August 18, 2001

Latin American leaders appeal to Bush on Argentina

SANTIAGO, Chile (Reuters) -- Latin American leaders wrapped up an annual
summit Saturday with a personal plea to U.S. President George W. Bush to
back IMF aid to Argentina, which has been stricken by fears of default on its
$128 billion debt.

Chilean President Ricardo Lagos, host of the two-day annual Group of Rio summit
held at a renovated former Santiago train station, said he phoned Bush on behalf of
the presidents to press for international help for Argentina.

The plea to Bush gave an unusual show of no-nonsense diplomacy from Latin
American leaders worried a financial meltdown in Argentina could spill across the

"President Bush indicated that the U.S. administration, Secretary of State (Colin)
Powell (and)Treasury Secretary Paul O'Neill are particularly worried about finding a
sustainable, adequate solution to what is occurring particularly in Argentina," Lagos

"In consequence, we hope that the work being doing will bear fruit and we can have
quieter markets," added the center-left president.

Lagos and Bush spoke after the International Monetary Fund, of which the United
States is a major stakeholder, appeared to shy away from a new multibillion aid
package for Argentina in negotiations in Washington.

On Saturday, a White House official told reporters with Bush at his Texas ranch that
the U.S. president, in his conversation with Lagos, "outlined our position with regard
to Argentina and that is that we're working with the IMF to find a way to help
Argentina return to sustainable growth."

"We are watching the situation closely. We are in close contact with leaders and
governments in the region," the official said, declining to elaborate.

Recent statements led some political analysts to suggest Bush's administration may
make Latin America's third largest economy go it alone in a crisis that has shaken
world markets worried about a repetition of a 1995 regional financial meltdown,
known as the tequila crisis because it began in Mexico.

A poor cousin?

On Friday, O'Neill painted a picture of the South American nation as a poor cousin
recklessly eating up U.S. wage-earners' cash, saying the economy was in "very
slippery position."

That same day the 19-nation group, which includes regional powerhouses Brazil and
Mexico, issued a strong declaration calling for international financial organizations --
namely, the IMF -- to come to the aid of Argentine President Fernando de la Rua's

Latin American markets, which had been hoping for an announcement on Friday of
as much as $15 billion of fresh IMF cash, slumped on news that a deal with the IMF
may not be imminent after all.

The IMF's external relations director, Tom Dawson, said in Washington on Friday
that reports of the size and composition of any aid for the debt-ridden country were

In a statement that dampened hopes of a quick IMF package, O'Neill told CNN,
according to a transcript of the interview, that "we're working to find a way to
create a sustainable Argentina, not just one that continues to consume the money of
the plumbers and carpenters in the United States who make $50,000 a year and
wonder what in the world we're doing with their money."

Argentina, whose economy has not grown in three years, received $40 billion in an
IMF-led aid package in December but has still not dispelled fears of a debt default
and devaluation in its peso, which for 10 years has been pegged one-to-one to the

The government has introduced austerity measures to reach a "zero deficit" budget
this year.

The Latin American leaders pointed out that Argentina has made great sacrifices to
improve its financial state.

"The presidents of the Group of Rio manifest their support for Argentina, agreeing
that this country has made major efforts in its necessary austerity plans," the
statement added.

The Rio group is made up of Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica,
the Dominican Republic, Ecuador, El Salvador, Guyana, Guatemala, Honduras,
Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

    Copyright 2001 Reuters.