8-6-2002

A CRISE ARGENTINA

DU VENEZUELA À L'ARGENTINE

“Cacerolazos”

27 décembre 2001

Si, début décembre 2001, l'ensemble des médias internationaux multiplie les éditoriaux au vitriol sur le Venezuela, ce n'est pas pour s'inquiéter du retournement du marché pétrolier. Conséquence indirecte des attentats du 11 septembre, l'effondrement des prix, d'une ampleur supérieure à ce qu'avait prévu Caracas, provoquera un ralentissement de la croissance en 2002 - le projet de budget a été bâti sur une hypothèse de prix de moyen de 18,50 dollars par baril, soit 4 dollars de plus que le niveau actuel. Peu importe également que le président vénézuélien Hugo Chávez ait remporté démocratiquement toutes les consultations organisées depuis son arrivée au pouvoir, et que la Constitution de 1999 ait été approuvée par 71,21 % des votants. Ce qui retient alors l'attention, ce sont les « cacerolazos », chahut provoqué par la bourgeoisie et une partie des classes moyennes frappant sur des casseroles pour exprimer leur mécontentement.

L'approbation de 49 décrets-lois a mis le feu aux poudres. Parmi les plus importants de ces textes, une loi des terres et du développement rural prévoit des mécanismes d'expropriation des latifundios et de distribution de terres aux paysans qui en sont dépourvus. Alors qu'une poignée de propriétaires accaparent 70 % de la surface cultivable, le pays doit importer massivement pour nourrir sa population ! Une loi sur les hydrocarbures accroît la redevance de l'Etat et rend obligatoire sa participation majoritaire dans les associations avec les compagnies pétrolières privées.

Craignant pour leurs vaches sacrées, les Seigneurs de la Terre renforcent une opposition à la tête de laquelle se sont portés, au nom du « droit sacré à la propriété privée », le patronat et les propriétaires des moyens de communication. Inhabituelle alliance, la Confédération des travailleurs du Venezuela (CTV), liée aux partis politiques mis hors champ par la « révolution bolivarienne », se joint à la grève patronale organisée le 10 décembre 2001. Un succès, et pour cause : lorsque les entreprises ferment leurs portes, on imagine mal où employés et ouvriers iraient travailler ! Bien que les activités du patronat rencontrent un faible écho dans la population et que le président Chávez continue de jouir d'une large popularité dans les secteurs les plus pauvres du pays, gazettes et chancelleries évoquent avec gourmandise le chaos social, économique et politique dans lequel sombre le Venezuela.

Ce n'est pourtant pas à Caracas que les « cacerolazos » et la mobilisation populaire vont provoquer la chute d'un président, mais à Buenos Aires, en Argentine. On avait oublié la révolte des 16 et 17 décembre 1993 à Santiago del Estero ; on s'était peu intéressé, en 1996, aux premiers « piqueteros », chômeurs excédés établissant des barrages à Cutral Có, dans la province de Neuquén ; on avait négligé la multiplication des actions de ces « piqueteros » et les mobilisations qui, des capitales provinciales, avaient gagné lentement la ceinture ouvrière de Buenos Aires. Nul n'avait prêté attention, le 24 juillet 2001, à la première Assemblée nationale des organisations populaires, territoriales et de chômeurs et, le 4 septembre, à la naissance du Front national contre la pauvreté (Frenapo), regroupant les principales organisations populaires du pays. N'était-on pas, en Argentine, chez le meilleur élève du Fonds monétaire international (FMI) ? Justement ! Une dette extérieure de 132 milliards de dollars (46 % du PIB, estimation basse) contractée pendant la dictature (1976-1983), augmentée par le régime de corruption et de rapine de M. Carlos Menem (1989-1999), tandis que la population subissait, sans anesthésie, le fer rouge des ajustements structurels. Les réformes néolibérales parmi les plus radicales du continent. Derniers résultats connus : quatre années de récession, une économie en chute libre, une crise fiscale, de multiples fermetures d'entreprises, une hémorragie d'emplois, une misère croissante. Le chômage atteint un record de 18,3 % en octobre 2001 et la pauvreté frappe 15 millions d'Argentins

Economiste ultra-orthodoxe, déjà présent à l'époque de la dictature militaire, M. Domingo Cavallo a, sous le gouvernement de M. Menem, inventé la parité peso-dollar pour « pulvériser l'inflation ». Il a, par la même occasion, pulvérisé les exportations argentines, rendues non-compétitives. Rappelé le 20 mars 2001 par le président de centre-gauche Fernando de la Rúa, il a d'abord tenté un « méga-échange » en juillet (échange des titres de la dette à court terme pour d'autres à plus long terme, mais avec de très forts intérêts), avant d'imposer une politique de déficit zéro : entre autres mesures, une réduction de 13 % des salaires des fonctionnaires et des retraites. Insuffisant. Alors que l'Argentine se trouve virtuellement en faillite, le FMI se refuse à octroyer 1 260 millions de dollars pour faire face au paiement des intérêts de la dette extérieure.

