When 34 leaders of the hemisphere hold their second conclave this week, long-term social-welfare issues will figure high on the collective agenda

By TIM PADGETT

he first-ever Summit of the Americas, a grand gathering of 34 heads of government in Miami in December 1994, was a historic landmark followed by a disaster. At the meeting, U.S. President Bill Clinton, acting as host, set a deadline of the year 2005 for achieving a hemisphere-wide free-trade zone. Less than two weeks later, the Mexican peso crashed, plunging America's newest free-trade partner into its worst recession in six decades--and putting the rest of Latin America through an economic bungee jump dubbed "the tequila effect."

This time the disaster came first. Last October, six months before the second Summit of the Americas, which opens this week in Santiago, Chile, Asian money markets collapsed, and the wave of panic selling spread instantaneously across the Pacific. From Mexico City to Buenos Aires, the crisis-hardened economies of Latin America bent before the storm but didn't break. The psychological boost from that exercise in damage control, says Chilean Foreign Minister Jose Insulza Salinas, has been immeasurable. "That was the test," says Insulza. "It was the moment we could say we were strong."

So the mood that will be struck as 34 leaders hold their deliberations in Santiago's Sheraton Hotel April 16-19 is of merited confidence. And some will be more confident than others: for example, Brazil since 1994 has emerged as an economic and diplomatic powerhouse, despite the shattering effects of the Asian meltdown. But all those in attendance (nondemocratic Cuba is excluded) feel bullish enough to launch formal negotiations over the 1994 goal that was overshadowed by the Mexican debacle. That is the hemisphere-wide agreement known as the Free Trade Area of the Americas, or FTAA, a bid for regional integration to encompass 770 million people and economies with a gross domestic product of almost $10 trillion, eclipsing any trade bloc in Europe or Asia.

For the first time, the hemisphere also seems willing to push for some urgent noneconomic reforms: the political, judicial and educational transformations that most countries in the Americas need to produce a more modern and just new world order. "The agenda," says Clinton's special envoy to Latin America, Thomas McLarty, "is about equipping all our people with the tools they need to participate in FTAA."

On that score, no crusade is more critical than education. For most countries in the hemisphere it remains, says Brazilian political scientist Helio Jaguaribe, "the origin of all our troubles." The 1994 summit declaration in Miami set a goal: to have all the hemisphere's children complete at least primary school by 2010. Since 1994, however, Latin America's primary school dropout rate has actually climbed. The Latin region spends a paltry $252 per primary school student, vs. $4,170 in developed countries. But the real issue is that too many Latin American governments still prize cutting ribbons at new schools over the learning inside them.

To correct that, Santiago will present a "quality strategy," says Mario Marcel, education adviser to Chilean President Eduardo Frei Ruiz-Tagle's government. Among its themes: improved teacher training, pay and textbooks, as well as a massive redirection of resources to primary and secondary schools--and away from universities, where more than half the region's education funding goes to subsidize the richest 20% of the population.

These longer-term fixes are needed because despite a fairly consistent record of economic growth, the already yawning gap in well-being between rich and poor in most of the Americas has only widened since 1994. While the Miami summit pledged to cut Latin America's child mortality rate (about 47 per 1,000 children under age 5 in 1990) a third by the year 2000, for example, the figure still hovers at 40 per 1,000. Reform of corrupt police and courts has made even less progress.

Summit pronouncements tend to paper over differences. But there will be sharp conversations behind closed doors. Almost everyone is expected to issue a denunciation of Washington's drug-certification policy, whereby the U.S. unilaterally judges which countries are worthy allies in the antidrug war. The distinctions are often laughable and do little more than illustrate Washington's diplomatic preferences. A push will be on for a multilateral certification process under the aegis of the Organization of American States (OAS).

Ironically, the U.S. would probably prefer to discuss that or almost anything else except the nuts and bolts of free trade. The leery U.S. Congress, especially leaders of Clinton's Democratic Party, is the main stumbling block on the road to a hemispheric free-trade zone. Until it renews Clinton's fast-track authority to present such pacts for a vote without congressional revision--which doesn't look likely soon--FTAA talks will be largely talk.

Still, greater access to the $7.5 trillion U.S. market is vastly important to other countries in the region, and they keep hoping. The fast-track woes "have been a great letdown for us," says Andres Cisneros, Deputy Foreign Minister of Argentina, which along with Brazil, Canada and the U.S. will chair the FTAA negotiations. But in the longer run, he says, "integration is inevitable." Since 1993, when Mexico, Canada and the U.S. signed the landmark North American Free Trade Agreement, more than a dozen bilateral or multilateral agreements have been signed in the hemisphere, and blocs like the Brazil-led Mercosur, which includes Argentina, Paraguay and Uruguay, are the rule of the day. As a result, Latin America's economy has grown 15% since 1994, to $2 trillion. And despite the Asian shock, 1997 saw the region's best performance in more than a quarter-century.

To critics of free trade, that is not enough. And the summiteers are taking more efforts to ensure that critics will have their say. In preliminary talks last month, organizers created a special committee to receive recommendations from interest groups like labor. The aim is to convince opponents like U.S. congressional minority leader Richard Gephardt that the FTAA, in Gephardt's words, will give underdog interests "the same protections as copyrights." U.S. Trade Representative Charlene Barshefsky acknowledged last month that "society today feels threatened by globalization and trade agreements. It must be able to be heard."

That will not keep marchers out of the streets in Santiago. One of the picketers will be Juan Jose Gorriti, head of the General Workers Confederation in Peru, which has suffered as a result of free-market reforms. "Our government doesn't even discuss the FTAA in its own Congress," says Gorriti. In the end, says OAS president Cesar Gaviria, the resistance to fast track in the U.S. might actually be a good thing for the summit. "It helps preserve the balance of issues," he says. But reforms like educational improvement take money, which only growing economies can provide.

Summitry is a ritual as well as a forum for substantive discussion. What ever happens in private, hemispheric solidarity will be on display. This time it may even be heartfelt and a good reflection of the progress that has been made so far.

--With Reporting by Catherine Elton /Lima, Jack Epstein /Rio De Janeiro, Uki Goni /Buenos Aires, Elizabeth Love /Santiago, Jane Knight /Caracas And Douglas Waller /Washington