In an article, "Will Debt Crush the New Democracies" (Outlook, July 21, 1985), a photograph indicated that Osvaldo Hurtado is the president of Ecuador. Its president is Leon Febres Cordero. In Peru, the correct name of the party coming to power is APRA.

THE UNITED STATES today has the greatest opportunity to build a partnership with Latin America's biggest countries since John F. Kennedy's Alliance for Progress. Eight of the continent's 10 Latin nations are now governed by democratic administrations that have proved both more moderate and more politically stable than their failed predecessors of the 1960s and '70s.

Yet none of these moderate leaders has managed to establish steady economic growth or assure the long-term payment of his country's debts. Five South American countries are suffering from inflation rates measured in the hundreds -- or thousands -- of percent. And all are desperate for dollars to save their countries' economies and their regimes.

"The United States is in the position to play an important role in the consolidation of pro-Western democracies," said Enrique Vanoli, a leader of Argentina's governing Radical Civic Union. "But a failure to understand our situation could have very serious consequences."

At stake in the continent is the most extensive movement toward democracy since the late 1950s, when elected governments were the rule, and Venezuela and Colombia established what are now South America's only long-standing civilian regimes. Since 1979, Ecuador, Peru, Bolivia, Argentina, Uruguay and Brazil have all shaken off military governments that had lasted from seven to 21 years.

Many American policymakers hope the politics of this movement could become a model for the trouble spots of Central America, Africa and Asia.

Across the area, the new democratic administrations have been led by centrists who have managed to revitalize respect for civil liberties and consensus politics for the first time since the 1960s, when the influence of Fidel Castro and Che Guevara spread through the region.

Peruvian President Fernando Belaunde has embodied the process. Recovering from a 1968 leftist military "revolution" that overturned his democratic government, he won reelection when Peru returned to democracy in 1980 and served out a full five- year term. Late this month, he is to become the first elected Peruvian president to turn over power to an elected successor in more than 60 years.

In Argentina, Uruguay and Brazil, where centrist politicians have also prevailed over populists and leftists, terrorist and guerrilla movements that once numbered in the thousands have disappeared or renounced violence, and public sympathy for them, once widespread, has vanished.

"Anybody who walks around with a gun now is finished politically," says editor James Neilson of the Buenos Aires Herald. "That's a very new development."

Deeply marked by the violence and intolerance of the last two decades, the new class of South American leaders has been preoccupied with avoiding the factional and ideological excesses that led to the coups of the 1970s. This spirit of reform has been the primary content of their platforms and the source of their electoral appeal.

In Argentina, for example, President Raul Alfonsin was virtually indistinguishable from the rival, favored, Peronist candidate on economic policy in the 1983 election. But Alfonsin won an overwhelming victory by promising to respect civil liberties, correct abuses of human rights and prevent the internal violence that ravaged the country under the Peronist government of the 1970s.

What has hamstrung the governments of Alfonsin, Belaunde, Osvaldo Hurtado of Ecuador and Hernan Siles Zuazo of Bolivia is that this political renovation has not been accompanied by a fresh approach to severe structural economic problems.

Economic conditions have changed drastically since the civilian political parties of these leaders were last in government in the 1960s. That decade was one of rising export prices, strong foreign investment and rapid growth throughout Latin America.

In the last five years, trade with industrialized countries has rapidly deteriorated as prices for Latin America's traditional exports -- copper, silver and grain, for example -- have plummeted. Meanwhile, flows of capital from banks and other investors have dried up as governments have not been able to manage the staggering sums of money they borrowed in the 1970s for development projects that are now recognized as ill-advised. International interest rates have risen, multiplying the burden of debt payments. As a result, every South American country now has loans that can be paid only by reorienting economic activity toward trade at the expense of internal prosperity.

The challenge of finding a new formula for growth under these adverse conditions is the implicit mandate of the new governments. For it was economic failure, rather than political considerations, that led to the downfall of the military rulers.

Only after the economy had crashed in Argentina, Uruguay, Brazil and Bolivia, and only after the Peruvian military's socialist experiment failed, were a decisive majority of the national elites and general public in those countries willing to rally behind the political liberalism offered by politicians like Belaunde, Alfonsin and Tancredo Neves in Brazil.

Nevertheless, these leaders' preoccupation with strengthening civil rights, decentralizing decision-making and "professionalizing" corrupt armies -- the product of their own bitter experiences -- have in many cases prevented them from recognizing or accepting the new economic challenge.

In Peru, Belaunde took office with an energetic program to strengthen civil liberties. But in economic policy, the veteran leader simply picked up where he had been interrupted in 1968, seeking growth through massive government investment in infrastructure and frontier development.

