On Drugs, Debt and Poverty

By JOHN MOODY AND STROBE TALBOTT and Andres Perez

Q. Mr. President, you're seen as a spokesman for the Third World. What should the relationship be between developing and industrialized countries?

A. First, the countries of Latin America must make concerted efforts among / themselves, then coordinate with other developing countries so as to enhance our bargaining power. There is a need for a new North-South summit that would deal with some issues involving the security of the whole world. I think we have to recognize that today's problems are global and that interdependence is both a problem and a solution. That's a central theme, and it's why a North- South conference is indispensable.

Today we can identify three problems that affect the North and the South equally: debt, drug trafficking and the environment. These are three fundamental problems about which we could have a broad and constructive dialogue.

Q. The Bush Administration has put forward the Brady Plan, whereby the U.S. Government urges private banks to provide some relief to debtor nations. Yet you've called it timid.

A. The problem is that it's not a plan -- it's an idea. What we call the Brady Plan is an extraordinary initiative. It recognizes that debt is a political problem -- one of the major issues of world security -- and not just a matter between U.S. banks and Latin American nations. The Brady Plan has as its basis the reduction of debt and the realization that the countries of Latin America cannot continue servicing their debt in the way the banks have obliged us to up to now. In the past five years, Latin America has paid back the total amount of its debt service, yet now it owes more than before. And what is the result? The economic growth of Latin America is now zero. Our countries have had to commit more than 50% of the value of our exports to debt service. That's intolerable. No country in the world can do this. If the U.S. was forced to accept these conditions to pay its debt, that would be really disastrous.

In order for the Brady Plan to be more than just an idea, in order for it to work, the decision of the banks ((to reduce debt)) must not be voluntary. The U.S. Government should modify certain banking regulations to facilitate the concessions that the debtor countries are asking for.

American public opinion must understand that we are not asking for a gift or for debt forgiveness. We want a system of economic relations that will give us guarantees so we can plan our economies and develop our countries.

Also, it's just good business. The inability of ((Latin American)) countries to pay their debt has created another problem that is even more damaging than the debt burden itself: an inability to import. Yet our countries are a market . that is indispensable to the growth of the industrialized nations. So resolving the problem of debt means opening markets to the industrialized countries.

In the 1970s Latin America imported from the U.S. significant amounts of goods. In the 1980s that flow dropped as much as 80% in some areas, such as automobiles and tractors. The decrease was a fundamental cause of the great fiscal deficit of the U.S. The recovery of Latin America's economy should have the same significance for the U.S. as Europe's recovery had during the Marshall Plan.

Q. What must the Latin American debtor nations themselves do as part of this process?

A. If we don't reform our economies, we would just fall back in the trap. Whatever accords we reach ((with the lenders and international bodies)) would have to be conditioned on adjustments that we make in our own economic systems. We've got to be able to ensure that the resources generated from debt reduction and new financing are used according to very specific investment norms and according to economic procedures in line with our realities.

Q. You are a lifelong socialist. Yet now you are relying on market mechanisms, privatization, letting prices and interest rates find their own levels. It looks like an economic philosophy closer to Ronald Reagan's and Margaret Thatcher's. What's socialist about it?

A. I know that the word socialism smells like the devil in the U.S., but it shouldn't be that way. The Communists expropriated the word socialism, so people now identify it with Marxism-Leninism.

What we're doing is not a contradiction of our ideology. Price controls were a consequence of the lack of markets, the lack of development and the existence of monopolies and oligopolies. These deficiencies required policies that should have been temporary but became permanent. Now we're correcting past errors. What is dramatic is that we're doing it all at once.

Q. The other two problems you stressed were drugs and the environment.

A. Drug trafficking has two facets: production and demand. If there were no demand, there would be no production. But production has many facets of its own, among them the poverty of our peasants in Bolivia, Peru and Colombia.

