Dominican President Speaks at Meeting of 11 Latin Nations : ‘Political’ Solution to Debt Urged

With armed troops in the streets to guard against a wave of strikes, President Salvador Jorge Blanco of the Dominican Republic opened a Latin American debt conference Thursday with an appeal for aid from creditors to sustain democratic governments in the region.

The debt crisis, which has virtually halted economic growth in Latin America since 1982, constitutes an “extraordinary threat for the resurgence in our region of stable, freely elected democratic governments,” said Jorge.

The Dominican government has weathered a series of strikes since last month, when it adopted austerity measures including a doubling of gasoline prices and removal of food subsidies. There are indications that leftist opponents of the regime are preparing a general strike Monday. Scores of union leaders and Communist Party members have been arrested in recent days.

$360-Billion Foreign Debt

In this state of tension, foreign and finance ministers from 11 Latin American nations opened the third meeting that they have held since last May on the development of a new framework for discussing the region’s foreign debt of $360 billion.

The ministers want to involve not only the international bankers who lent the money but the United States and the governments of other major industrial countries.

“Those who see the foreign debt crisis simply as a problem between bankers, as a matter for balance sheets and exchange projections, suffer from intellectual blindness,” Jorge said. “What we need is a political solution.”

“This implies that the industrial countries should provide financial resources which the private banks cannot supply alone,” he said. “It also means that these countries should improve access to their markets for our exports, particularly of agricultural origin.”

The Dominican Republic depends on sugar exports for more than 75% of its foreign income and, with sugar selling at record low prices in recent months, the cost of petroleum imports has absorbed virtually all sugar export revenue.

The Dominican sugar industry has remained profitable only because of its quota in the U.S. sugar market, but U.S. sales represent only half of the island’s potential sugar production.

At their two-day meeting here, the ministers are expected to approve a formal proposal for a “political dialogue” on the region’s debt, trade and development problems with the major Western industrial countries.

Jorge said a long-term solution would require net transfers of capital to the region, which has been losing capital at a rate of $35 billion a year since 1982 to meet debt interest payments.

He proposed that the level of interest payments currently paid by the Latin American debtors should be limited to a percentage of export earnings.

Another proposal under discussion here would limit current interest payments to a “historical” level of between 2% and 3% above the rate of inflation.

The countries participating in the meeting here are Argentina, Brazil, Uruguay, Chile, Bolivia, Peru, Colombia, Venezuela, Ecuador and Mexico, in addition to the Dominican Republic.