Joy in Brasilia, Despair in Buenos Aires

Joy in Brasilia, Despair in Buenos Aires

* Argentina's death throes go largely unnoticed abroad

* While a majority of Brazilians are seized by hope as a result of Lula's triumph in their country's presidential race, Argentina's economic crisis has left its population unemployed, deeply embittered, resentful of government corruption and snarling at the IMF

* The collapse of Argentina's economic and financial infrastructure has led to the disintegration of the country's social foundations

* Under the Menem presidency, during which period the IMF greeted this scoundrel with praise and enthusiasm, Argentina's woeful current economic plight was hatched due to government corruption and mismanagement of its loan portfolio and the basic dishonesty of its neo-liberal reform program

* Argentina could be the next Latin American domino falling into the democratic-left camp

Nothing could better legitimize the criticism of the IMF's pursuit of globalization, or better illustrate the case against the agency, than the events that occurred in Argentina over the past decade. The worst expectations of financial and social collapse due to inappropriate and often inept IMF policies unfortunately have come to fruition.

A nation that "was and no longer is"

Once the wealthiest nation in Latin America and among the wealthiest in the world, Argentina is now sliding into desperation, with the bottom not in sight. More than half the population lives in poverty, and 25 percent of the poorest Argentines cannot provide themselves with the basic essentials of food and shelter to survive. In a country with enormous natural and intellectual resources, a history of powerful labor unions and a traditionally strong industrial base, officials estimate that, after factoring in joblessness and underemployment, two out every five Argentines cannot find sufficient work to support themselves or their families. This year alone the country's GDP has fallen 15 percent, investments decreased by 43 percent, and the currency is now worth 30 percent of its January value. Almost beyond toleration, the country's social infrastructure is collapsing, unemployment continues to rise and each month more Argentines lose their homes, causing many of its citizens and recent immigrants, now completely alienated, to try to return to the countries of their ancestry-mainly Spain and Italy.

While Brazilians are full of hope and enthusiasm over the prospect of a Lula presidency, the exact opposite is the case in Argentina. In an article in El Pais, former Uruguayan president Mario Sanguinetti comments, "The problem is that Argentina 'was' and no longer 'is.' Or it doesn't feel that it is." He explains that the events of recent years in Argentina have led its people to believe that their nation, which they once held in the highest esteem, no longer exists as it once did-as a legitimate, sovereign state. With the disastrous combination of inept leadership and shortsighted, if not misguided IMF reforms, Argentina's enormous natural and national endowments have been squandered, and its citizens abandoned by their own leaders. While the international financial community has adapted to its own economic crisis, Argentines still suffer every day, but their travail rarely makes headlines in non-Argentine newspapers, and few rescue plans are being readied to deliver the country from its nightmare. The situation could certainly lead to an explosion.

The political vacuum

Mariela Klarman, a university student, echoes the sentiments of many of her fellow Argentines, young and old, saying, "I don't trust any political leader in Argentina. Not the current ones, nor the ones that came before, nor the ones that will come next." Argentines are quick to blame their leaders for the nation's woes, pointing to gross incompetence and the almost daily revelations of shameless corruption engaged in as almost a matter of right by government officials, as the major factors bringing about the country's economic collapse. Transparency International chairman Peter Eigen has argued that former presidents Carlos Menem and Francisco de la Rúa have allowed the country to be "captured by a network of leaders who misuse it in the service of their business and political interests."

Argentina's "savior"

Many Argentines appear to consider leftist Adolfo Rodríguez Saá the lesser of many evils: the provincial governor and onetime president leads the polls as the Peronists' candidate for the March 2003 presidential elections. "Leading the polls," of course, is a purely technical term in Argentina; most findings show Rodríguez Saá still pulling less than 20 percent of potential votes. His numbers, despite their diminutive size, reveal the tendency of many Argentines to turn to Peronism in times of trouble, as they did repeatedly throughout the 1940s, 50s, 60s, and 70s.

But Peronism in the 1990s-in the form of Menem-only resulted in catastrophe; what will it bring about today? Rodríguez Saá, during his week-long presidency last December, declared default on Argentina's loans and resigned before the fallout could reach him, leaving him free to campaign for a full term with a reputation untarnished by extended politicking in office. A victory in March for him, along with leftist Lucio Gutiérrez's possible victory in Ecuador's November elections, could align Argentina and Ecuador with Chávez's Venezuela, Lula's Brazil, and Castro's Cuba, tilting the Latin American balance of power to the left and even stymieing the U.S.'s plans for a hemispheric free trade agreement.

