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Latin America 1989-1990 [OA 8486]
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Latin America 1989-1990 [OA 8486]
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Records of the White House Office of Speechwriting (George H. W. Bush Administration)
Speech Backup Alphabetical Files
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Speech File Backup Files
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Alpha File, 1987-1991
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Latin America, 1989-1990
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26
23
3
2
THE WALL STREET JOURNAL FRIDAY, FEBRUARY 23, 1990
A11
Peru, in Its Darkest Hour, May Be Close to Dawn
LIMA-Economic mismanagement in
Vargas Llosa, the pro-free-market candi-
and Argentina, have taken half-measures
despite man's imperfections.
Peru has reached such proportions that
date, will win. The polls give him 50%,
that do more harm than good because they
Mr. Vargas Llosa also has been accused
statistics that reflect it sound unreal. De-
with leftist Alfonso Barrantes second at
impose hardships on the population without
of being stubborn and authoritarian. But
spite tight control of prices, inflation
14% and the government party's Luis Alva
reaching the roots of the problems. Typi-
true leaders, such as Winston Churchill
reached 1,720% in 1988 and 2,775% in 1989.
Castro trailing at 10%. But there are
cally they administer International Mone-
and Margaret Thatcher, are often thought
Gross National Product per capita dropped
deeper grounds for optimism.
tary Fund-style monetary shocks without
to be stubborn. Only a combination of a
11.1% and 14.2% in each of the same years,
Peru may be the first country where
the deep structural changes that release
strong character with the right ideas can
and real wages have fallen 60% in the past
Latin America's inefficient statist model
market-led growth. Monetary orthodoxy is
get a country like Peru out of the mess it is
12 months.
dies a natural death, without foreign or
worse than useless if you do not also un-
in. The combination is rare. Too many
With seven different artificial exchange
military intervention. Credit for this is
ravel the overmanned state enterprises,
other countries in a similar plight have ei-
rates and a labyrinth of subsidies, Peru-
partly due to President Alan Garcia, a car-
eliminate monopolies, dismiss redundant
ther no strong leader to guide them or
icature of the Latin American demagogue.
bureaucrats, free rigid labor markets, re-
have a strong leader with the right in-
The Americas
Incapable of the soft-spoken incompetence
form prohibitive tax systems and remove
stincts but little knowledge of economics
of Brazil's Jose Sarney or Argentina's
barriers to foreign investment.
(Poland's Lech Walesa or Argentina's
Raul Alfonsin-who managed to make
Mr. Vargas Llosa may be aware of all
Carlos Menem).
By David Gallagher
their statist policies sound plausible in the
this. But does he have the right advisers,
Thanks to Mr. Vargas Llosa's openness
midst of disaster-Mr. Garcia's wild ges;
and does he have the clout?
and his gift for words, the simplest of
ticulating from the balcony of the presiden-
The economists working for him are ca-
Peruvians have learned to grasp economic
vians can devote their energies to spectac-
tial palace has made him look like a char-
pable, and they have been preparing them-
fundamentals. This means he will have a
ular fiddles. For instance, you can get an
acter out of Chaplin's "Great Dictator" or
selves for months. As for himself, Mr.
clear mandate for Latin America's first
'agricultural credit" at an interest rate of
Woody Allen's "Bananas." Peruvians
Vargas Llosa has demonstrated his tenac-
well-thought-out program of political and
255% per annum, in real terms the equiva-
could not help but grasp the irrationality of
ity by the years he has devoted to writing
economic freedom. The potential demon-
lent of minus 2,520%. With it. you can im-
his policies.
his complex yet polished novels. His cour-
stration effect on other countries should
port a tractor at an exchange rate 11 times
age was demonstrated by his unflinching
have Western governments queuing up to
Photo Copy Preservation
Also Mr. Garcia's populist measures
more favorable than the market rate. You
criticism of the totalitarian aspects of the
help. And help he needs, with millions of
have been more tellingly audacious than
then sit and wait for the chain to reverse
Cuban revolution, when it was suicidally
Peruvians already close to hunger levels.
those of his neighbors. By freezing prices,
and sell the tractor-probably even re-ex-
unfashionable to do SO. He gradually
Governments and banks will have to be
raising wages by decree, subsidizing credit
port it-at a 1,000% profit. In the mean-
turned away from socialism because of his
understanding about Peru's foreign debt.
and inflating public expenditure in 1985, he
time, you would not actually use the trac-
interest in actual evidence. Without aban-
The U.S. government is anxious that the
achieved growth of 9.5% in 1986 and 7.8%
tor, because as a local producer you could
doning his concern for the poor, he saw
in 1987. The very gap between the expecta-
Peruvian coca plantations be uprooted, de-
not compete with lavishly subsidized food
that socialist policies invariably decreased
tions thus aroused and the disaster that fol-
spite strong demand from American con-
imports.
the few options open to the poor.
lowed has had a salutary didactic effect
sumers. The U.S. should contribute gener-
Mr. Vargas Llosa has been accused of
In an economy where some people
ously to crop replacement. Otherwise Peru
By the time Mr. Garcia staggers to the end
being a "fundamentalist." Fortunately, on
make fortunes but most get poorer, you
of his mandate, Peruvians should be im
might be tempted to legalize the drug
economic matters he is, because what
can buy matches at a newsstand in individ-
mune from demagogic interventionism.
barons in order to concentrate its re;
Peru needs is a return to basic principles.
sources on the defeat of terrorism.
ual units, because some people cannot af-
The Peruvian mess stems from years of
ford a whole box. Add the activities of the
But he is not naive. Like most novelists, he
Mr. Vargas Llosa's success depends on
irrational resource allocation by pea-
is in fact a skeptic. His novels could even
narcotics mafia and the Maoist "Shining
two additional factors. Fredemo, the coali-
brained bureaucrats (at the present count,
Path," perhaps the world's most vicious
be accused of undue pessimism, with their
tion that supports him, must gain an over
800,000 of them) driven either by self-inter
merciless exposures of man's corruptibil-
terrorist group, and one wonders if there is
all majority in Congress: And some of the
est or by the pressures, of favor-seeking
ity and abuse of power. The few characters
any hope for. Peru?