We have to find a substitute crop ((for coca)), and the economic and technical resources, as well as the political will, of the North must play a role. We must attack this crime without borders with a policy without borders. % Otherwise we will never be able to eliminate it.

As for the environment, Europe and the U.S. have caused great damage, but we ((in the Third World)) have also contributed. In Latin America we have the great Amazon region. The great depredator of the environment is misery and poverty. If we don't correct the problem in countries that still have great ecological resources, then humanity will see itself in the long term confronting a tragedy of survival.

Q. Venezuela has recently joined the Non-Aligned Movement. There's a view in Washington that the NAM is less relevant and coherent than in the past, that it has split up into regional and parochial groups. So you've joined a club just at the point when that club might be going out of business. How would you respond to that?

A. People in Washington should realize that the world is changing. Five years ago, who would have hoped for the extraordinary opening in East-West relations? I know that the Non-Aligned Movement, which represents some 120 nations, is often criticized, especially by industrialized countries, for its radical positions and for the way it acts in concert. But the fact remains that the Non-Aligned Movement has led to a new awareness among developing countries. The purpose is not conflict and confrontation, but dialogue.

It's true that recently there has been a lack of coherence in the developing world. That has been one of the most worrying factors of the 1980s. This has been a perverse decade, a profound crisis for all of our countries. Economic problems are more serious than they've ever been. The poverty of our countries consists not just of groups of people in misery, which is still the case in the developed countries. For us, poverty is taking on structural characteristics that really threaten the future of humanity. We are all feeling this, and it's driving us toward convergence. The Non-Aligned Movement is part of that convergence.

Q. What do you mean by convergence?

A. I mean a consensus among all the countries in the world on the essential problems from which the developing countries are suffering. In general, that the political struggle ((between North and South)) has been de-ideologized.

I wouldn't say that I put all my hope in the Non-Aligned Movement. Absolutely not. But it's an organization that could serve the right objectives, and it could increase our power of negotiation if we know how to use it. No doubt the problems of Latin America are different from those of Africa or Asia. But there is a common denominator, and it's our shared need to exert pressure on the developing world in a determined way.

Q. When you talk about common denominators and exerting pressure on the industrialized North, are you advocating a debtors' cartel?

A. No. Such a thing would be an act of suicide -- and of collective suicide. Theoretically, we might have the power to provoke a great worldwide financial crisis that would be a catastrophe for the industrialized countries. But we would also suffer. So this would be like the biblical story of Samson pulling the temple down on his head.

Q. Countries like Venezuela, when they got into economic trouble in the past, used to be able to say to the U.S. "Watch out or we may go Communist. Help us." Isn't that now changing?

A. The ghost of Communism has done much damage to relations between the U.S. and Latin America. Under the pretext of defending the region from Communism, the U.S. supported military dictatorships. This was a terrible error. Now we don't need to look for ghosts. We have realities. If the problems that our countries face are not resolved, the social explosions would be of a magnitude previously unimagined. I'm not just imagining this. The world today is much more complex. Before the days of mass media, radio and television, the poor were more resigned to their fate. Without television, they didn't have any possibility for comparison. That's why today's poverty is more dangerous and could provoke terrible social upheavals -- a Latin America in effervescent rebellion. We are facing certain danger. If we don't deal with this catastrophe, military dictatorships could come back.

Q. What is the ghost we have to be frightened of today?

A. The immense gap that is opening up because poverty is now intolerable. And the poor man now knows how poor he is. He has his transistor radio. That's not a ghost but reality.

Q. Did the price riots that flared up last February here in Caracas and left 300 dead provide a glimmer of that danger?

A. I think so. That tremendous social explosion came about because of the dammed-up frustration of the past eight years, the decline in living standards. Now, this year, in Venezuela we're going to have a dramatic drop, almost 10%, in our gross national product as a result of our adjustment measures. If we don't straighten out this situation, if we don't have the resources to confront this violent decline, the social situation will reach intolerable extremes. And it's not just us; all the countries of Latin America are suffering.