A Latinobarómetro poll reports that nine out of ten Argentines are not satisfied with the way democracy functions in their country and less than one percent of the population has faith in the country's political parties. Meanwhile, 17 percent of all Argentines believe that under certain circumstances, an authoritarian government could be preferable to a democratic one. However, these numbers also reveal that while Argentines are contemptuous of the dysfunctional brand of democracy currently at work in the nation, there is surprisingly little support for autocratic rule. Although they speak little about it, most Argentines have not forgotten the disasters of past military dictatorships. In fact, the armed forces are now often the subject of ridicule and scorn, after their budget was severely cut. Nevertheless, the detrimental effect that the economic crisis has had on Argentina's democratic institutions (such as they are) must not be underestimated, and could very well, under the right circumstances, lead to the return of another, even more virulent species of military regime than was experienced between 1976-1983. Clearly, Argentina must not be ignored; clearly, it needs help.

What's wrong with the IMF?

Once the IMF's poster child for implementing with gusto the agency's neoliberal reforms-opening up markets, privatizing industries, pegging the peso to the dollar-Argentina is now an economic third rail for the international financial community. The IMF's policies never adequately took into account Argentina's deepening rifts in its social structure and the financial sector until after the country had unraveled. Now, so much investment has fled, including moving to neighboring countries, that Argentina is left to pay its bills without the appropriate means to generate income.

The fundamental problem with the IMF's economic strategies may be that it has exaggerated the art of analyzing economic trends and conceptualizing the unique profiles of individual developing countries from the generalized perspective of a pseudo-science which features a procrustrean bed, thereby sacrificing the need for country-specific solutions. IMF teams look at a country's economic indicators but all but discount, or at least underestimate, any sui generis political, cultural, or sociological factors at play when they are deciding what needs to be done for it to reach its valid economic goals. IMF personnel, with a fierce religiosity, often believe that it is possible to tweak the indicators so that they can reach the reading devised back in their Washington headquarters, as though they are omnipotent economic panjandrums and woeful Cassandras. In Argentina, the IMF has been long on giving lectures about deflating the economy and privatizing state-owned industries, but somewhat short on establishing indexes on profligate government spending during the military dictatorship of 1976-1983 as well as throughout Menem's rule from 1989-1999, when economic reforms and deflationary policies pursued by that notorious figure suited the IMF's agenda, in spite of his flagrant corruption. Such negligence allowed local politicians to loot the country, while the international lending agencies appeared indifferent to, or criminally unaware of the factors of corruption, excessive military budgeting and wasted projects that drained the nation of its substance and morale.

In order to prevent future catastrophes like that which Argentina is now undergoing, the IMF would do well to change its tactics, to trade in its almost congenital arrogance for a welcomed modesty. Large-scale privatization projects, often seen by tainted politicians and seamy corporate officials as bottomless cookie jars for their greedy fingers, must be monitored and implemented following exacting standards (obviously, well above those administered by the SEC in this country). Monopolies, once controlled by the state, should not be allowed to remain monopolies once in private hands; the funds derived from the sale of valuable government-owned industries should be tracked and utilized not to temporarily sustain what are often ill-justified currency board disbursements, but rather to fund the expansion of public health, education, and other social services.

IMF loan packages characteristically are far too large and complex for developing countries' economies and limited trained personnel to easily handle; debt levels can be dangerously amplified by currency devaluations. Borrowers like Argentina would be well advised to contract smaller loans which are directly tied into sustainable development initiatives, so that modest economies can be allowed to engage in modulated growth, without the burden of contracting a First World-size debt. Also, loan repayment schemes should include a mandatory savings plan, whereby a developing nation can simultaneously pay off its debt.

In the era of a heightened global terror alert, the international financial community can ill afford to let a fragile democracy and a desperate populace like Argentina's turn to extreme and shortsighted measures in an attempt to rectify its problems. Like in other countries, similarly overheated environments in the past have led to repeated takeovers by Argentina's ultra-conservative military juntas throughout the 20th century, along with opening the door to the urban warfare waged by Marxist guerrillas in the 1960s and 70s. In this increasingly fragmented nation, for decades plagued by political instability, social upheaval and economic insolvency, Argentines understandably now want an end to cyclical economics and political and social upheaval. However, their false god has too often been the military, whose officers were quick to sacrifice the constitutional guarantees of civil society in favor of terrorism and corruption, culminating in 1976-1983, when they condemned the country to an economic and political purgatory.

What are needed are strict social and financial pre-conditions, as well as anti-corruption standards, which must be met; also, emergency outside funds should be available on an expedited basis. The developed world and the international lending institutions would be prudent, even from their narrow self-interest, if they assume the obligation of helping Argentina reach a sensible, valid and humane solution to a nagging problem that can neither be forgotten nor overlooked without inviting the spectre of unleashing dark societal forces along with grievous political and economic consequences. This analysis was prepared by Research Associates Katherine Ruddick, John Galante, and Tom Richardson of the COHA research group. The Council on Hemispheric Affairs, founded in 1975, is an independent, non-profit, non-partisan, tax-exempt research and information organization. It has been described on the Senate floor as being "one of the nation's most respected bodies of scholars and policy makers."

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