L'annonce de nouvelles mesures d'austérité jette les plus démunis, sans drapeaux précis et sans dirigeants, à la recherche désespérée d'aliments. Ils mettent à sac et pillent les supermarchés. Et à l'ajustement structurel succède l'ajustement politique. Les grands investisseurs et spéculateurs, tant nationaux qu'internationaux, viennent de faire sortir 15 milliards de dollars du pays : le 2 décembre, « pour éviter le chaos provoqué par les spéculateurs », M. Cavallo gèle les dépôts bancaires des citoyens « ordinaires » et n'autorise que 250 dollars de retraits par semaine. Jusque-là absente de la mobilisation sociale, la classe moyenne descend spontanément dans la rue les 19 et 20 décembre. L'Etat de siège et une répression qui fera 31 morts ne pourront sauver de cette furia, dont sont absents tant les partis politiques que les syndicats, ni le ministre des finances détesté, ni le président de la Rua qui, le 20 décembre, fuit en hélicoptère de la Casa Rosada.

Elu par le Congrès, le nouveau président, le péroniste Adolfo Rodriguez Saá, a tout promis : il a annoncé la suspension du paiement des intérêts de la dette en attendant une négociation avec les créanciers ; il a rejeté tant la « dollarisation » que la dévaluation - cauchemar des particuliers et des entreprises endettés en dollars ; il a prévu la création d'une troisième monnaie - l'argentino - et promis la création d'un million d'emplois ! Il convoquera des élections présidentielles pour le 30 mars 2002. Il s'agit, avant tout, de gagner du temps pour désamorcer la pression populaire.

Le phénomène de la dette extérieure, tant de l'Argentine que de l'Amérique latine, et les politiques néolibérales qui y sont liées se retrouvent incontestablement au banc des accusés. Mais il en faudrait plus pour impressionner Washington. C'est toujours en direction du régime de M. Hugo Chávez que la capitale impériale dirige ses critiques les plus aiguisées.

MAURICE LEMOINE                             

<Maurice.Lemoine@Monde-diplomatique.fr>

Janvier 2002

 LE NAUFRAGE DU « MODÈLE FMI »

Crise totale en Argentine
 

En refusant, le 5 décembre 2001, un prêt de 1,264 milliard de dollars au gouvernement argentin, son meilleur élève, confronté à une dette extérieure de 132 milliards de dollars, le Fonds monétaire international (FMI) a déclenché en Argentine une crise d'une ampleur sans précédent. Défiant l'état de siège, refusant de nouvelles mesures d'austérité, les laissés-pour-compte de l'ultralibéralisme ont poussé le président Fernando de la Rúa à la démission. Nommé le 23 décembre par le Congrès, le président intérimaire, M. Adolfo Rodríguez Sáa, a suspendu le paiement de la dette extérieure. Mais sa marge de manoeuvre demeure étroite, tant vis-à-vis des créanciers que d'une population en rupture radicale avec sa classe politique.

C'est un cas d'école qui vient de s'effondrer. Finalement, l'Argentine a explosé. Nombre d'observateurs ne pouvaient dissimuler leur étonnement devant l'étonnante passivité d'une société possédant une longue tradition de luttes et un haut niveau d'organisation politique et syndicale. Dans le passé, les Argentins avaient mis le pays cul par-dessus tête pour beaucoup moins que la situation insoutenable à laquelle ils sont confrontés : un taux de chômage de 20 %, 14 millions de personnes vivant au-dessous du seuil de pauvreté - sur un total de 37 millions d'habitants -, une perte de pouvoir d'achat de près de 50 % en cinq ans.

Néanmoins, jusqu'à ce 19 décembre 2001 qui vit des dizaines de milliers de citoyens descendre spontanément dans la rue, la société paraissait abasourdie, impuissante à manifester son mécontentement. Se souvenant de la sanglante dictature militaire (1976-1983), de la déroute de la guerre des Malouines (1982) et de l'hyperinflation traumatisante de 1989, les citoyens supportaient le chantage de dirigeants politiques les menaçant d'un « retour au passé » (l'autoritarisme, la débâcle économique), tout en continuant à appliquer point par point le modèle économique néolibéral mis sur les rails par les généraux.

On l'oublie trop souvent, c'est en effet sous ce régime illégitime - qui a fait assassiner plus de 30 000 personnes - que la dette publique extérieure a bondi de 8 à 43 milliards de dollars, jetant le pays dans une spirale infernale. Durant cette période, la « sale guerre » et la doctrine de Sécurité nationale imposent la phase préparatoire au plan d'ajustement. Le général-président Jorge Videla, le ministre de l'économie Martinez de la Hoz, un cadre du Fonds monétaire international au service du régime, M. Dante Simone, ainsi que le président de la Banque centrale, un certain... Domingo Cavallo occupent les rôles principaux (1).

