Charting the Alliance

On the tip of a narrow Uruguayan peninsula separating the mouth of the River Plate from the Atlantic Ocean lies Punta del Este. a resort town that comes to life only in the South American summer. Last week the temperature hovered at 52DEG in the South American winter, but Punta del Este was hardly deserted. Platoons of security agents swarmed through the town, and squads of workmen were everywhere, repairing streets, painting walls, planting flowers.

Cause of the activity was a special meeting of the economic ministers of the Latin American nations, called by the U.S. to hammer into shape President Kennedy's Alliance for Progress, the most vital aid program in the history of the hemisphere. At the start of the conference this week, Treasury Secretary C. Douglas Dillon, leading the U.S. delegation, will propose a generous, but often stern, program. Even the minimums are staggering. To help raise the per capita income in each country by 2.5% a year, the U.S. intends to pour $1.3 billion a year into Latin America.

The sum is only a beginning. The U.S. program also calls for stabilizing world market prices of the commodities on which many Latin American economies depend. It encourages setting up common markets to spur exports and thus production. It demands effective social reforms such as land reform and graduated income taxes that would help to narrow the all-too-wide gap between the indifferent rich and the suffering poor.

The detailed U.S. proposal was sent to the 19 Latin American nations (all save the Dominican Republic) that are scheduled to participate in the alliance. That aid is needed, all are agreed. The question is how much. Many Latin Americans fear that even the generous U.S. commitment will not be enough to achieve its high goals, particularly the aim to raise the per capita income by 2.5% a year. Such a feat, they say, could only be accomplished by pouring in $3 billion--perhaps $6 billion --worth of U.S. aid each year.

The U.S. is fully aware that government aid money alone cannot provide what Latin America needs. The job requires massive private investment -- at least $1 billion a year. But U.S. businessmen are reducing, not increasing, their stakes, sent only $95 million in net direct capital south of the border last year (v. $1.1 billion in the peak year 1957). Even more disheartening is the record of Latin American investors themselves, who have withdrawn an estimated $11 billion from their needy continent since World War II.

As it prepared for Punta del Este, the U.S. was betting that once a dynamic aid program gets under way, the current crisis of confidence will end. It must, if the alliance is to succeed.

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