coalition's conservative politicians, who
businessmen and union bosses. To undo the
who preserve their ideals in them come
still believe in economic paternalism, will
Actually, Peru, with a presidential elec-
mess, deep structural reforms are neces-
across like knights without armor. But
have to swallow their pride and let Mr.
tion due on April 8, is one of the few Latin
sary. Mr. Vargas Llosa knows all this, and
then the libertarian principles that he has
Vargas Llosa govern. Two very big "ifs,"
American countries about which one can
his governmental program, "Action. for
turned to are the only ones coherent with
but despair can breed wonders.
be cautiously optimistic. This is due to the
Change," spells out in detail the reforms
this skeptical vision. It is only with politi-
happy convergence of several factors. For
needed to get the country moving again.
cal and economic freedom, and their ensu-
Mr. Gallagher is 11 writer and invest-
one it is probable that novelist Mario
Other countries, as disparate as Poland
ing competition, that society can function
ment consultant based in Santiago, Chile.
CONTRAS
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
March 24, 1989
Bipartisan Accord on Central America
The Executive and the Congress are united today in support
of democracy, peace, and security in Central America. The
United States supports the peace and democratization process
and the goals of the Central American Presidents embodied in
the Esquipulas Accord. The United States is committed to
working in good faith with the democratic leaders of Central
America and Latin America to translate the bright promises of
Esquipulas II into concrete realities on the ground.
With regard to Nicaragua, the United States is united in
its goals: democratization; an end to subversion and
destabilization of its neighbors; an end to Soviet bloc
military ties that threaten U.S. and regional security.
Today the Executive and the Congress are united on a policy
to achieve those goals.
To be successful the Central American peace process cannot
be based on promises alone. It must be based on credible
standards of compliance, strict timetables for enforcement,
and effective on-going means to verify both the democratic and
security requirements of those agreements. We support the use
of incentives and disincentives to achieve U.S. policy
objectives.
We also endorse an open, consultative process with
bipartisanship as the watchword for the development and
success of a unified policy towards Central America. The
Congress recognizes the need for consistency and continuity in
policy and the responsibility of the Executive to administer
and carry out that policy, the programs based upon it, and to
conduct American diplomacy in the region. The Executive will
consult regularly and report to the Congress on progress in
meeting the goals of the peace and democratization process,
including the use of assistance as outlined in this Accord.
Under Esquipulas II and the El Salvador Accord, insurgent
forces are supposed to voluntarily reintegrate into their
homeland under safe, democratic conditions. The United States
shall encourage the Government of Nicaragua and the Nicaraguan
Resistance to continue the cessation of hostilities currently
in effect.
To implement our purposes, the Executive will propose and the
bipartisan leadership of the Congress will act promptly after
the Easter Recess to extend humanitarian assistance at current
levels to the Resistance through February 28, 1990, noting
that the Government of Nicaragua has agreed to hold new
elections under international supervision just prior to that
date. Those funds shall also be available to support
voluntary reintegration or voluntary regional relocation by
the Nicaraguan Resistance. Such voluntary reintegration or
more
2
voluntary regional relocation assistance shall be provided in
a manner supportive of the goals of the Central American
nations, as expressed in the Esquipulas II agreement and the
El Salvador Accord, including the goal of democratization
within Nicaragua, and the reintegration plan to be developed
pursuant to those accords.
We believe that democratization should continue throughout
Central America in those nations in which it is not yet
complete with progress towards strengthening of civilian
leadership, the defense of human rights, the rule of law and
functioning judicial systems, and consolidation of free, open,
safe, political processes in which all groups and individuals
can fairly compete for political leadership. We believe that
democracy and peace in Central America can create the
conditions for economic integration and development that can
benefit all the people of the region and pledge ourselves to
examine new ideas to further those worthy goals.
While the Soviet Union and Cuba both publicly endorsed the
Esquipulas Agreement, their continued aid and support of
violence and subversion in Central America is in direct
violation of that regional agreement. The United States
believes that President Gorbachev's impending visit to Cuba
represents an important opportunity for both the Soviet Union
and Cuba to end all aid that supports subversion and
destabilization in Central America as President Arias has
requested and as the Central American peace process demands.
The United States Government retains ultimate responsibility
to define its national interests and foreign policy, and
nothing in this Accord shall be interpreted to infringe on
that responsibility. The United States need not spell out in
advance the nature or type of action that would be undertaken
in response to threats to U.S. national security interests.
Rather it should be sufficient to simply make clear that such
threats will be met by any appropriate Constitutional means.
The spirit of trust, bipartisanship, and common purpose
expressed in this Accord between the Executive and the
Congress shall continue to be the foundation for its full
implementation and the achievement of democracy, security, and
peace in Central America.
George Bush
President of the United States
James C. Wright, Jr.
Robert Dole
Speaker of the House
Senate Republican Leader
George J. Mitchell
Robert H. Michel
Senate Majority Leader
House Republican Leader
Thomas S. Foley
House Majority Leader
THE WHITE HOUSE,
March 24, 1989.
###
CONTRAS
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
March 24, 1989
STATEMENT BY THE PRESIDENT
The President of a Central American democracy was asked recently
what is the most important step the United States can take. He
said, "Speak with one voice." Today, for the first time in many
years, the President and Congress, the Democratic and Republican
leadership in the House and Senate, are speaking with one voice
about Central America.
In my inaugural address I reached out my hand to the leadership
of Congress in both parties asking them to join with me to
rebuild a bipartisan foreign policy based on trust and common
purpose. Today, I am gratified that the Speaker and the Majority
and Minority Leaders of the Senate and House have extended their
hands back to me.
