Kennedy Backs Reduction in Latin Debt Payments

Sen. Edward M. Kennedy called Thursday for an immediate reduction in Latin American debt payments as a stimulus to economic growth in this region.

The Massachusetts Democrat said such a reduction could be achieved if interest rates are brought down and if creditors and debtors reach a “political” agreement on how to manage the debt with economic growth as the goal.

“The stakes are too high for either side to leave the problem up to the bankers. Governments themselves must be involved in ways that strengthen, not starve, democracy in the Americas,” he said in a speech at the American Chamber of Commerce here.

Kennedy said he had come to this region to celebrate the return of democracy in Brazil, Uruguay and Argentina. But he said that democracy in Latin America is threatened by a “massive economic crisis” and that the region’s $380-billion foreign debt is an obstacle to restoring economic growth.

Kennedy evoked the spirit of the Alliance for Progress, which his brother, President John F. Kennedy, made the cornerstone of U.S. policy toward Latin America, combining regional political cooperation with long-term capital lending for economic development and social reform.

In his speech Thursday, the senator, who announced last month that he would not run for President in 1988, said the Reagan Administration is not providing the “political leadership” needed for solving the crisis.

He said Treasury Secretary James A. Baker III’s conditional offer of $29 billion in new capital for Latin American debtors was “constructive” but not enough.

“Unless there is also a corresponding reduction in the amount of funds transferred from Latin America to foreign creditors each year, even that $29 billion may not be meaningful,” Kennedy said. Latin American countries now pay about $30 billion a year in interest on the debt.