C'est au même Domingo Cavallo que le gouvernement du péroniste Carlos Menem demande, en 1991, de terrasser l'hyperinflation. Béni par la communauté financière internationale, artisan d'une « révolution économique » dont les réformes figurent parmi les plus radicales du continent, celui-ci applique rigoureusement les lettres d'intention des experts de Washington : démantèlement du secteur public à travers le licenciement de dizaines de milliers de fonctionnaires, privatisations, libéralisation de l'économie et des échanges extérieurs, hausse des taux d'intérêt. M. Cavallo invente le système de convertibilité, une parité fixe entre le dollar et le peso - qui deviendra un carcan pour les exportations.

Le pays va sur sa quatrième année de récession, des dizaines de milliers d'entreprises ont fait faillite et celles qui demeurent difficilement en activité souffrent d'un important retard technologique. Lorsque le président de centre-gauche Fernando de la Rúa est élu, le 24 octobre 1999, la démocratie n'est plus que la façade élégante du meilleur élève du néolibéralisme, géré par une administration corrompue au-delà de l'imaginable (2). Rappelé aux affaires le 20 mars 2001, l'artisan du « miracle » des années 1990, M. Domingo Cavallo, obtient du Parlement des pouvoirs spéciaux et fait passer, le 30 juillet, la « loi du déficit zéro ». Entre autres mesures, les traitements des fonctionnaires et certaines pensions de retraite sont réduits de 13 % en juillet. Le projet de budget 2002 prévoit une diminution des dépenses de 18,6 % - 9,2 milliards de dollars - par rapport à celui de 2001.

Fin d'une époque

Mais les Argentins paraissent avoir récupéré leur instinct vital. Le soulèvement massif en termine, d'abord, avec le ministre des finances détesté, puis avec tout le gouvernement et, finalement, le 20 décembre 2001, avec le président de la Rúa lui-même, contraint de présenter sa démission.

Le soulèvement a commencé quand des milliers de désespérés, dans leur immense majorité travailleurs au chômage depuis des années, dépourvus de toute couverture économique et sociale, se sont rués sur les supermarchés et les commerces et les ont pillés pour se procurer de quoi manger. Après un absurde discours du président de la Rúa affirmant que les protestations étaient organisées par « des ennemis de la République », la classe moyenne appauvrie a entamé un « cacerolazo » (3) dans tous les quartiers de toutes les villes du pays. Puis, aussi spontanément que les premiers manifestants, elle est descendue dans la rue et s'est dirigée vers la Place de Mai, à Buenos Aires, et devant les sièges des autorités dans les autres villes.

Différence notable avec d'autres soulèvements, les Argentins non seulement rejettent le modèle économique, mais aussi l'ensemble de la classe politique et syndicale, à de rares exceptions près (dont la Centrale des travailleurs argentins, CTA). S'ils obéissaient auparavant à des consignes de grève et manifestaient en colonnes et sous les bannières de leurs organisations syndicales et politiques, cette fois ils l'ont fait en simples citoyens. Lors des manifestations, il n'y eut pas de drapeaux - à l'exception du drapeau national - et, pour la première fois en plus d'un demi-siècle, même pas les traditionnelles grosses caisses péronistes. Les quelques dirigeants politiques qui ont tenté de se joindre à la foule ont été rejetés, et des centaines de manifestants ont tenté de prendre le Congrès d'assaut.

Défiant l'état de siège instauré le 19 décembre, la rébellion sociale a transformé la crise économique en crise politique, susceptible de conduire à une crise institutionnelle. L'Argentine vit la fin d'une époque, l'un de ces moments historiques aux perspectives imprévisibles. Il est évident que la société a lancé un vigoureux « ça suffit » à la corruption généralisée (4), à une caste dirigeante qui, depuis un quart de siècle, vit dans le luxe, se répartissant les prébendes que lui offrent les grandes banques, les entreprises multinationales et les centres du pouvoir mondialisé. Car, alors que le pays est le « meilleur élève du FMI », que 90 % de ses banques et 40 % de son industrie sont aux mains de capitaux internationaux, le résultat est désastreux.

Depuis le début des années 1970, la dette extérieure est passée de 7,6 à 132 milliards de dollars (certaines estimations la chiffrent à 155 milliards de dollars), sans parler des 40 milliards de dollars encaissés par l'Etat en raison des privatisations et évaporés.... Entre-temps, le chômage est passé de 3 % à 20 % ; l'extrême pauvreté de 200 000 personnes à 5 millions ; la simple pauvreté de 1 million de personnes à 14 millions ; l'analphabétisme de 2 % à 12 %, et l'analphabétisme fonctionnel de 5 % à 32 %...