We have signed today together a Bipartisan Accord on Central
America. It sets out the broad outlines of U.S. policy towards
that troubled region and commits both the Executive and Congress
to work together to achieve it.
The goals we seek are the goals which the people of Central
America yearns for: democracy, security, and peace. Those are
the pledges made by the Central American Presidents in the
Esquipulas II Accord. That agreement is an integrated whole:
all of its provisions must move forward together if any of them
are to be fulfilled. Our challenge now is to turn those promises
into concrete realities on the ground.
The only way we can meet that challenge is if Latin democratic
leaders and the United States work together, with the support of
our European friends and allies, as true partners with candor and
mutual respect. I believe Latin leaders are asking for that kind
of relationship as we confront together the many challenges facing
our hemisphere. As President, I pledge the United States is
ready to respond.
Under this Central America agreement, insurgent forces have the
right to re-integrate into their homeland under safe, democratic
conditions with full civil and political rights. That is the
desire of the Nicaraguan Resistance. It is what they are
fighting for. We hope and believe it can be achieved through a
concerted diplomatic effort to enforce this regional agreement.
- more -
- 2 -
To achieve these goals the bipartisan leadership of Congress has
agreed to support my request for continued humanitarian
assistance to the Nicaraguan Resistance through the elections
scheduled in Nicaragua for February 28, 1990.
There will be extensive consultations and review with respect to
these funds effective November 30, 1989 by the bipartisan
leadership and relevant committees. However, I have been assured
that the leadership in both Houses supports the extension of this
assistance through the Nicaraguan elections barring unforeseen
circumstances.
There is no shortcut to democracy; no quick fix. The next weeks
and months will demand patience and perseverance by the
democratic community and the hard, technical work of ensuring
compliance with the Esquipulas Accord. The United States will
work in good faith to support that kind of diplomatic effort, but
we will not support a paper agreement that sells out the
Nicaraguan people's right to be free.
We do not claim the right to order the politics of that country.
That is for the people of Nicaragua to decide. We support what
the Esquipulas Accord requires: free, open, political processes
in which all groups can fairly and safely compete for political
leadership. That means the playing field must be level; all,
including the current government must respect the majority's
decision in the end, and the losers much also retain the
political rights to operate as a legal opposition and contest
again for political authority in the next recurring election
contest.
The burden of proof is on the Sandinista government to do
something it has steadfastly refused to do from 1979 to 1989: to
keep its promises to the Nicaraguan people to permit real
democracy; keep its promises to its neighbors not to support
subversion in Central America; and keep its obligation to this
hemisphere not to permit the establishment of Soviet bloc bases
in Central America. If those promises are kept we have an
opportunity to start a new day in Central America; but if those
p edges continue to be violated, we hope and expect that other
nations will find ways to join us to condemn those actions and
reverse those processes.
The Soviet Union also has an obligation and an opportunity: to
demonstrate that its proclaimed commitment to "new thinking" is
more than a tactical response to temporary setbacks, but
represents instead a new principled approach to foreign policy.
- more -
- 3 -
In other regional conflicts around the world the Soviet Union has
adopted a welcome new approach that has helped resolve
long-standing problems in constructive ways. In Central America
what we have seen from the Soviet Union and Cuba can only be
described as "old thinking."
In the last decade, the Soviet bloc has poured at least $50
billion in aid into Cuba and Nicaragua. Soviet and Cuban aid is
building in Nicaragua a military machine larger than all the
armies of the other Central American nations combined and
continues to finance violence, revolution, and destruction
against the democratically elected government of El Salvador.
Indeed, Soviet bloc military support for the Marxist guerrillas
has increased since the United States ended military support for
the Nicaraguan Resistance and Soviet military aid to the
government of Nicaragua continues at levels wholly uncalled for
by any legitimate defensive needs. The continuation of these
levels of Soviet bloc aid into Central America raises serious
questions about Soviet attitudes and intentions towards the
United States.
The Soviet Union has no legitimate security interest in Central
America; and the United States has many. We reject any doctrine
of equivalence of interest in this region as a basis for
negotiations. Instead, the Soviet Union and Cuba have an
obligation to the leaders of Central America to stop violating
the provisions of the Esquipulas Accord which the Soviet Union
and Cuba both pledged to uphold. The time to begin is now.
In signing the Esquipulas Accord, President Oscar Arias of Costa
Rica said: "Without democracy, there can be no peace in Central
America.' He is right. But with democracy and peace in Central
America can come new hope for economic development in which all
of the people of the region can share. One can look at the
terrible violence ravaging Central America and despair, but I
have a different vision of its future.
I can see a democratic Central America in which all of the
nations of the region live in peace with each other; where the
citizens of the region are safe from the violence of the state or
from revolutionary guerrillas; where resources now devoted to
military defense could be channeled to build hospitals, homes,
and schools. That is not a dream if all the people and nations
of the Americas will it to be true. I hope the Esquipulas Accord
and perhaps, also, the Bipartisan Accord, will someday be seen as
the first step toward its fulfillment.
