Conable Opposes Bradley Proposal On Latin American Debt
WASHINGTON (AP) _ World Bank President Barber Conable on Wednesday voiced strong opposition to a proposal by Sen. Bill Bradley to help ease the Latin American debt crisis through partial loan forgiveness.
The plan, expected to be given new momentum with the Democratic takeover of the Senate, could backfire, drying up sources of new bank loans to those nations completely, Conable suggested.
Instead, Conable told the National Association of Manufacturers, a rival plan advanced by Treasury Secretary James A. Baker III calling for $29 billion in new loans should be given more time to work.
Conable said that the so-called Bradley plan would do little to revitalize troubled Latin American economies. He said the Baker proposal, which ties new loans to economic reforms within the recipient nations, stands a far better chance of succeeding.
The Bradley proposal would cut the interest rates on international loans by three percentage points and cancel 9 percent of the principal that debtor nations owe over three years.
Bradley, a New Jersey Democrat, has sponsored legislation calling on President Reagan to convene an international debt summit to discuss his proposal and other new strategies for dealing with the Third World debt issue.
Bradley aides said Wednesday they anticipate quick action on the measure when Congress reconvenes in January with Democratic majorities in both chambers.
Conable, a former Republican congressman from New York, said commercial banks would balk at making new loans where corresponding steps were not being taken to spur growth.
″How do you get the additional capital? (Banks) simply won’t come fortward to make the new loans,″ Conable said.
The Baker plan would make $29 billion avaiable over the next three years to 15 debtor nations, most of them in Latin America, that have debts totaling nearly $450 billion. Of the $29 billion, $20 billion would come from commercial banks.
Conable said the Baker approach made more sense, at least from his vantage point as head of the 151-nation lending organization.
″Commercial banks must be convinced that old debt and new debt will be better managed by a growing economy,″ he said.
The first loan package to be put together under outlines of the Baker plan is a $6 billion relief plan for Mexico. Conable, who is helping assemble the package, said its ″critical mass″ of private banks loans now have been put together.
Completion of the package, which also includes about $2 billion in new loans from the World Bank and International Monetary Fund, should be announced soon, Conable said.
On another subject, Conable praised recent steps taken by Japan to stimulate demand for the products of other nations and to pump funds into the economies of some developing nations.
He said recent loans by Japan to Columbia and Mexico ″were not tied to the purhase of Japanese goods - and that’s good news.″
Conable also said that the World Bank is studying, although without much enthusiasm, a proposal advanced by members of Congress from Idaho that would enable silver-producing nations to use their silver supplies to help them pay back loans.
Bonnie Limbach, an aide to Rep. Larry Craig, R-Idaho, said the plan would help trim a world surplus of silver and ″put our miners back to work.″
Conable said the plan clearly would be a boost to silver-producing nations like Mexico and Bolivia, but would not be of much help to other developing nations.
″But it’s an interesting idea,″ he said. ″And clearly it would be helpful to Idaho.″