CAMBRIDGE, MASS., JUNE 4 -- With the easing of the Cold War, nations of the world can focus on the long-ignored North-South agenda and confront issues involving drugs, debt and ecology, Colombian President Virgilio Barco told graduates of Massachusetts Institute of Technology today.

Surrounded by lush rhododendrons, Barco told 1,712 degree recipients and thousands of guests that the fight against "narco-terrorism" will continue in his country, a principal source of cocaine. Barco plans to step down when his four-year term ends in August, allowing for transition of civilian power.

Barco hailed the rise of democracy from the Philippines to Eastern Europe to Chile but warned that the drug trade has replaced totalitarianism as the greatest threat to democracy worldwide.

"In the past, we usually saw extremist ideologies as the most serious threat to democracy, but now drugs and organized crime are even more dangerous, not only to our democracy, but to yours as well," he said.

At the same time, Barco said, newly free peoples emerging from decades of dictatorship are demanding higher living standards. "It is your responsibility, and those in other wealthy countries, to ensure the fostering of global economic growth," he said.

Barco also drew applause when he declared that the 1980s marked the triumph of free markets and the end of "the long-running match between Karl Marx and Adam Smith." The graduates cheered again, however, when he warned that "free-market economics is not a magic wand which will somehow relieve us of the obligation to care for our fellow human beings."

MIT President Paul E. Gray, who is retiring after 10 years to chair the school's governing corporation, told graduates they are entering a world marked by three "recent, rapid and irreversible" changes -- collapse of the Soviet empire, recognition that human industry is altering the global environment and the rise of a truly global economy.