# # #
WALL STREET JOURNAL 03/20/90
Help Latin America and Help Ourselves
By PETER F. DEUCKER
We also cannot realistically expect food
Who needs Latin America? "We don't,"
exports to bounce back. For a few short
most American businessmen would say.
years ahead there may be sharply in-
But it is the wrong answer- Latin America,
creased demand to assuage almost certain
rather than Japan. holds the key to the
famine in the Soviet Bloc, but food relief
U.S. trade deficit.
on a massive scale can be maintained only
Whatever may be wrong with American
for a few short years. Yet the U.S. trade
industry-and many things are surely
deñcit cannot continue indefinitely. and
wrong-it is not "lack of international
perhaps not even for many more years.
competitiveness." Since the overvaluation
The interest payments on the debt due
of the dollar was corrected nearly five
our suppliers already greatly exceed our
years ago. U.S. industry has turned in a
capacity to earn foreign exchange to serv-
stellar performance. especially in export-
ice them. While the foreign creditors can
ing to Western Europe and Japan. A host
convert their dollar claims into U.S. as-
of industrial exporters-South Korea, Bra-
sets-that is, buy American businesses and
zil, Taiwan, Singapore-became bigger
real estate-and most economists consider
players in world trade. Yet the U.S. has re-
this to be harmless and perhaps beneficial,
gained the share of the world's manufac-
tured-goods exports it held before the over-
"buying America" clearly will not be toler-
valuation-as large 2 share as the U.S.
ated long politically.
ever held except in the immediate post-
There are, in effect: only two ways to
World War II period.
cut the trade deficit. In the wrong but tra-
ditional way, a very sharp recession cuts
Nor can the U.S. trade deficit be
domestic consumption by 10% or so. The
blamed on "excessive imports. "Manufac-
alternative: a revival of Latin America as
tured-goods imports account for a smaller
a customer for U.S. manufactured goods.
share of America's GNP-9%-than they
do in any other developed-country except
It would be 2 great deal easier to turn
around Latin America than to turn around
Japan. And the Japanese are now "out-
sourcing" at such a furious rate that the
Eastern Europe. the region on which most
attention is focused now. Latin America is
import share of manufactured goods in Ja-
home to 300 million people-almost as
pan's GNP is likely to match the U.S. fig-
many as in the Soviet Bloc. In sharp con-
ure within four or five years.
trast to the Soviet Bloc. Latin America
What then explains the massive Ameri-
comfortably feeds itself and has a substan-
can trade deficit? Its main cause is the col-
tial surplus of both food and industrial raw
lapse of the world's food and raw materi-
materials. In the larger countries there is
als economy in the past decade.
an excellent supply of well-trained engi-
World's Largest Producer
The U.S. is the world's largest producer
Drucker on Management
and-exporter of agricultural and forest
products, and about one-third of the trade
deficit is directly traceable to this collapse
About one-third of the
in prices and demand. Another third or so
is owing to the impact of the raw-materials
trade deficit is directly trace-
depression on what traditionally was one of
U.S. manufacturers' best foreign CUS-
able to the collapse in raw-
tomers-Latin America. Indeed in most
materials prices and demand.
Latin American countries U.S. imports tra-
ditionally accounted for half or more of all
Another third or so, to the
manufactured-goods imports. (By the way,
most of Japan's export surplus is far less a
impact of the depression on
result of industrial prowess than of the
one of U.S. manufacturers'
raw-materials depression: Japan-the
world's largest raw-materials importer-is
best foreign customers.
the main beneficiary.)
The trade deficit will not be eliminated
neers, entrepreneurs, accountants, econo-
by increasing exports of manufactured-
mists and lawyers. And they did not have
goods to Western Europe and Japan In-
to become moral eunuchs to get an educa-
deed If Japan removed all restrictions to
tion or to get and hold 75 decent job.
U.S. imports. U.S. exports would at most
Nor do the educated people of Latin
grow by 55 billion-as against a trade defi-
America have to be "re-educated" to func-
cit with Japan of $50 billion. And the U.S.
tion in a free economy. Until the raw-mate-
will be hard pressed to maintain current
rials depression hit. Latin Americans
export volume with the developed world in
worked effectively in a market economy
the years ahead. when world manufactur-
and participated in rapid economic growth
ing competition is bound to intensify.
And there is enormous pent-up demand for
goods of all kinds.
19
021
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11:11
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Finally. Latin America, unlike the So-
viet Bloc. has an adequate supply of capi-
Latin America's turnaround is, in other
tal. Indeed, Latin America probably has
words, no longer a matter of economics,
three times as much capital-or more-
but largely of the political will It requires.
than it has foreign debt. There is only one
above all. the backbone not to cave in-as
thing wrong with it: It is not in Latin
did the governments of both Argentina and
America. It has been driven out systemati-
Brazil in both 1988 and 1989-at the first
cally-and often purposefully-by govern-
protest by 2 powerful group such as the la-
ment policy.
bor unions or the army. The things that
But if the money that is now in Miami
need to be done will at first be painful and
and New York, Zurich and Geneva-but
unpopular. But within a year they will be
also in the mattresses of virtually all but
gin TO produce results and to enjoy wide
the poorest families in Latin America-
popular support.
could be enticed into productive invest-
But the U.S., too, has a crucial role to
ment at home. every Latin American na-
play: to stop the well-meaning but destruc-
tion, save perhaps the smallest and poor-
tive policies it has pursued for almost 40
est, would have all the capital it needed for
years. Maybe Latin America needs fairly
rapid economic growth. And the holders of
small short-term loans to help assuage the
Latin America's capital are willing, and in-
pains of the transition But the favorite
deed eager. to invest their money at home
"aid" policies of the past four decades-
if only their governments were to stop ex-
government-to-government aid: military
propriating savings and investment
aid: World Bank loans-must not be con-
through inflation and punitive taxation,
tinued They are largely to blame for the
and were to stop discouraging productive
current crisis of the continent.
Investment through the granting of monop-
Anti-Entrepreneur Bias
olies to military and governmental enter-
These policies encouraged government
prises. As a result of these policies, even
spending They paid for bloated govern-
the shoeshine boys in Buenos Aires and
ment bureaucracies and for military estab-
Sao Paulo demand to be paid in dollars.
lishments that are, in many countries. four
What needs to be done is clear enough-
or five times as large proportionately as
Stop inflation by turning off the spigot of
that of the U.S.-and without any foreign
government spending; dismantle the
threat. They diverted capital from produc-
grossly overstaffed and unproductive mo-
tive investment into "prestige projects"-
nopolies owned by the government or the
steel mills, for instance-without domestic
military (especially in Brazil and Argen-
markets that in their own way. were not
tina) or by the government's political cro-
too different from the monstrosities of Sta-
nies and the ministers' relatives (espe-
linist planning. Above all, these policies all
cially in Mexico): cut excessive nominal
had a strong anti-business and anti-entre-
tax rates that discourage honest enter-
preneur bias. To continue them would be
prise, but increase actual tax collection.
like pushing drink on an alcoholic
That these things can be done. and with-
What Latin America needs from the
out political catastrophe, has been shown
U.S. is made, not aid It needs political
by two of the smaller countries: Chile un-
support for policies that reward enterprise
der Augusto Pinochet's dictatorship. and
and discourage monopolies-and protection-
(reasonably) democratic Bolivia And
ism. policies that stress savings rather
there is now widespread demand through-
than spending. and economic growth
out the region for a return to sanity.
rather than growth of the bureaucracy.