When the foreign debt crisis reached Peru in 1982, Belaunde proved unable to respond, insistently continuing his investment program. The result has been a economic collapse that has brought Peru to the brink of default on the $12 billion it owes abroad.

In Argentina, Alfonsin entered office in December 1983 with a program for sweeping political reforms. Treatment of the country's soaring inflation and debt was a secondary priority, and the expansionist policy that finally took shape during 1984 was nearly identical to that applied by the Radical Civic Union's previous government in the mid- 1960s.

While Alfonsin's approach led Argentina to the brink of hyperinflation, an even greater economic disaster was underway in neighboring Bolivia. There, Siles Zuazo was forced to renounce the last year of his term after overseeing the collapse of production, a virtual default on the foreign debt and the explosion of inflation to a percentage figure calculated in the tens of thousands.

Even when civilian leaders have given priority to economic restructuring, their willingness to act has been limited by their acute consciousness of the political polarization of the past. Almost every South American president has echoed new Brazilian President Jose Sarney's argument that measures imposing economic hardship on the public threaten the existence of a new democracy.

Such concerns at times appear more rooted in the conflicts of the 1960s than in the overwhelming centrist consensus reflected in the 1980s elections. "The fear for political stability becomes self-defeating, because if you worry about it too much you end up not taking any action," said Roberto Cortes Conde, an Argentine historian. "The point should be to prove that democratic governments are capable of taking the hard steps."

While these political limitations have helped prolong the region's internal imbalances, the strategy of Western governments and the IMF for managing foreign debts has also failed to provide a clear way out.

Three years of austere adjustment programs overseen by the IMF have improved trade earnings in several South American countries. But they have been ineffective in controlling inflation or reigniting foreign investment and economic growth.

The dangerous thing, in U.S. terms, is that this search for economic solutions has caused a shift away from the "centrists" of the Latin American political spectrum -- those that stress civil rights, tolerance of opposition and a results-oriented, pragmatic approach to policy, open to compromise.

In Ecuador's election last year, for example, Hurtado was replaced by Leon Febres Cardero. Hurtado's main focus was a scrupulous rebuilding of democratic institutions -- his respect for the constitution, the courts and the congress carried the fervor of the professor of political scientist that he was. Cardero, by contrast, is from the right of Ecuador's political spectrum. He is attempting to implement a strongly free-market economic program that seem to favor the interests of big business and large landowners, and he has been accused of seeking to subvert the constitituion in the process.

In Peru, Belaunde is due to turn over power to the Arpa Party of Alan Garcia. Garcia has taken the radical position of rejecting the very principle of International Monetary Fund intervention in the economics of his country and has said he will refuse to accept any of its recovery plans.

Last week, elections to replace Siles in Bolivia returned a plurality for Hugo Banzer, a retired general who ruled the country as dictator in the '70s.

Argentina's Alfonsin, meanwhile, has set aside his political and military reforms to launch his drastic austerity program marked by a wage-and-price freeze and the introduction of a new currency.

The ineffectiveness of multilateral solutions, whether proposed by the IMF or the 11-nation Cartagena group of Latin debtors, has led to the increased role of the United States in the region. Brazil, Peru, Argentina and even Chile have all come to depend on the Reagan administration for emergency loans or political support with banks and the IMF in the last two years, and now look to Washington in proposing long-term solutions to the debt problem.

Not since Washington terminated arms sales to the major South American countries in disputes over nationalizations, nuclear power and human rights in the 1960s and '70s have U.S. leaders had such an opportunity to exert economic and political influence in the region.

For the Reagan administration, the potential benefits of such cooperation can be glimpsed in the close consultations between Argentine and U.S. economic officials on Argentina's new antiinflation plan. Buenos Aires conspicuously has moderated its promotion of a Latin American debtors' group and its criticism of U.S. policy in Central America.

In Brazil, U.S. support in debt-financing arrangements has been accompanied by a renewal of cooperation in military and scientific affairs. In Chile, the prospect of American opposition to a new financing arrangement recently helped prompt Gen. Augusto Pinochet to lift a state of siege.

The risks of the new situation, however, may be equally great. Peru's failure to win stronger U.S. economic help under Belaunde's administration has helped inspire the more militant position of Garcia, whose rhetoric toward the Reagan administration has frequently been hostile.

Most of Latin America's democratic leaders continue to warn that the United States must act more aggressively to help resolve the continent's economic crisis, or face the loss of the continent's rare embrace of moderate democratic politics.

In the simplest terms, that means more U.S. dollars -- more investment in Latin American industries, more favorable terms for Latin America's exports to the United States and, above all, more help paying off the banks.

"If the United States isn't willing to understand the reality of our problems," Garcia warned several months before his election, "it could be confronted with a hostile bloc of governments in South America."