Jun 12, 1987


GENEVA JUNE 10 (IFDA/CHAKRAVARTHI RAGHAVAN) -- President Raul Alfonsin of Argentina called Tuesday for reactivation of the world economy, reduction of protectionist barriers and expansion of world trade in order to combat unemployment in Europe and North America and base the debt burden which was crippling third world development.

In launching this appeal while addressing a special sitting of the 73rd. International Labour Conference, Alfonsin dwelt a length on the debt burden of the third world and its negative impact on third world development as well as unemployment in the north.

Denouncing the present debt strategy of "fighting haemorrhage by extracting blood from the patient", Alfonsin in effect appeared to be advocating consolidation of the third world debt on the basis of its quoted value in secondary markets and fixing interest rates for this on the "realities of our genuine capacity to pay".

At a 45-minute press conference, Alfonsin was repeatedly probed by newsmen to explain and elaborate his statements, but he did not really expand on them.

Poor interpretation facilities resulted in many of his replies being left incomplete in English and French interpretation, but those who listened to his original Spanish said the Argentine President had not elaborated on his address at the Conference.

Alfonsin also conceded at his press conference that the PLEA of the Carthegena Group for a political dialogue between creditor and debtor countries, and the appeals of the Presidents of Argentina, Brazil and Uruguay to the Venice Summit, had not yielded "any positive answers".

However he remained optimistic, and said: "We think some measures are being taken which tantamount to recognition of the existence of the problem".

Earlier Alfonsin told the Labour Conference that the external debt problem was "closely linked with the social and political destiny of our countries", and denounced the "unacceptable paradox" in the policies of industrialised countries.

While calls were made for consolidation of young democracies, industrial countries "continue to apply policies which discriminate against U.S. commercially and decrease the price of our exports by subsidising commodities which compete with our markets, which increase the interest rates and which claim the payment of a debt which leaves U.S. bloodless".

"We must put an end to this perverse method by fighting this hemorrhage which ills the patient", Alfonsin declared.

"We cannot permit the frustration of the expectations of the people of Latin America in the renewal and rebirth of democracy. The reactivation of the world economy and the reduction of protectionist barriers can be the beginning of an alternative solution".

The Argentine President told the packed hall of delegates and dignitaries: "The time of waiting and the time of delay has come to an end. We believe in a realistic and lasting solution of the foreign debt. The financial markets themselves and the banks have begun to recognise this fact".

"The foreign debt of our countries has been paid for already to a very large extent. The enormous interest rates that some governments of industrialised countries have demanded and the enormous margins and commissions charged by trade banks have given rise to premature payments, the serious consequences of which may cause sufferings to us all".

"The remainder on the market which recognise our debt as a value must be consolidated in a long-term operation. In reality any intention for rescheduling cannot be realistic nor appropriate for the health of the world economy".

"The rates of interest for this consolidated debt should reflect the realities of our genuine capacity to pay and eliminate once and for all the uncertainty induced by the growing instability of the world financial markets".

"Thus relieved of the deadweight of this long-standing debt which hampers the revitalisation of the world economy, it will then be possible to resume normal financial exchanges for the increasing benefit of all peoples of the international community".

At his press conference, Alfonsin was repeatedly asked about his remarks that the foreign debt had been already paid to a large extent, and whether this meant no more payments should be expected.

While no directly replying to this, Alfonsin said the debtor countries did not want to suffer from the preoccupations and economic policies of the centre countries, which for example could increase interest rates.

He was talking of "consolidating debt to be repaid in a long-term operation", and fixing interest rates on this "based on a sense of history, at much lower rates than today".

Alfonsin referred specifically to actions being taken by Citibank and other U.S. Banks to create new reserves to deal with third world debt, and said this would be followed by others as well.

"It is understood by them that it is impossible to pay the debt in the present circumstances ... we feel that these interest rates have been paid at exaggerated rate ... there has to be a dialogue, and what we want is an interest rate which is not subject to the fluctuations of creditor country policies as is the case now. There is now a trend for increase in U.S. interest rates and this will seriously damage the conditions of our countries".