Mexico has taken some fairly big steps
And these policies also are needed pre-
in the right direction, especially in disman-
cisely because the U.S. needs Latin Amer-
ica.
tling protection for governmental monop-
oly industries; the immediate results have
been most impressive (including 2 more
Mr. Drucker is a professor of social sci-
than two-fold increase in Mexico's pur-
ences at the Claremoni Graduate School in
chases from the U.S.). The first priority of
California.
the new government inaugurated in Brazil
last week is to sell more than a hundred
unproductive, overstaffed and loss-making
government enterprises. And the albatross
of the foreign debt that the Latin American
countries incurred when the raw-materials
economy collapsed has largely been re-
moved-it has been written down in all but
legal fiction.
20
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Private
Investment
Corporation
1615 M Street, N.W.
Washington, D.C. 20527
(202) 457-7200
FAX (202) 331-4234
March 19, 1990
Ms. Chriss Winston
Deputy Assistant to the President
For Communications
The White House
(By Fax)
Dear Chriss,
In the past week, there has been considerable news coverage of
the inability to get the Panamanian economic aid package out of
Congress and into that country. I hope you can use facts about
the recent OPIC mission to Panama to defend the President's
ability to act quickly and effectively.
While the OPIC mission (February 24 - March 3) is no longer
news, the $70 million of private sector investment it generated
is. THERE OPIC element of the aid package is already providing
jobs and investment capital in Panama.
Highlights include:
0
While on OPIC's mission, Radisson announced plans for a
$40 resort complex 70 miles north of Panama city. This
project will provide jobs for 200 Panamanians as early as
this summer. Radisson's commitment demonstrates their
faith in the long-term political stability of the country.
o
Altrix International, a small Florida aqua-cultural
business, is expanding a shrimp operation in Parita, a
small village in Northern Panama. The expansion will add
100 jobs and employ virtually 100 percent of the town.
o
Strategic Resources Corporation is seeking investors and
OPIC assistance for a Panama Economic Recovery Fund -- a
vehicle which would rush money for housing starts and
other essentials into that country. Considering that a
housing crisis in Chorrillo seems to be the lighting rod
for the recent civil disturbance in Panama, this is a
clear example of a private sector solution to a foreign
policy challenge.
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OPIC
PAGE 2-2
Great American Farms Inc. is establishing an
infrastructure which will take advantage of Panama's
reverse growing season to provide fruits and vegetables
for export during the "winter window" period. Great
American will work with Panamanian farmers to help them
diversify into production and packaging of high-value
fruits and vegetables. This project is scheduled to begin
within one month.
o
American Express Bank joined the OPIC mission and was
instrumental in providing commercial credit for many of
the projects.
In the past week, I've tried (with marginal results) to inject
OPIC's success into news coverage of Congressional treatment of
the aid package. Perhaps your office can use this information
to mitigate questions about the administration's commitment to
economic recovery in Panama.
If you need more specific information on the OPIC investment
mission to Panama, please feel free to call.
Regards,
1Bm
Jeffrey Brown
Marketing and Communications Officer
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Overseas Private
Investment Corporation
1615 M STREET. N.W. WASHINGTON DC 20527 / TELEPHONE (202) 457-7011
CONTACT:
Jeff Brown or Jim Hall
RELEASE:
IMMEDIATE 3/6/90
U.S. OPIC MISSION GENERATES $70M OF INVESTMENT IN PANAMA
*
RADISSON TO BUILD 450 ROOM RESORT AT CORONADO
WASHINGTON, D.C., -- Returning from Panama today, OPIC
President and CEO Fred M. Zeder announced that the recent
investment mission there has already produced $70 million in
initial project commitments. American investors found business
opportunities in Panamanian agriculture, aquaculture, light
industry and tourism.
"This was a highly successful OPIC mission," said Zeder. "It
proves that American business is bullish on Panama's economic
future."
During the mission, the TransAmerica Hotel Group announced
plans to build a 450-room resort about 75 miles west of Panama
city. "This project is testament to our belief in the on-going
vitality of the Panamanian economy," said TransAmerica Hotel
Group Vice President Richard A. Rozier. "Coronado is a
spectacular beach with proven ability to attract vacationers."
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PANAMA INVESTMENT
PAGE 2-2
The facility, to be called the "Radisson Coronado," will
feature two restaurants, two bars, tennis, pool, golf and beach
facilities. Construction is scheduled to begin mid-summer and
will employ approximately 250 Panamanians. The hotel is
scheduled to open December of 1991 and will employ about 400
permanent full-time workers.
Before traveling to Panama, the investors attended an
unprecedented send-off ceremony at the White House where
President Bush told them that America is deeply committed to
helping the Panamanians. That message was conveyed when Zeder
and the investors met with Panamanian President Guillermo
Endara and Vice President Guillermo Ford.
The OPIC Panama mission was attended by 27 representatives of
American business including AT&T, American Express, UnoCal
Geothermal, GTE and others.
OPIC is an agency of the United States Government committed to
promoting private sector investment in more than 110 developing
countries throughout the world. An increasingly vital
instrument of American foreign policy, OPIC has led recent
investment missions to Latin America, Africa, Asia and Eastern
Europe. In April, OPIC will lead a group of Americans on a
mission to Poland and Hungary.