Mais la fortune placée à l'étranger des dirigeants politiques, syndicaux et du patronat atteint 120 milliards de dollars. L'« élève modèle » du néolibéralisme aura constitué un cas d'école en tout : dans le larcin et dans ses désastreux effets sociaux.

Le « hold-up » décidé par M. Cavallo, le 1er décembre 2001, a fait déborder le vase. Pressé par les échéances financières internationales - le pays devait rembourser 750 millions de dollars avant la fin 2001 et plus de 2 milliards avant la fin janvier 2002 -, le gouvernement a imposé une limite sur les retraits bancaires des particuliers « pour freiner les fuites de capitaux » : les Argentins ne peuvent plus retirer une somme supérieure à 250 dollars par semaine en argent liquide de leur compte en banque. La mesure, bien sûr, a été décrétée après que les grands spéculateurs nationaux et internationaux aient fait sortir plus de 15 milliards de dollars du pays (5)...

Autrement dit, le soutien ultime du système retombe sur les épaules des petits et moyens épargnants, sur les entreprises nationales, qui, à partir de ce moment, ne peuvent plus disposer librement de leurs avoirs, tout en tremblant chaque jour un peu plus devant la possibilité d'une dévaluation qui transformerait les économies de toute une vie en monnaie de singe...

Profitant du désespoir des citoyens pour se procurer de l'argent liquide, les banques imposent alors des commissions de 40 % en pesos et de 29 % en dollars pour l'usage des cartes de crédit et se disposaient à augmenter ces taux (6) ! Aux millions de citoyens déjà confrontés à la pauvreté, cette mesure aurait ajouté plusieurs millions de personnes de la classe moyenne « décapitalisées ».

Tragique solde de cette révolte populaire : trente et un morts, victimes de la répression policière, des milliers de commerces mis à sac, quelques quartiers des grandes villes dévastés et une République décapitée (7). Après quatre jours de délibérations frénétiques, la bande de « truands politiques » qui, à quelques exceptions près, peuplent le Congrès (députés et sénateurs réunis), a décidé que le gouverneur de la province de San Luis, M. Adolfo Rodríguez Sáa, assurerait l'intérim jusqu'à la remise du pouvoir au nouveau président élu lors d'un scrutin convoqué le 3 mars prochain (8).

Craignant pour sa propre survie, la classe politique abordera-t-elle la situation avec rationalité, dépassant, au moins dans un premier temps, divisions politiques, ambitions personnelles et conflits d'intérêts ? La tâche ne sera pas facile : l'économie est en ruines, et la société, en se révoltant, a exprimé des demandes urgentes.

Après avoir nié l'évidence de la crise du modèle ultralibéral pendant des années, les dirigeants politiques vont devoir assumer l'échec de celui-ci dans les pires conditions : les réserves en devises, dans lesquelles M. Cavallo a puisé pour payer les échéances de la dette extérieure, n'existent pratiquement plus (9).

M. Adolfo Rodríguez Sáa a annoncé un ensemble de vigoureuses mesures sociales et officialisé la suspension des paiements de la dette, en attendant une renégociation avec les créanciers. Promettant de créer une nouvelle monnaie, pour tenter de réactiver l'économie, il a également précisé qu'il ne procéderait pas à une dévaluation du peso - crainte des citoyens et entrepreneurs nationaux, massivement endettés en dollars -, bien que, dans les faits, la parité ne soit plus qu'un mirage : les banques ne vendent plus de dollars et la monnaie américaine s'échange à 2 pesos dans la rue.

La crise de la représentation politique a retardé la réaction sociale et fait craindre que celle-ci vire à l'anarchie. Pour éviter le pire, les nouvelles autorités devront choisir : soit favoriser, comme elles l'ont toujours fait, les intérêts multinationaux, soit s'exposer à un nouveau soulèvement populaire. Certains analystes remarquent avec inquiétude la similitude de la situation actuelle avec la grande dépression mondiale des années 1930, y compris avec le développement et les conséquences politiques de la République de Weimar.

Cette comparaison peut paraître excessive. Elle cesse pourtant de l'être lorsqu'on examine l'histoire argentine récente : la guerre des Malouines perdue, des années de frustration, le discrédit des élus, la perte de confiance dans les institutions, l'absence d'horizons vers lesquels se projeter, une crise mondiale... Dans un tel contexte, comment écarter l'idée que le vide du pouvoir puisse déboucher sur une sortie autoritaire ou tenter un quelconque aventurier ?

CARLOS GABETTA                        

(1) Lire Arnaud Zaccharie, « Aux origines de la crise argentine », dans le dossier « Crise de la dette argentine » du Comité pour l'annulation de la dette du tiers-monde (CADTM).

