When Latin American finance ministers and foreign ministers gather in the Dominican Republic this week to discuss common approaches to their massive debt problems, there will be less of the urgency that sparked the first such gathering last June in Cartagena, Colombia.
Interest rates have subsided, the U.S. economy has regained momentum and many countries have seen their exports to the United States soar, enabling them to generate dollars they need to pay their debts with less strain on their economies.
Nevertheless, nearly three years of economic crisis and austerity has taken its toll on Latin America. And although the biggest debtors -- those whose collapse would have threatened the world financial system -- now seem able to pay their international debts, their economies and their workers will remain under heavy pressure.
That prospect of long-term sluggishness in their economies has been the basis for so-far fruitless appeals from Latin governments that industrial countries, especially the United States, take a more direct role in solving the debt crisis.
But last June -- and again in September when the Cartagena Group met in Argentina -- the foreign ministers and finance ministers focused most on rising interest rates (each 1 percent climb in rates costs Mexico, for example, $700 million a year) and bank and U.S. economic policies that were squeezing them.
Now, rates have fallen (although not far enough in their eyes) and banks have agreed to better terms by reducing the spread between what they pay for deposits and charge the borrowers and by stretching out repayments for a longer period of time. For these reasons, the debt and economic crises will be discussed in a far less "rhetorical" atmosphere, according to one Latin American economic official.
Furthermore, Argentina is expected to retreat from its earlier push to "politicize" the debt issue. After two years of dragging its heels, Argentina has finally reached an accord with its bank lenders and the International Monetary Fund, the international financial rescue agency. Most observers -- including a large number of Latin American officials -- felt that Argentina had used earlier forums as a pressure point to get better terms from its bank lenders and more leniency from the IMF, which requires painful economic belt-tightening as a condition of its credit aid.
"With Argentina no longer on the outside, the country will find raising the rhetoric level less useful," an international economist said.
But if the atmosphere in Santo Domingo will be less politically charged, the issues the debtor nations must face still will be difficult.
Although smaller debtors such as Peru and Bolivia still are floundering and low on reserves, the Latin American debt crisis no longer looms as an imminent threat to the world financial system.
If the nations found it impossible to induce Western governments to boost aid to the region when a financial panic loomed, their appeal will seem even weaker without an imminent crisis.
Yet the need for help may be greater in the years to come when Latin American political leaders will find it harder to appeal to "crisis" to persuade their citizens to make huge sacrifices.
Although the debtors' success in boosting exports and damping imports to accumulate dollars needed to pay debts astounded even the most opimtistic observers, their internal economies face a slow recovery.
"We now are confronting the long march ahead," according to Jose Angel Gurria, Mexico's director of public debt.
Many economists worry that the debtor nations will weary of the austerity measures they have taken to build up their international position, eliminate their need to borrow and reduce rampant inflation. These programs, developed in conjunction with the IMF, are called "adjustment programs."
As a result of their adjustment programs, Mexico, Brazil and Venezuela (which undertook its program without an IMF imprimatur) have managed to build up a huge supply of dollars to guard against the situations they found themselves in nearly three years ago: out of reserves with big foreign bills to pay. As economists would say, their external position has improved substantially.
But that external improvement came mainly at the expense of their workers -- although their bank lenders swallowed some of the cost.
"All IMF programs put the burden of adjustment on labor," said the chief international economist for a U.S. regional bank. "There is only so much farther you can go. Who ever heard of a 10-year austerity plan?"
So far, despite massive increases in unemployment and a sharp slash in the standard of living, the major debtor nations -- with the exception of Argentina, which has just started its program -- managed to adjust without the major political and social disruptions many observers predicted.
For the future, "The secret is to combine adjustment and growth," Mexico's Gurria said.
And Mexico and Brazil -- each with about $100 billion in foreign debts -- have begun to do just that.
After steep recessions in 1983, economic growth resumed in 1984. Mexico's real economic output grew about 3 percent, and Brazil's increased about 4 percent. That is better than recession but far less than they achieved before the crisis, when foreign funds were plentiful and could be used to subsidize consumption (by financing government budget deficits) and to invest in development activities to create new jobs for burgeoning populations.
But Brazil's growth, at least, seems to have been achieved because the country was willing to ease its internal economic policies. Its growth came about because the outgoing military government was willing to tolerate -- or unable to control -- inflation (200 percent), big budget deficits and excessive money growth.
The IMF so far has winked and rewritten Brazil's goals to enable it to remain in compliance with its programs (and keep bank and IMF funds flowing into the country). Presumably the agency will not wink forever.
If the IMF continues to rewrite goals, it will lose its credibility as an international financial disciplinarian. If it declares Brazil out of compliance, the nation will find it hard to keep the confidence of its bank lenders and its citizens, a top U.S. official said.
"Brazil is making a mistake. The kind of growth it is achieving under rampant inflation is not solid," said a U.S. government official. If Brazil does not get back on course, it will find itself in severe difficulty again "some months from now," he said.
But Sao Paulo economist Sergio Pimental Mendes said Tancredo Neves -- Brazil's newly elected president and the first civilian to hold the post in more than two decades -- has the political support to move the country back on the course it agreed to follow with the IMF.
Brazil's inability to meet its internal goals while surpassing its external goals is a sticking point in negotiations with its banks for a long-term repayment plan on its huge foreign debt, about $60 billion of which it owes banks.
Brazil and Mexico have been able to generate surpluses in their financial relationships with the rest of the world because of big devaluations, the large growth in world trade (much of it accounted for by the United States) and the stress both countries have placed on exports.
"But Brazil has got to beat inflation," a key U.S. banker said. And he added that the steps must be taken decisively and soon, before a crisis forces the country to take measure so tough that they trigger another recession.
Most officials and economists say debtor nations must continue to chip away at budget deficits and inflation to induce their own citizens to save domestically (rather than abroad). Latin American savings must replace foreign bank loans as the sources of development.
But with populations in Brazil and Mexico growing dramatically each year, both countries have got to get back to a sustainable growth rate in the range of 4 to 5 percent to create employment for new job-seekers and to cut into the huge number of workers still unemployed as a result of the 1982-83 recessions.
According to a top international financial official, "Many of the debtor nations, including Brazil, have far sounder internal policies than they did before the crisis."
One international economist said that the key development to watch in Santo Domingo is whether the debtors spend their time discussing their own economic policies.
If the debtors continue to dwell on the need for more help from Western nations -- because the root of their problems are high interest rates and recession in the industrial world -- they will miss the point, he said.
Western taxpayers are not going to swallow their debts or substantially boost their development assistance. Latin American nations will have to solve their own problems, he said.