JB&JH/847
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UNCLASSIFIED
Jeff Browa
INCOMING
TELEGRAM
Department of State
PAGE 01
PANAMA 91771 00 OF 02 0721182
6586
PANAMA 01771 " OF 02 072118Z
5586
ACTION ARA-00
THE PANAMANIAN PEOPLE, THE PARTICIPATION OF NORTH
AMERICAN COMPANIES IN THIS COUNTRY THROUGH INVESTMENT
INFO LOG-00 INR-06 CIAE-00 EB-00 DODE-00 NSAE-00 OPIC-08
IN PRIVATE INITIATIVE, IS VITAL OXYGEN FOR THE
PA-02 INRE-00 SP-00 PRS-01 /019 W
IMPORTANT SECTOR OF JOB CREATION, WHICH IS PRECISELY
244351 072119Z /61 38
THE WEAKEST IN THESE MOMENTS OF CRISIS, THE HIGH
0 0721082 MAR 90
LEVEL OF UNEMPLOYMENT CONSTITUTES ONE OF THE MOST
FM AMEMBASSY PANAMA
DESTRUCTIVE SOCIAL ILLS OF PANAMANIAN SOCIETY. EVERY
TO USIA WASHDC IMMEDIATE 8311
ATTEMPT TO RESCUE OUR COMPATRIOTS FROM THE CLAWS OF
SECSTATE WASHDC PRIORITY 8853
MISERY AND HUNGER HAVE TO DESERVE THE STRONGEST
USCINCSO QUARRY HTS PM
SUPPORT AND THE GREATEST SENSE OF SATISFACTION.
FBIS CHIVA CHIVA PM
7. THE DEPLORABLE CONDITIONS IN WHICH OUR ECONOMY
UNCLAS PANAMA 01771
OPERATES TODAY REQUIRE THE TYPE OF INTITIATIVE WHICH
THESE NORTH AMERICAN ENTREPRENEURS HAVE BROUGHT TO OUR
USIA
COUNTRY. THEIR CONTRIBUTION WILL BE DECISIVE FOR THE
ECONOMIC PROGRAMS WHICH BOTH THE PRIVATE AND PUBLIC
USIA FOR P/M, AR, P/PFL, VOA/BRL
SECTORS SHOULD PUT IN PRACTICE.
USIA PASS TO OPIC FOR JEFF BROWN
STATE FOR ARA/PAN, ARA/P
8. THE CREATION OF JOBS IN THESE MOMENTS OF ECONOMIC
SOUTHCOM FOR PAO
ANGUISH IS OUR MOST NOURISHING FOOD. THERE IS NO
FBIS FOR NAQUIN
DOUBT THAT AFTER THE DESTRUCTION OF OUR SOCIAL
STRUCTURES, THE COUNTRY REQUIRES URGENT FOREIGN AID.
E.D. 12356: N/A
HOWEVER, THIS SHOULD NOT BE THE PRINCIPAL OBJECTIVE OF
THE GOVERNMENT AND OF PANAMANIAN PRIVATE BUSINESSMEN.
SUBJECT: MARCH 6 PANAMA MEDIA REACTION: U.S.
WE SHOULD NOT CROSS OUR HANDS AWAITING ONLY SUCH
INVESTMENT IN PANAMA
HELP.
1. INDEPENDENT "LA ESTRELLA DE PANAMA" CARRIES VERY
9. ON THE CONTRARY, IT IS NECESSARY TO TAKE JUDICIOUS
POSITIVE HALF-PAGE EDITORIAL ON OPIC AND "PRESENCE OF
ADVANTAGE OF CUR OWN EFFORT, OF THE NATIONAL DYNAMISM,
NORTH AMERICAN PRIVATE ENTERPRISE IN PANAMA.' FULL
AND OF THE INTERNAL INITIATIVE TO PUSH FORWARD THE
TEXT FOLLOWS:
ECONOMIC CARE OF THE REPUBLIC. THERE IS NO DOUBT THAT
THE NORTH AMERICAN BUSINESSMEN WHO VISIT UNDER THE
2. BEGIN QUOTE: "NOTHING IS MORE BENEFICIAL FOR THE
AUSPICES OF OPIC WILL HELP US TO REALIZE THESE
FUNCTIONING OF A FULL DEMOCRACY THAN THE ACTIVE AND
OBJECTIVES." END QUOTE. EDMONSON, ACTING
DECISIVE PARTICIPATION OF PRIVATE ENTERPRISE. ITS
CONTRIBUTION IS A BASIC AND FUNDAMENTAL FACTOR IN THE
ADVANCE AND CONSOLIDATION OF THIS SYSTEM. FOR THIS
REASON, WE HAVE TO RECEIVE WITH GREAT SATISFACTION THE
PRESENCE IN THIS COUNTRY OF A GROUP OF DISTINGUISHED
NORTH AMERICAN BUSINESSMEN, WHO HAVE COME WITH THE
PURPOSE OF OBSERVING OUR NATIONAL REALITY ON iTS HOME
GROUND.
3. UP UNTIL NOW, THE MEMBERS OF THE COMMISSION OF
PRIVATE INVESTORS OF THE U.S. HAS SUCCEEDED.. MAKING
CONTACTS AND INTERCHANGING IDEAS WITH THE MOST NEEDY
ECONOMIC SECTORS, AT BOTH THE OFFICIAL AND PRIVATE
LEVELS OF THE COUNTRY. THE ACTIVITY HAS BEEN
COORDINATED BY THE OVERSEAS PRIVATE INVESTMENT
CORPORATION (OP IC) .
