ARGENTINA THE 'BEAUTIFUL'
Aires is Rome, Paris and London all built into one.
by James before Argentina hit the skinds in December 2001
Such is the translated
description by an obscure twentieth century journalist of one of Latin
Americas richest and most advanced countries in the southern hemisphere.
Blessed with decades of European immigration, Buenos Aires is
Rome, Paris and London all built into one. This is a land of immeasurable
wealth, spiced by a populous with a high level of education and intellect,
he went on to say. For more than a century Argentina had enjoyed the
harvest of it's Pampas and the fruits of its industrial
Since declaring itself independent from Spain in 1825 Argentina had
grown from strength to strength. For many years, it has been one of
the most developed manufacturing sectors of Latin America. Coupled with
fertile lands producing a high level of agricultural products as well
as rich in oil deposits, the Republic seemed to prosper in a self-sufficient
manner, unique in the modern world. So what has gone wrong?
At this moment in time the country owes its soul to the financial devil.
Successive governments over the last few decades have allowed the country
to reach, at one stage, absurd figures of inflation (2000% in the 70s)
as well as fall into an external debt that now stands at billions none
other than 44% of its GDP! Any modern corporation in todays capitalist
environment would have placed its staff on the dole, sold off what ever
remained of its fixed capital and declared bankruptcy years ago. But
a nation is not a company.
Argentina has been in financial trouble, on and off, for 70 years
said Paul ONeill, secretary of the US Treasury. Weve
tried to act as their Chief Firemen when we should have been getting
rid of the Fire Department,'he added. His statements came at the height
of negotiations with the International Monetary Fund as Argentina tried
to reach agreement to bail out of yet another economic mess. The recent
announcement of 8000M dollars of aid by the IMF on the condition that
the zero deficit law is enforced over the next few months
is a step in the right direction.
But Argentines are famous for accepting loans and then reverting back
to the happy go lucky lifestyle until the money runs out.
Its a very rich country says Walter Martinez, a forty-year
old immigrant hairdresser from Buenos Aires who has now returned to
Spain. But suffers from a long history of mismanagement and corruption,
he added. Despite a plethora of economic dissertations and thesis written
the world over, the fundamental problem probably stared the day the
Peronists took over just after World War II.
When Juan Domingo Peron and his wife Evita came to power in 1946, and
entered the Casa Rosada (Argentinas Presidential Palace)
they inherited an overflowing national bank balance. Years of administering
a warring Europe with vital food supplies had filled the countrys
coffers with hard foreign currency. Instead of continuing the economic
successes of the past, the new Peronista movement known as the Descamisados
embarked on a catastrophic series of industrial and social developments
that continue to haunt the country to this present day. Indiscriminate
nationalisation, rapid industrial growth and lavish social benefits
for the workers have resulted in lasting economic and social problems.
The following twenty years were marked with runaway inflation, strikes
and high unemployment. Added to these problems have been a series of
political upheavals. These have ranged from military coups and sporadic
democratic elections to two wars, the so-called dirty war
against Marxist guerrilla movements and the infamous battle of the Falklands
Islands. Since the early eighties, democratically elected presidents
have run the country. Each in turn has tried to induce economic stability
including privatisation of national industries wage and price controls,
cuts in public spending and restriction of money supply. But the financial
malaise persists. On the other hand, why are the world financial markets
Argentinas main trading partners are Brazil, Mexico and the USA.
Building up huge debts with these giants without any signs of relief
would have a knock on effect, especially Brazil whose own foreign debt
is far from healthy. The cumulative result from a large number of Latino
bank balances in the red were bound to ring the alarm bells the world
over. The whole network of Latin American stock exchanges would go into
turmoil with the obvious consequences north of the Equator. So? Is there
light at the end of the tunnel?
The IMF with its loan package, has given Argentina a last chance
- whatever that means, to put its house in order. This means draconian
measures over the next few months that equate to: Not a penny
spent without a penny income. In other words, Zero deficit
accounting. This is all very well on paper but in practical terms it
is easier said than done. To start with, trade unions who control the
working forces and provincial governors who manage the regional budgets
still have to come to terms with the new measures. To cut wages, pensions,
public spending and all other peripheral expenditures in one fell swoop
are a hard task for any government. Add to it the machista
attitude of most Portenos (Buenos Aires residents)
these measures do not concern me and you have a formula
for further trouble. And what about overall corruption itself? How will
this unfortunate virus that has prevailed within the system for decades
be eradicated overnight?
Nevertheless, there is no other alternative. If Argentina, on the other
hand, manages to survive the diet over the next six months, as stipulated
by the IMF, further world assistance would come forward. The World Bank,
the Inter-American Bank of Development ,as well as the G7, have all
pledged some sort of aid for the future. The mere hint that these latter
institutions would be involved at one stage is indicative of the world
preoccupation on Argentinas economic future.
It would be interesting to know what the anti-globalisation organisations
that persist in creating havoc for the economic gurus think about all
Skinner. 2001 - our Spanish correspondent
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