"There Is Still Great Risk"

Before accepting an honorary doctor of laws degree from New York University last week, Argentine President Raul Alfonsin breakfasted in New York City with TIME editors and correspondents. Excerpts from the interview:

On the Argentine economy: As you well know, we are facing a very difficult ( situation, with an external debt in the neighborhood of $48 billion; 60% of our export earnings go to service that debt. The world price of grain has fallen by 20% to 25%, and because of that we have lost $850 million in potential income, despite a record harvest. Trade agreements discriminate against Latin America. We are having problems selling some of our products abroad. Yet to pay our debts we must have foreign currency, and to earn foreign currency we must export. An even greater problem for us is inflation. We inherited a budget in which the deficit constituted 16% of the gross national product. In the year that I have been in office, that has been reduced by one-half. I think that Argentines have got accustomed to an inflation cycle that is ten years old. And when people learn to defend themselves against inflation, that generates inflation. We have applied policies that we consider correct from our point of view, but the International Monetary Fund established a system of nominal guidelines that is practically impossible to comply with. Inflation is something you cannot stop in one month.

On democracy: We are convinced we have inaugurated an era of real democracy in Argentina. We don't think of it so much as a system of government as a philosophy of life. Of course, there are still those who are nostalgic for the old days. In the end, they will be defeated because people realize that social justice is found only in a democracy. But it is also necessary to understand that while we are encouraging this new wave of democracy sweeping through Latin America, there is still great risk, which is caused by the heavy foreign debt burdening many of these countries. They are underdeveloped; they are poor. Thus the debt is not just a financial but a political problem. To enjoy liberty, you must have a minimal level of subsistence.

On why the military left power: It was a political defeat and also a military defeat (in the war against Britain). The military was rejected by the people because of the repression it imposed.

On Central America: Our point of view is based on the principles of self- determination, non-intervention and support for the work of the Contadora group. We need a political solution in Central America. The issue is a complicated one for all the democratic countries of Latin America, even those farthest from the area, because it is one that polarizes societies. We cannot cast aside the security of the region for the security of the U.S. We must not have interference by any extracontinental power. We must avoid the idea that anyone can interfere in any given country. I think that is possible, and I would not dare say that President Reagan cannot find a solution.

On U.S. support for the contras: I think there are other formulas. I would continue a dialogue (with Nicaragua). Dialogue is the most important element.

On the Falkland Islands dispute: The problem? Mrs. Thatcher. We are ready to solve this question peacefully. We have asked for a dialogue with an open agenda, but the British government does not want to discuss sovereignty. I did not agree with the war Argentina waged over the Malvinas, but you can understand that people get tired. Anybody who has studied the subject will tell you that Argentina is right in the dispute. Now we are facing an additional problem, the fortification of the islands. That is a tremendous danger, not only for Argentina but for the whole area. Next month the British will complete construction of an airfield in the islands that will allow them to bring in all manner of war supplies, including nuclear weapons. It is necessary to stop this.