Good Neighbors Again

THROUGHOUT the 1980s, the United States and Latin America clashed on many issues - Central America, the debt crisis, drug trafficking, and the Malvinas-Falklands war. These conflicts are today mostly resolved or muted, and the US and Latin America have begun to enjoy an "era of good feeling." Consider these developments:

* The US is negotiating a free-trade arrangement with Mexico to accelerate the economic integration of the two countries.

* George Bush has proposed a Western Hemisphere free-trade system, and virtually every Latin American nation has responded enthusiastically.

* The US is cooperating with Latin American nations to restore a leftist, populist president to power in Haiti.

* Latin American leaders have been pressing President Fidel Castro of Cuba to join the world trend toward free politics and open markets.

* The US is being praised in Latin America for its efforts to promote peace in El Salvador.

This positive turn in US-Latin American relations should not be exaggerated. Disagreements and frustrations remain. But the discourse of US-Latin American relations has changed. It is increasingly rare for Latin American leaders to confront Washington or to seek political advantage at home by denouncing the US. Just the opposite: Most Latin American governments say they want stronger ties with the US.

President Bush, almost surely without fully realizing it, captured the new mood of hemispheric affairs when he announced the Enterprise for the Americas Initiative in June 1990. The Initiative offered to reduce the $12 billion debt Latin American countries owe the US Treasury, and proposed creation of a $300 million a year fund in the Inter-American Development Bank to promote private investment.

To be sure, the Initiative was not conceived as an economic recovery program for Latin America. It is, in fact, hard to point to any immediate and tangible economic gains from the proposal. Bilateral debt reduction will cut Latin America's yearly interest bill only by about 1 percent. The investment fund is very small. Despite the current enthusiasm in Washington and Latin America, hemisphere-wide free trade will be a long time in coming.

What the Enterprise Initiative does is establish a new structure of incentives to reinforce the region's own reform efforts. Providing no substantial resource transfers, this is a "self-help initiative" that promises Latin America an eventual economic partnership with the US once the region gets its economies in shape.

In the past 18 months, the Initiative has become the centerpiece of US policy toward Latin America, replacing Washington's waning interest in Central America. In Latin America, the Initiative has shifted emphasis from debt toward trade and foreign investment. Its fundamental achievement was to set a common hemispheric agenda for both the US and Latin America.

It is not only on economic issues that US-Latin America relations have warmed. The growing effectiveness of the Organization of American States - illustrated by its leadership in efforts to restore President Jean-Bertrand Aristide to power in Haiti - may be an even more significant demonstration of the improved inter-American climate.

Despite the good will now permeating inter-American relations, there are two continuing sources of friction: the war on drugs and US policy toward Cuba.

US anti-drug efforts are focused on the main supplier countries of Bolivia, Peru, and Colombia. While the US wants to curtail the flow of drugs northward, Colombia's principal aim is to contain the violence of the drug cartels. For Peru and Bolivia, the goal is an economically viable alternative for the huge numbers of coca-growing peasants. In all three countries, democratic civilian leaders resent Washington's pressures and are concerned that the US emphasis on expanding the anti-drug role of the milit ary will undercut civilian authority.

Nearly every Latin American country now agrees that political change in Cuba is desirable. Some Latin American governments are openly critical of political repression in Cuba; others privately press for change.

At the same time, however, most Latin American leaders are dismayed by US policy. They argue that reintegrating Cuba into the hemispheric community is the best way to encourage change. In contrast, the US insists that Cuba be kept isolated until a new government is installed.

No one can yet say how long this "era of good feeling" in US-Latin American relations will last. What we do know is that unless Latin America's major countries are able to sustain democratic rule and stick with open, market-oriented economies, relations with the US will be more difficult. We also know that Latin American governments would quickly sour on Washington if the US were to close off the possibility of closer economic relations.

The US would surely endanger its current good will in the region if it retreated from commitments it is perceived already to have undertaken. Relations would be frayed, for instance, if Washington were to withdraw from its free-trade negotiations with Mexico; began to downplay the prospects of free-trade initiatives with other Latin American countries; or worse yet, became more protectionist and unilateral in its commercial policies.