(2) Lire Carlos Gabetta, « Le lent naufrage de l'Argentine » et Jorge Beinstein, « Entre dette et pillage, une économie à genoux », Le Monde diplomatique, respectivement octobre 1999 et juillet 2001.

(3) Forme de protestation : les mécontents se mettent aux fenêtres ou descendent dans la rue en frappant bruyamment sur des casseroles ou autres ustensiles de cuisine.

(4) L'évasion fiscale, qui s'élevait en 1998 à quelque 40 milliards de dollars, prive l'Etat de la moitié des recettes fiscales qu'il devrait normalement encaisser. Ainsi, seuls 17 % des hauts revenus paient un impôt sur le revenu ; cf. Arnaud Zaccharie, op. cit.

(5) Daniel Muchnik, « La economía en la cuenta regresiva » (« Le compte à rebours de l'économie »), Clarín, Buenos Aires, 16 janvier 2001.

(6) Gustavo Bazan, « Tarjetas de crédito : sólo prestan en dólares y a tasas muy altas » (« Cartes de crédit : on ne prête qu'en dollars et à des taux très élevés »), Clarín, 18 décembre 2001.

(7) On déplore également des milliers de blessés et environ 2 000 arrestations.

(8) Le poste de vice-président est vacant depuis la démission, en octobre 2000, de M. Carlos « Chacho » Alvarez. Dans ces circonstances, le Congrès (dominé par les péronistes) pouvait choisir entre convoquer des élections générales ou laisser l'un de ses membres ou l'un des gouverneurs de province terminer le mandat vacant jusqu'à décembre 2003.

(9) Julio Nudler, « Mucho plan, pero pocos dólares » (« Beaucoup de plan, mais peu de dollars »), Pagina 12, Buenos Aires, 21 décembre 2001. Voir également le dossier « Argentina, un país empantanado » (« L'Argentine, un pays embourbé » Le Monde diplomatique édition Cône sud, décembre 2001.

Latin America's free-market fall

And the Money Kept Rolling In (and Out) Wall Street, the IMF, and the Bankrupting of Argentina Paul Blustein PublicAffairs: 280 pp., $27.50

Liberty for Latin America How to Undo Five Hundred Years of State Oppression, by Alvaro Vargas Llosa, Farrar, Straus and Giroux, 304 pages, ISBN 0-374-18574-3

By Daniel Kurtz-Phelan
Daniel Kurtz-Phelan, an associate editor at Foreign Affairs, reported from Argentina during the economic crisis.

July 24, 2005

When Argentina collapsed into economic ruin and political chaos 3 1/2 years ago, much of the world looked on with quiet satisfaction. The nation had been the star of the laissez-faire 1990s, transforming its economy into one of the world's most open, earning lavish praise from Washington policymakers and lavish reward from Wall Street investors. Yet by the end of 2001, the government had stopped payment on its massive debt and sat paralyzed as the financial system crumbled. For critics of globalization, this implosion provided a neat morality tale: How greedy capitalists and smug neo-liberals sacrificed a nation of 38 million people on the altar of free-market dogma.

At first, Paul Blustein's "And the Money Kept Rolling In (and Out)" and Alvaro Vargas Llosa's "Liberty for Latin America" seem like exemplars of this line of thinking. In his authoritative account of the nation's unraveling, Blustein calls Argentina "a victim of misfeasance, nonfeasance, and even malfeasance by foreign money interests, bureaucrats, and political figures." Vargas Llosa takes the country's crisis as a point of departure for a sweeping, seething analysis of Latin America's long history of "oppression" and "deceitful capitalist reform."

Latin America's recent past certainly provides fodder for critics of the free-market ideology that swept through the developing world in the 1990s. No other region so eagerly embraced neo-liberal reforms — free trade and capital flows, privatization, labor flexibility, balanced budgets — and no other benefited so little from them. But before anti-globalists brandish these books, they should read past the opening pages. For despite their indignation, neither Blustein nor Vargas Llosa is out to save Latin America from neo-liberalism; they are more intent on saving neo-liberalism from Latin America.

Blustein, a Washington Post business reporter and author of a superb 2001 book on the International Monetary Fund's response to the various financial crises of the 1990s, opens with stark images of a society's decline: pensioners banging pots in the main plaza, children starving in Buenos Aires suburbs, hordes of scavengers picking through garbage, a middle-aged woman setting herself on fire in a bank lobby after the government freezes her life savings. From there, he backtracks several years to the heady days of easy money, and asks how Argentina could have fallen so far so fast. He finds the explanation in the fluctuations of financial indicators and the debates of gray-suited economists, out of which material he crafts an absorbing tale of hope, folly and betrayal.

