Reagan Offers Argentina Aid : Reagan Ties Argentine Aid to Tough Austerity Moves

From Reuters

President Reagan today offered to help Argentine President Raul Alfonsin reverse his country's economic decline but warned him that tough austerity measures would be required.

Alfonsin, whose government is faced with inflation above 800%, told Reagan that he was willing to adopt the necessary austerity measures but he stressed he could be overthrown if he did not satisfy workers' demands.

Alfonsin took office in December, 1983, ending eight years of military rule in Argentina.

"We appreciate the severe economic problems you inherited," Reagan told Alfonsin in a White House ceremony beginning the Argentine leader's state visit to Washington.

Hard Work and Vision

In an apparent reference to tough austerity measures that the International Monetary Fund has demanded of Argentina, Reagan said: "Keeping an economy vital and robust requires hard work, vision and commitment."

Monetary sources said the IMF would postpone paying out a standby loan to Argentina because it has not met economic targets spelled out in their agreement.

Reagan told Alfonsin of the U.S. recovery that "turned decline into progress, inflation into stability and doubt into optimism and growth," but said every country must find its own way to economic stability.

"We in the U.S. will do what we can to assist in your efforts to improve the economic conditions of your country," Reagan added.

Bridging Loan Given

A senior Administration official later said Reagan and Alfonsin discussed the $500-million bridging loan that Washington provided Argentina after it signed the standby agreement with the IMF last September.

The official said Reagan reiterated privately his offer to assist, but added: "We have no specific plans at this time."

Alfonsin, in his remarks, said he was willing to adopt "the austerity that the times demand," but in an apparent reference to Argentina's powerful labor unions said he could not make the adjustments that would burden "those who have less."

Alfonsin said that demanding a greater effort from workers would be "condemning them to extreme poverty and misery."

In a veiled warning that his 14-month-old government could be toppled, Alfonsin added: "The immediate consequence would be that the eternal demagogues would seek in the force of arms the satisfaction that democracy has denied them."

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