Democracy and Debt in South America: A Continent's Dilemma

Democracy and debt were a macabre pas de deux in South America during 1983. As military regimes withdrew in disgrace (Argentina), further liberalized (Brazil), or tried to cope with vigorous popular pressures to restore democracy (Uruguay and Chile), that welcome news was haunted by the growing social and political implications of the continent's economic difficulties. The growing foreign debt burden has become the most visible manifestation of the current economic crisis, the worst in more than 50 years.

The quality of life has deteriorated dramatically in most of the countries of South America, largely as a result of stabilization programs and austerity measures implemented in 1983. Outbursts of rioting and growing street demonstrations indicate a decreasing tolerance for belt-tightening among the poor and middle sectors of the populations. Many ask if it is possible for fragile democratic institutions to meet the demands of the International Monetary Fund and the international private commercial banks, and simultaneously to respond to the expectations and needs of their citizens.

U.S. policy in the Western Hemisphere in 1983 continued to emphasize what the Reagan Administration has taken to be America's "backyard" in Central America and the Caribbean. Indeed, the early twentieth-century reality of the "big stick" and "gunboat diplomacy" returned for many observers as American troops landed in Grenada, the number of U.S. advisers increased in Central America, U.S. covert aid for guerrillas became overt, and American warships steamed off the coast of Central America. These actions were a warning to unfriendly governments that the Reagan Administration was committed to a reassertion of what it perceived as U.S. vital interests in the region. Headlines trumpeted the meandering of the Contadora Group (a regional peace initiative by Colombia, Mexico, Panama and Venezuela) as well as the deliberations of the Kissinger Commission for Central America.