4. THE ACTION IS AT THE INITIATIVE OF U.S. PRESIDENT
GEORGE BUSH, WHO HAS TRACED THE MOST EXPEDIENT ROUTE
FOR PANAMANIANS TO PUT INTO ACTION THE GREAT ECONOMIC
RECOVERY OF THE COUNTRY. MORE THAN THIRTY INVESTORS,
REPRESENTATING LARGE U.S. COMPANIES SPECIALIZING IN
ACTIVITIES IN OUR REPUBLIC, HAVE SHOWN A DEFINITE
INTEREST IN DOING BUSINESS IN PANAMA AND IN TRYING IN
THIS WAY TO BUILD A LAUNCH PAD FROM WHICH THE CRIPPLED
NOTONAL ECONOMY CAN TAKE OFF.
5. THESE EXECUTIVES OF COMPANIES SPECIALIZING IN
TELECOMMUNICATIONS, SEA PRODUCTS, SUGAR PRODUCTION,
FRUITS AND VEGETABLES, SUPERMARKETS, FOOD PROCESSING,
CONSTRUCTION, CEMENT FACTORIES, HOTEL DEVELOPMENT, AND
ENERGY AND FERTILIZERS HAVE SEEN DURING THEIR DAYS
HERE ALL THE ADVANTAGES OF OUR NATION FOR THE INVESTOR
IN THE MOMENT IN WHICH HE IS MOST NEEDED.
€. INDEPENDENT OF WHAT ECONOMIC AID REPRESENTS FOR
UNCI ASSISIER
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White House Fact Sheet on the
Partnership With Panama: Action Plan
To Foster Economic Recovery
January 25, 1990
The President today announced the fol.
firms wishing to donate products to Pana-
working with other interested agencies
lowing action plan to foster economic re-
manian businesses.
and organizations, offer technical assist-
covery in Panama:
II. Loans, Guarantees, and Export Opportu-
ance to the Panamanian banking
1. Humanitarian Assistance
nities to Strengthen Panama's Private Sector
sector; and
The Agency for International Develop-
and to Create Jobs
initiate discussions with the COP with
The Export-Import Bank (Exim) will pro-
the view toward concluding an agree-
ment (AID) will initiate a $42 million hu.
vide up to $400 million in short-term and
ment pursuant to section 4702 of the
manitarian assistance program for Panama,
Anti-Drug Abuse Act of 1988 for the
covering:
medium-term guarantees, through Exim
replacement housing for the former
and its affiliate, the Foreign Credit Insur-
exchange of large currency transaction
information.
residents of the Cherillo area;
ance Association, to finance sales of Ameri-
an emergency public works program,
can products.
The Department of Commerce will lead
principally for Panama City and Colon,
AID will use $15 million in Trade Credit
a business development mission to Panama
but also including rural areas;
Insurance Program funds authority to rup-
and undertake other efforts to stimulate
small business rehabilitation to assist
port additional Exim lending to private
trade and investment with Panama.
those businesses affected by the loot-
sector borrowers.
The Department of Defense will:
ing: and
The Overseas Private Insurance Corpora-
resume promptly preferential buying
technical assistance to Government of
tion (OPIC) will reopen its insurance and
of Panamanian goods and services by
Panama (GOP) agencies.
finance programs to support American pri-
U.S. military authorities in Panama, the
The Departments of the Treasury and
vate investment in Panama. This program is
Panama Canal Commission, and all
Defense will develop ways to assist U.S.
valued at $50 million.
other U.S. entities, in accordance with
The Department of Agriculture will initi-
the provisions of the Panama Canal
ate a $15 million P.L. 480 title 1 program
Treaty of 1977; and
and a $15 million Commodity Credit Cor-
authorize the return of U.S. military
poration program for Panama.
dependents to Panama when the mili-
The United States Trade Representative
tary situation permits.
will:
In addition, Panamanian flag vessels will
restore Panama's suspended 1990 sugar
continue to have full access to U.S. ports.
quota and, consistent with U.S. policy,
III. Promoting Sustained Economic
compensate Panama for its foregone
Recovery
1989 quota. This is estimated to be
worth a total of $28 million;
Significant but temporary external eco-
initiate an educational program to
nomic assistance will be required to assure
ensure Panama makes full use of trade
that Panama's economy returns to a sus-
benefits under the CBI and GSP pro-
tained growth pattern. This undertaking
grams; and
will be a partnership involving the United
remove the quota on cotton pants.
States, Panama, other donor countries, and
The Department of Transportation will
international financial institutions (IFI's).
arrange for the Federal Aviation Adminis-
The administration will seek an additional
tration to negotiate a Memorandum of
8500 million in FY '90 for U.S. assistance to
Agreement with the GOP on the provision
Panama. This amount shall be offset from
of technical assistance in order to case air
other programs. The $500 million would be
travel to and from Panama.
used to help Panama normalize relations
The Department of State will, if the GOP
with the 1F1's, for balance of payments sup-
so wishes, arrange that the already-negotist-
port and business credit, for a public invest-
ed bilateral investment treaty be resubmit-
ment program, for public-sector restructur-
ted to Congress.
ing, and for development support.
The Department of the Treasury will:
The Administration will also:
discuss with the GOP the conclusion of
work to establish a support group of
a Tax Information Exchange Agree-
friendly donor countries to help clear
ment (TIEA), thus permitting U.S.
Panama's arrears to the IFT's;
firms, under established tax guidelines,
seek an early and generous reschedul-
to deduct expenses of conventions held
ing of Panama's debt to foreign gov-
in Panama. A TIEA would also make
emments under the auspices of the
Panama eligible for section 936 funds;
Paris Club; and
take steps to assist the conclusion of a
satisfactory financing package for Pana-
ma's commercial bank debt that ad-
dresses the amount of debt and the
level of debt service payments in the
context of the strengthened debt strat-
ogy.