Most critics have railed against Washington, Wall Street and the IMF for forcing painful and misguided reforms on poor countries. (Then-Argentine President Carlos Menem called it "major surgery without anesthesia.") Blustein argues the opposite: As successive Argentine governments borrowed and spent their way toward disaster, the rest of the world was not strict enough. Argentina's fall, as he tells it, is the story of a spoiled teenager who gets a Porsche for his 16th birthday and promptly wraps it around a telephone pole. His ire, accordingly, is directed at the policymakers and investors who "indulged" the nation's fiscal irresponsibility and convinced its leaders they could do no wrong.

The key problem was convertibility — the pegging of the Argentine peso to the U.S. dollar at a 1-to-1 exchange rate. After years of devastating hyperinflation, most Argentines welcomed the relief convertibility brought. It also meant, however, that large amounts of governmental borrowing would undermine the peso's value and the entire financial system with it. Given the pressures of electoral politics and the eagerness of foreign investors to lend, borrowing proved too tempting to pass up. The Argentine government came to resemble "a small businessman so desperate for cash to meet the immediate demands of creditors that he agrees to borrow at usurious rates from a loan shark."

How could all those PhD economists and millionaire financial analysts not have seen the crash coming? Blustein reveals just how many of them did. His heroes are the Cassandras who warned of impending disaster as everyone else sped along, drunk on a mixture of wishful thinking, political (over)sensitivity, incompetence and greed. The IMF was eager to "showcase a success story," while Wall Street, with its "voracious appetite for fee income," was more than happy to sell its clients high-interest bonds issued by the cash-strapped Argentine government. Had they faced up to the truth, they could have let Argentina down relatively easily. Instead, they cheerfully led it to a ruinous panic by investors and depositors.

This boom-and-bust saga prompts a comparison with the corporate scandals that erupted when the U.S. economic bubble burst, and Blustein points to factors behind both — especially a financial architecture that encourages hype among market analysts who know that, up to the crisis point, the more optimistic they are the bigger their bonuses will be. (The IMF looks more feckless than sinister, often helpless in the face of investor exuberance.) His broader critique is of the "market fundamentalism" that pressed developing countries to do away with all controls on money flowing across their borders, leaving them like "small craft bobbing on the waves, all too likely to be swamped or capsized." To avoid another Argentina, he advises a return to moderate capital controls, smarter IMF rescues and a bankruptcy procedure for governments.

What Blustein neglects is the other side of Argentina's economic revolution, and he consequently fails to understand fully the nature and extent of the popular backlash. For many Argentines — beset by growing poverty, unemployment and job insecurity, watching social services deteriorate and income distribution worsen — the bloom was off the rose long before the international financial establishment began sweating over debt ratios. But Blustein maintains "otherwise sensible" policies "ended in tears because of particular errors, not because the policies were fundamentally ill-conceived." In other words, last time was a technical failure, and next time we will do better.

Vargas Llosa, a Peruvian journalist and political analyst, starts his book waving the flag of revolution. Argentina, to his mind, is just one recent entry in a centuries-long catalog of treachery and misfortune in Latin America. The reforms of the 1990s failed because they were only "so-called capitalist reforms," cloaked in the language of liberty and transformation but in reality guaranteeing more of the same. Real change, he proclaims, requires the total annihilation of Latin America's "machinery of exploitation."

This phrase, which might have been lifted from, say, Fidel Castro, turns out to be just a euphemism for the machinery of government. Stagnant economies, appalling inequality, flimsy legal structures — all stem from the fact that "state control over the economy and society" has "placed a tight corset on individual initiative." Remove that corset, it follows, and freedom and prosperity will come, needing only a nudge here or there. Vargas Llosa takes it as almost self-evident that liberty alone will "give people the means to survive and access to health care and education, which, rid of government intervention and subject to the power of consumers, will be provided at low cost."

That the vision underpinning Vargas Llosa's analysis is so dogmatic is a shame, because he elucidates several strands of failure in Latin American history that are worthy of examination. It is true that impossibly intricate business regulations and weak rule of law have hampered enterprise; that corporatist politics have undermined sound policy; that thriving informal economies prove there is no fundamental aversion to private initiative; and that reform too often merely "reshuffles privilege." But turning Latin America into a laboratory for radical libertarianism — or wielding it as an ideological bludgeon — does not offer much hope for progress.

