one estimate, Latins' efforts to increase exports to the United States while restricting imports to their own nations have cost more than a million U.S. jobs in the last decade.

But Latin American countries won't be able to marshal the free-market forces to sustain healthy economic growth - thereby expanding the markets for U.S. goods - unless they can somehow get out from under the huge debts now crushing them. The United States must provide more help with that than Bush administration policies so far have offered.

A free-trade zone in the Western Hemisphere is in itself no panacea. There is danger that the world might arrange itself into trade blocs, free internally but hostile and protectionist toward each other. Nevertheless, alongside that risk lies the hope that a global system of free trade will prove more obtainable if more nations enjoy the blessings of free foreign investment and fallen trade barriers.

All depends on follow-through, cooperation and commitment. Meanwhile, President Bush's call for increased aid and freer trade, as it coincides with remarkable political and economic upheaval in Latin America, couldn't have come at a better time. It is well not to ignore the South even as events in the East occupy our attention.

by CNB