A15
THE WALL STREET JOURNAL FRIDAY, MAY 19, 1989
A Latin American View of the Brady Plan
2 LIMA-Like the Baker plan, U.S. Treas-
lic-transportation riders would benefit indi-
entrepreneurs of Peru are unusually well
the bottom up" is impossible. This makes
a my Secretary Nicholas Brady's debt-relief
rectly from the reduction in costs. In real
organized, considering their marginal
the IMF and foreign governments appear
plan contains sweeteners to encourage
terms, the liberalization of the tire trade
status. In addition, the ILD has provided
"impertalistic" and causes the poor undue
Latin leaders to swallow bitter economic-
represents a $101 million saving.
them with the technical expertise neces-
hardship because they do not realize who
policy pills. But regardless of the stimuli,
The government of Peru agreed to these
sary to make their case.
the proposed adjustments are affecting.
the indebted nations will need to reform
measures with a willingness that would not
However, in most cases, the victims of
Unfortunately, this particular situation
their economies if they are to achieve sus-
have existed had the adjustment been a
bad economic policies cannot successfully
represents only one more case in a mer-
tainable economic growth. create jobs and
condition imposed by an international lend-
lobby their government for the implemen-
cantilist society, where everyone, in one
alleviate poverty. Indeed, real structural
ing organization. Why? Because pressure
tation of a structural adjustment that satis-
way or another, must adapt to its prac-
adjustment is in the interest of the poor
for adjustment welled up from the bottom,
fies their needs. Even if political elections
tices. However, it also represents a golden
and the middle classes of the indebted
and 300,000 transportation entrepreneurs
are free and fair, the additional demo-
opportunity to set a precedent that would
Latin American countries.
are an unquestionable constituency for any
cratic institutions that in the developed
modify the status quo.
However, truly effective structural ad-
government-even more SO in the case of a
countries facilitate the enactment of rules
For this reason, the ILD proposed to the
justment must well up from the bottom,
populist government (as many Third
and policies that take into account the in-
president of Goodyear of Peru that instead
not be imposed by international institutions
World governments are likely to re-
terests of the majority of the population
of allowing its lawyers to entangle the
main).
are lacking here and in other developing
transportation entrepreneurs in a web of
The Americas
Yet there is an ironic twist to this tale.
countries. For example:
legal and bureaucratic red tape, it should
In early March, Goodyear of Peru filed an
Common people lack the resources
take advantage of this incident to join us in
By Hernando de Soto
appeal that temporarily prevents the duty-
and procedures to challenge government
making proposals that would unfetter the
free import of tires and seeks to perma-
decisions on the basis of economic and le-
Peruvian economy. thereby lowering their
nently rescind all the measures. The argu-
gal criteria.
production costs. The ILD is involved in
ments used by Goodyear to justify its ac-
We lack the means to ensure that
many such proposals now being dissem-
and foreign governments. This is not as
tions are the defense of the domestic tire
laws and regulations are formulated
inated in Peru.
far-fetched a proposition as it might seem.
industry and the protection of 1,258 jobs in
openly and in a way that allows for the
How do we encourage structural adjust-
In fact, recent events in Peru attest to a
the domestic tire industry.
measurement of their economic impact on
ment from the bottom up? Any program
groundswell of support for the same types
The significance of this turn of events
the poor. There are no comment and re-
for resolving the debt crisis should specifi-
of policies that would have been required
goes far beyond the obvious irony: A com-
view periods, no public hearings. no cost/
cally promote institutions that create in-
by the IMF.
pany that produces goods at 2.5 times the
benefit analyses of proposed regulations.
centives for and protect the rights of the
A typical IMF requirement is the liber-
international price can obstruct a reform
We lack referenda or "sunset laws"
unorganized majorities of the Third World.
ization of the foreign-trade sector. But
that provide for the evaluation of proposed
This will allow the "informal Boston Tea
supported by informal entrepreneurs who
Oith no intervention from the IMF. infor-
provide transportation services at one-
laws and regulations.
Party" to achieve the objectives without
Lal transportation operators in Peru suc-
tenth the cost of the same service in Wash-
There is no ready access to public in-
resorting to force. It also will prevent the
ssfully lobbied the government for the
ington, D.C., and employ 300 times more
formation. As a result, citizens are unable
impoverished majority (who must ulti-
actment of a package of measures that
people. This case proves that the main
to weigh the consequences of the policies
mately bear the burden) from despairing
ocluded the reduction of taxes and tariffs,
cause of Peru's poverty and foreign indebt-
imposed upon them or to ensure that they
and accepting violent terrorist solutions,
-d the removal of duties on tire im-
edness lies in its mercantilist system,
do not distribute power or property arbi-
employment by drug lords or massive em-
rts.
which imposes excessively high transac-
trarily.
igration to the U.S.
The latter measure is of vital impor-
tion and legal costs on domestic pro-
The executive branch is not subject
If as a major component of any struc-
nce because, as the Lima-based Institute
ducers.
to the prior authorization of the Congress
tural adjustment plan debt negotiators in-
Liberty and Democracy (ILD) has
There is ample evidence that similar
in the adoption of trade barriers.
sist that the majority of our citizens be
guaranteed a more effective means for ac-
"monstrated, the sales price of domesti-
cases occur throughout the Peruvian econ-
In other words, in the absence of guar-
cessing their government, then we will be
"lly manufactured tires is 2.5 times
omy. We can therefore conclude that struc-
antees and institutions that ensure eco-
attacking the causes of underdevelopment
[meater than that of imported tires Duty-
tural adjustment has ampte support as
nomic opportunity, the state receives no
as well as its effects.
THE imports would directly benefit 300,000
long as the costs and benefits apply across
input from those affected by its decisions.
¡LOormal transportation entrepreneurs and
the board at all. This instance of "bottom-
Thus, the state does not govern in accor-
Mr. de Soto is president of the ILD and
rkers, as well as an additional 390,000
up" structural adjustment is clearer than
dance with the interests of the majority.
author of "The Other Path" (Harper &
vate-car owners. And five million pub-
most because the informal transportation
As a result, structural adjustment "from
Row, 1989).