Abroad

Madrid Hesitation Waltz During the last election campaign, one of the planks in the platform of the Spanish Socialist Party was the abandonment of membership in the North Atlantic Treaty Organization, which the previous parliament had ratified. Now that Felipe Gonzalez’s Socialist government has settled itself in power, this question keeps awkwardly coming up. Like the Socialist government in Greece, which also pledged itself to withdraw from NATO, Gonzalez and his men are obviously having second thoughts. But pressure is mounting to settle the issue one way or another. Alfonso Guerra, deputy premier, has come out for early withdrawal, without specifying how this might affect the bilateral military agreements with the United States, which long preceded the NATO association. Spain’s formal adhesion to NATO may not make so much difference to the long-view strategic planners, since Spain has nowhere to go outside of Western Europe, but practically it would make a considerable difference. As Gonzalez grows in experience, he may decide that this is one campaign promise that should be forgotten.

Brasília Latin Debts Two of the biggest debtor nations in Latin America are striving to conform to standards of international practice in order to win support from the International Monetary Fund, but the struggle is far from easy. Brazil, for example, has announced that wages will go up by only 8 per cent in the next two years and that interest rates will be reduced. These measures will chiefly affect the industrial triangle of Rio de Janeiro, Sao Paulo, and Belo Horizonte. At the same time, Argentina, which has a foreign debt of $65 billion (compared to Brazil’s $90 billion), will default on one of the IMF’s basic requirements, namely to hold the inflation rate for this year to 160 per cent. Consumer prices rose by 15.8 per cent in June; if that trend should continue, Argentina will suffer the highest annual inflation rate—340 per cent—since the military junta took over the country in 1976. The June increase was blamed on speculators who cashed in on the redenomination of the Argentine peso. Economy Minister Jorge Wehbe is warning that consumer price controls may be imposed as a consequence. Higher interest rates may be another recourse for the government, which has been relying on unenforceable agreements with private companies to limit price rises.

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Madrid Hesitation Waltz During the last election campaign, one of the planks in the platform of the Spanish Socialist Party was the abandonment of membership in the North Atlantic Treaty Organization, which the previous parliament had ratified. Now that Felipe Gonzalez’s Socialist government has settled itself in power, this question keeps awkwardly coming up. Like the Socialist government in Greece, which also pledged itself to withdraw from NATO, Gonzalez and his men are obviously having second thoughts. But pressure is mounting to settle the issue one way or another. Alfonso Guerra, deputy premier, has come out for early withdrawal, without specifying how this might affect the bilateral military agreements with the United States, which long preceded the NATO association. Spain’s formal adhesion to NATO may not make so much difference to the long-view strategic planners, since Spain has nowhere to go outside of Western Europe, but practically it would make a considerable difference. As Gonzalez grows in experience, he may decide that this is one campaign promise that should be forgotten.

Brasília Latin Debts Two of the biggest debtor nations in Latin America are striving to conform to standards of international practice in order to win support from the International Monetary Fund, but the struggle is far from easy. Brazil, for example, has announced that wages will go up by only 8 per cent in the next two years and that interest rates will be reduced. These measures will chiefly affect the industrial triangle of Rio de Janeiro, Sao Paulo, and Belo Horizonte. At the same time, Argentina, which has a foreign debt of $65 billion (compared to Brazil’s $90 billion), will default on one of the IMF’s basic requirements, namely to hold the inflation rate for this year to 160 per cent. Consumer prices rose by 15.8 per cent in June; if that trend should continue, Argentina will suffer the highest annual inflation rate—340 per cent—since the military junta took over the country in 1976. The June increase was blamed on speculators who cashed in on the redenomination of the Argentine peso. Economy Minister Jorge Wehbe is warning that consumer price controls may be imposed as a consequence. Higher interest rates may be another recourse for the government, which has been relying on unenforceable agreements with private companies to limit price rises.