Coming to Grips

Seven days after the end of the Organization of American States meeting in Costa Rica, the U.S. this week goes to a hemispheric Committee of 21 development conference in Colombia. It is' a logical progression from symptom to cause. The symptom is the wide emotional response in Latin America to the nostrums proposed by Fidel Castro; the cause is the growing despair among Latin Americans over their inability to make the big breakthrough out of poverty and backwardness.

These are the conditions that give Fidel Castro and his vision of a Utopia a popular audience all over Latin America: 1% With 20 million more people than the U.S., the Latin American nations have combined gross national products of only about one-eighth the U.S.'s. Latin American population keeps rising at a fast 2.6% annually, which pushes the per capita share of G.N.P. down--from a fat 4.1% increase in 1957 to a slim .3% in 1959.

P:Though it produces and exports more goods than ever, Latin America's income from foreign trade is dropping. The prices of what it sells (coffee, farm products, petroleum, minerals) are falling; the prices of what it buys (industrial ma-thinery, tractors, cars) are rising steadily. P:Foreign private investment--as lately as five years ago the Latin American area was the No. 1 beneficiary--is falling fast. Capital from U.S. Government sources has also been decreasing. In 1959, the Export-Import Bank of Washington collected far more in repayments and interest from the region than it laid out in new money.

Latin America's Job. The development of Latin America is basically Latin America's job, and the Latin Americans know it. Says Rio's Correio da Manhd: "We are far from doing the most possible for ourselves. We flee with horror from fundamental problems." Latin America could:

P:Raise income taxes and crack down on its flagrant tax-dodging (and in the case of three smaller nations, enact so far neglected personal income-tax laws). Bringing collections up to U.S. standards would produce an extra $2 billion a year for development.

P: Stabilize itself politically to encourage investing at home: "flight capital" to the U.S. and Europe in the last ten years comes to $1.5 billion.

P:Cut away trade barriers that brake international trade, and incidentally, in the process, mow down parasitic bureaucrats by the thousands.

Yet these measures will not bring prosperity to Latin America, for they are all limited by the fact that the whole money pot, the combined gross national product, is only $60 billion compared with the

U.S.'s $505 billion. Neither sufficient taxes nor sufficient investment capital can be sweated out of such a small sum. A big share of the desperately needed roads, schools, houses, hospitals and industrial plant will have to be built with money from abroad.

The U.S. Job. This week the U.S. delegation to Bogota will offer its first installment on the solution: the $500 million Eisenhower plan voted by Congress last week. Measured against the need, the sum is small. It is less than the amount lost by Latin America this year because of the adverse terms of trade; it is only twice as much as the capital expected to be taken this year from the region for repayment to the Export-Import Bank. Brazil's chief delegate to the Bogota meeting, Augusto Frederico Schmidt, author of Brazil's Operation Pan American, which asks $10 billion in 20 years of aid to the region's economy, says that the U.S. proposal is "very kind, very generous," but it is only "a short-term palliative, made on the spur of the moment under the pressure of the Cuban crisis."

The Eisenhower plan is deliberately aimed at producing quick, visible results, such as low-cost housing. It does not tackle the hard, basic job of building an industrial economy that will routinely produce good-paying jobs and good housing. Doing that job, says Under Secretary of State Douglas Dillon, U.S. delegation chief at Bogota, and a thoughtful banker with a refreshing disdain for diplomatic cant, may easily cost $10 billion.

After years of platitudes about the Good Partner Policy, designed to let the U.S. off cheaply, Washington seemed fi nally to be coming to grips with its neighbors' problems. The U.S. choices seem to be only two: give Latin America help, Marshall-Plan style, or see the area hunger perilously and indefinitely.

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