In the end, Vargas Llosa is less concerned with the spectacular setbacks of recent years than with the reaction to them. He echoes Blustein: Neo-liberalism has not failed in Latin America, it has never been tried. But given the poor results of recent free-market reforms — and the palpable sense of betrayal in countries that bought in and failed — that case is likely to be a hard sell. And if the recent resurgence of the region's left is any indication, Latin Americans, at least, are not convinced. • 

The Caudillo Clash

In a rare move, the IMF is demanding that an all-powerful provincial elite change its profligate ways

By Colin Barraclough
NEWSWEEK INTERNATIONAL

April 22 issue — Jose Manuel de la Sota is a party boss of the classic Argentine mold. With a blunt manner and natural flair for the backroom deals of local politics, the Peronist party stalwart seized the governorship of Cordoba province in 1999 by promising both sweeping tax cuts and greater welfare spending. In fact, de la Sota comes from a place so deep in the provincial roots of Argentine political power that he is widely touted as a leading contender to replace President Eduardo Duhalde, should he become the latest in a string of fallen incumbents. That’s also why he is perhaps first in the class of provincial rulers targeted by the incoming auditors of the International Monetary Fund.

THIS COULD HAPPEN only in Argentina, a loose federal state where power often trickles up from the provinces. At independence in 1810, rural landowning strongmen, or caudillos, resisted control from Buenos Aires. Their successors still boss the 23 provinces as semi-sovereign fiefdoms, and often push the central government as well. Argentina defaulted on $141 billion in debt this December, triggering deadly riots that would see Argentina ruled by five presidents in two weeks. Of those five, four were former governors in the provinces, which have been wasting a steady flow of federal tax dollars for years. By the time the latest IMF delegation arrived for negotiations last week with Duhalde, who is seeking $10 billion in emergency relief, the visitors were openly demanding an end to the profligate ways of the provincial caudillo culture.

Such an attack is unusual. The IMF typically avoids meddling in a nation’s internal affairs. But in Argentina’s case, the provincial connection is too critical to ignore. IMF officials believe that a 10 percent cut in spending by each provincial governor would translate into a 60 percent reduction of the federal deficit. Argentina’s provincial governments collect, on average, only 35 percent of the money they spend—the poorest provinces rarely collect more than 10 percent—and get the rest from the Feds, who have no control over spending. “There is no federal oversight, none at all,” says Julio Burdman, director of research at the New Majority Studies Center in Buenos Aires. “The provinces do not collect taxes, but they spend without control. They have total autonomy and no responsibility.”
The results are predictably ridiculous. Provincial officials routinely award contracts at inflated rates to business associates, and give jobs to family members or political allies. “Inconsistency and poor planning, at all levels, have become ingrained over many years,” says Diana Mondino, managing director of Standard & Poor’s in Argentina. “In education, which is decentralized, there are more teachers per class than average in some schools and no teachers at all in others. Or two bridges will be built over one river, and none over the next.”

Until recently, the waste was hidden by a stream of foreign capital, particularly as Argentina opened up during the 1990s under President Carlos Menem. The IMF itself was a key lender until it abruptly suspended a $22 billion loan program last December, forcing the country to default. With the economy in free fall (it’s expected to contract by 12 percent this year), provinces couldn’t just jump off the gravy train. Unable to pay state workers, provinces literally printed money, issuing some $1.75 billion in public bonds, equivalent to almost one in every two pesos in circulation, that quickly became de facto currencies. Meeting behind a cordon of police in a government building in Buenos Aires, the IMF last week was pressing Duhalde to either impose federal control over provincial spending or press provinces to collect taxes and pay their own way. They are also pushing for the retirement of the 20 unofficial currencies now circulating in the provinces. “Argentina should put together an economic plan that’s coherent and consistent,” says Francisco Baker, the IMF’s spokesman on Argentine issues. “They need to bring down the deficit in the provinces and stop using the so-called funny money they’ve been using.”

IMF insiders say its stance on Argentina’s provincial elite is part of a new get-tough policy under managing director Horst Kohler. It has a questionable ally in Duhalde, who was accused of using poverty relief to buy votes as governor of Buenos Aires province. Now he is urging his former peers among the governors to voluntarily cut payrolls. With unemployment at 20 percent and rising fast, the governors are stalling. “The IMF is asking the government to use its federal power to exert some control on the provinces,” says Burdman. “The federal government is, in effect, replying ‘We can’t do it. You do it for us’.” The IMF team appears determined to see real reform. “The IMF view is that if Argentina’s political class can’t get it together, then so be it,” says a senior Western diplomat. “They’ll come in afterward and pick up the pieces.” If it comes to that, the international cleanup crew will find the biggest mess in Argentina’s provinces.

© 2002 Newsweek, Inc.

‘I Want My Money’

 Argentina sinks deeper in pain—and in denial about how much worse the crisis is likely to get

 By Rich Thomas
NEWSWEEK INTERNATIONAL

 May 6 issue — Susana Gimenez stood with angry Argentines outside Congress last week, clutching a homemade sign reading, I WANT MY SAVINGS NOW. Never mind that the money is gone: Argentina has $12 billion in reserves left against outstanding deposits twice that high, which means that Argentines will eventually have to accept a huge loss on their savings. With banks shuttered, President Eduardo Duhalde tried to persuade Congress last week to begin administering the pain by converting cash deposits to bonds payable over 10 years. With the mob at its door, Congress refused. “If they don’t have reserves to back their deposits it’s not my problem,” says Gimenez. “I want my money back.”