When Alfonsin repeatedly proclaimed his optimism over the debt issue, he was reminded that despite repeated appeals for a political dialogue nothing had happened, and the Venice Summit was ending at best "with some palliative for sub-Saharan Africa's debt and with more of the same past for Latin America and others, even as Latin America every year was transferring 30-40 billion dollars of real resources to the north.

"How long would you and your Latin colleagues continue to appeal for dialogue, or would you all take some other collective action", Alfonsin was asked.

"Latin America cannot bear this burden", Alfonsin replied. "It is absolutely impossible to think about paying back this debt. This is a matter that has to be tackled by both sides, abut not by rhetorical statements or mutual blame".

"There has to be a dialogue, and I believe that some solution will be found. We have been having discussions, and I believe Brazil will also undertake such discussions. They do not want a confrontation either, and they too want solutions on the basis of real possibilities.

"Here again I am optimistic. But under no circumstances can the present ... be considered a satisfactory response to the most pressing problems".

On the outcome of the Venice Summit, Alfonsin said the was not fully informed about all its decisions, but is seemed on the issue of subsidies for exports of primary products, "no step forward has been taken, and that is of great concern to us".

"We are not too optimistic", Alfonsin said about the prospect for UNCTAD-VII.

In his speech, Alfonsin noted that the ILO was often termed "the social conscience of world development" and evoked its moral authority for a joint effort to turn ethical principles into "a concrete and tangible reality in the life of men and women throughout the world".

It was not enough to define human rights purely from the negative side (of governmental actions), he said. Rights were also violated by the omission of the positive duty of "supplying human beings with the necessary means to choose and put into practice a plan of life ... in other worlds to increase the freedom of the least free".

All the liberal rights of the past century would remain abstract unless accompanied by actions that made possible the exercise of another set of rights, and "among them, the right to work".

"The right to work provides us perhaps, better than ever before, with the adequate framework to carry out a common dialogue among nations", Alfonsin said.

The economic and social reality no longer followed the conventional profile, and the crisis of the international economic order projected its effects on the labour environment, both in the industrialised and third world countries.

"The lack of productive employment is no longer a phenomenon characteristic of the developing countries and has now become part of the heart of the industrialised countries".

The deflationary and protectionist policies unleashed by industrialised countries since the 1980's had closed markets for the third world exports, decreased the commodity prices, and forced debtor countries to drastically cut imports, in turn affecting employment in the North.

At the beginning of the 1980's, even before the outbreak of the debt crisis, Latin America had a deficit of 23 million jobs.

And the debt crisis had had its repercussions on the north too. UNCTAD estimates showed that between 1982-84 seven million man-years were lost in Europe and one million in Canada and USA. Other estimates showed that the U.S. was losing, because of drop in exports to Latin America, 250.000 to 400.000 man-year jobs a year.

"We are not claiming that this picture summarises the full complexity of the phenomenon of unemployment in the industrialised countries. But we certainly are convinced that the reactivation of all the economies, those of the developed and those of the developing, by expanding the markets would help to decrease the shortage of jobs in Europe and North America as well as the very heavy burden of the foreign debt of our own countries".

Calling for joint efforts for recovering the dynamism of international trade, Alfonsin said it was wrong to think that "spontaneous action of the forces of the market" could find solutions for the present crisis.

"This ideology of resignation, besides being ineffective, embodies a historical regression that we have to fight. It would be highly damaging for the fate of humanity that we should give up on an exercise of will and political responsibility in the face of our common problems".

The Argentine President referred to the arms race and the world's strategic conflicts that "increases the weakness of our political systems, interferences in our solutions and absorbs part of national energies".

Referring to the appeals and the "five-continent initiative ... of the group of six" for cessation of the arms race, Alfonsin added: "Everybody knows the benefits that could be derived from cutting the armaments race. I think this is one of the most appropriate fora to stress this idea. Workers are more aware than anyone else that if at least a part of the huge mass of resources directed to producing increasing sophisticated arms were used for other purposes, the world economic predicament would be very different and some of our problems less worrying".