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President Bush's proposal to forgive billions of dollars in debt owed by Latin American countries is being hailed as a long-overdue initiative that will help struggling democracies and boost U.S. standing in the world.

The president laid out a package of proposals Wednesday to forgive part of the $12 billion owed to the U.S. government by Latin American and Caribbean countries. Bush said some of the debt could be swapped to buy environmentally endangered land.In addition, he called for work to begin on a "hemispherewide, free trade zone" and said the United States would work with other developed countries to channel up to $300 million annually to Latin America to spur foreign investment.

The proposals represented an about-face for the administration. It had been resisting congressional calls for debt forgiveness on the ground it could open the floodgates for domestic demands from groups ranging from farmers to people with old student loans.

The administration predicted that the Latin American debt concessions would have little trouble winning congressional approval. The initial reaction both at home and abroad was favorable.

Brazilian President Fernando Collor de Mello told Bush in a phone call that his proposal was "comprehensive, bold and innovative," a Brazilian spokesman said.

Honduran President Rafael Callejas termed Bush's proposals "encouraging news," while a spokesman said Mexican President Carlos Salinas de Gortari viewed Bush's speech as a "very important redefinition of the U.S. position regarding economic development in Latin America."

John Reed, head of Citicorp, a large U.S. bank with about $8 billion in loans in Latin America, said he welcomed the initiative as a way to bring economic growth and prosperity back to Latin America.

"The president acknowledged that in this changed world the United States cannot forget Latin America," said Reed.