Latin American nations, whose combined foreign debts exceed $300 billion, are groping for a way to persuade the United States to help them reduce the amount of interest they must pay on their loans.
Many Latin American delegates to a special conference here on the region's debt have complained loudly of the high rate of interest the nations are required to pay. "It is killing us," Brazilian officials were reported to have said in the closed-door session, sponsored by the Organization of American States.
Most Latin American debts are owed to commercial banks, but several delegates noted that the high level of interest rates is the result of tight money policies in industrialized countries, chiefly the United States.
But U.S. officials here have given no encouragement to proposed solutions that would require official U.S. activity or joint tactics by the debtor countries.
"When you have $3 billion of debts, it is a financial problem. When you have $30 billion in debt, it is a financial problem. But when you have $300 billion in debt, it is a political problem," said a leading delegate to the conference.
"The United States has to realize that Latin America cannot service its debts and still continue to grow economically and avoid political and social difficulties," the official said.
In private conversations, Latin American delegates frequently refer to the unrest in Central America, and say the debt load could generate similar problems in the borrowing nations.
To cope with their interest payments, most countries have slashed imports, cut public spending and reduced the value of their currencies. Those actions--designed to reduce their borrowing needs--have spawned recessions in most Latin American nations, already burdened with high poverty levels.
But U.S. officials reject the notion that the so-called adjustment programs contain the seeds of political and social disaster. What Latin American nations want "is for us to guarantee them a flow of funds so they don't have to take many hard steps themselves," said one U.S. official.
The State Department's Paul McGonagle, who heads the U.S. delegation to the three-day technical session of the conference, told delegates late Monday that the nations cannot avoid adjustment programs and that, the longer policymakers try to avoid them, the more severe the adjustments will be.
Delegates to the conference said publicly and privately that there is no way the nations could join forces to renegotiate their debts collectively. The thought of such a debtors cartel scares commercial bankers, who own the lion's share of the outstanding Latin American debt.
Until recently, debtor nations were so relieved to get maturing debts rolled over and to get new money they desperately needed that they ignored the stiff fees and higher interest rate spreads imposed by the bankers. Because the overall level of rates is dramatically lower than it was 17 months ago, Latin American countries were paying reduced rates even though the banks' spreads (the difference between what a bank pays for its money and what it lends it out for) were higher.
Now delegates to the conference are beginning to pay attention to spreads, and although they say they could not run a debtors cartel, several delegates admitted they wouldn't mind throwing a little fear into the bankers.
The only concrete proposal to help countries deal with higher rates was put forward this morning by Venezuela, the host country. The plan calls for compensation to a debtor nation that has taken "adjustment steps" but finds itself in new trouble because of a general increase in rates.
Raul Sosa Rodriguez--a banker, economist and consultant to the Venezuelan Finance Minstry--said the new compensatory facility probably should be run by the International Monetary Fund or some other existing institution. Sosa said that the new facility could be aimed at all developing nations with loan problems, not just those in Latin America, and that contributions would have to come from the United States, Japan, and Western European governments.
U.S. officials said privately that, even on the long shot that the Reagan administration could be persuaded of the worth of such a proposal, the chance of getting Congress to authorize new contributions to international financial institutions is minuscule.
With the end of the technical session Wednesday, higher ranking officials from the 30 or so participating nations will arrive for a "ministerial" conference Thursday and Friday. Treasury Undersecretary Beryl Sprinkel will head the U.S. delegation to that conference.