MILLIONS OF ARGENTINES ARE LIVING this same illusion. They are like passengers on an elevator after the cable snaps, who know something is dangerously wrong, but can’t quite believe it will crash. Four months after defaulting on its national debt, Argentina is in free fall, with a shrinking economy bringing in too few export dollars to offer any hope of paying back its huge debts. The peso has fallen 67 percent, gutting Argentine savings and wages and leaving the banking system insolvent. The major foreign banks that dominate the system appear more likely to abandon Argentina than pour more dollars into the country. And Congress’s rejection of the painful bond-for-cash deal forced the resignation of Economy Minister Jorge Remes Lenicov, who had brought at least some sense of reality to the waffling Duhalde administration. Before the vote, Duhalde had bluntly warned that Argentina “is out of money.”
        Can a country actually run out of money? Argentines don’t seem to believe it, but the answer is, in a practical sense, yes. Every nation that has fallen into default or forced devaluation in recent years, from the Asian tigers to Russia, has hit a point where it could no longer borrow on international markets, stalling the economy and government operations. With $12 billion in reserves and $140 billion in debt, Argentina is past that point. In fact, by this practical definition, Argentina is perhaps more desperately “out of money” than Russia or the Asians ever were, because its credibility is more seriously tarnished.

Here’s why: Argentina made bigger promises. It ended an era of turbulence and launched a brief period of growth in the 1990s by guaranteeing a rare level of currency security. It adopted a fixed-exchange-rate system called a currency board that legally obligated the central bank to back pesos with dollars and gold. Alas, the government kept spending without restraint, and by late last year did not have the dollars to back its pesos. In November, when the government forced foreign banks to accept shaky peso bonds in exchange for once valuable dollar bonds, it effectively breached its obligation. “Argentina is nowhere near bottom yet,” says Steve Hanke, a Johns Hopkins University economist who helped design the dollar-peg system. “The government has totally trampled the rule of law and property rights, trashed the banking system, and nobody is able to put anything serious together that even hints at a long-term solution.”
        Of course, it’s not quite that black and white. The currency board appealed to Argentines in large part because it allowed them to effectively buy dollars at half price, a deal that tickled their vanity but was too good to last. Accustomed to seeing themselves as the elite of Latin America, it’s difficult for Argentines to accept that they are setting new record lows for disrepute in international markets. The combined effect of the November bond swap and devaluation cost foreign banks in Argentina billions of dollars, and they have now cut off Argentina entirely. But as recently as last June, the banks were still lining up to loan money to Argentina at 16 percent interest, a rate so high, it was a virtual admission that the loans were unpayable. “Everyone participated in this,” says Rafael Ber, a partner at Argentine Research in Buenos Aires. “The only people who can claim they are innocent are living in the shanty towns.”

        There Argentina hangs, waiting for the crash. Duhalde reopened the banks for petty-cash deposits late last week and appointed a new Economics minister, Roberto Lavagna. But it’s too late for a soft landing. There have been recent civil disturbances in at least three provinces, where spending cuts demanded by the IMF would hit hardest, costing at least 400,000 jobs. With unemployment at 25 percent, the powerful provincial governors are unlikely to accept those demands.
        The defeat of Duhalde’s bond-for-cash deal last week showed that Argentines aren’t willing to lose on their deposits, either. The likely alternative: printing money, which would only make matters worse, possibly triggering hyperinflation. Monthly income for an average family of four is now less than $200. One in two Argentines is living in poverty, and one in five does not have enough to eat. “We are heading for a period of semipermanent crisis,” says local economist Artemio Lopez. “We are deconstructing the social and political structure of a country that for 60 years was not typically Latin American.” Argentines enjoyed a lifestyle and a self-image that was, in many ways, European. When they hit bottom, they may have to give that up.

With Peter Hudson in Buenos Aires
       

Argentina's Fall From Grace

by Steve H. Hanke

April 2002

Steve H. Hanke is Professor of Applied Economics at The Johns Hopkins University in Baltimore, Chairman of the Friedberg Mercantile Group, Inc., in New York, and Senior Fellow at the Cato Institute in Washington.

Anyone attempting to make sense out of Argentina's fall from grace to economic and political chaos faces a real challenge. Most of the commentary has been, at best, confused and confusing.

The road to good health began on April 1, 1991, when Carlos Menem's government installed what was known locally as a "convertibility system" to rid Argentina of hyperinflation and give the country a confidence shock. Under the Convertibility Law, the peso and the U.S. dollar both legally circulated at a 1-to-1 exchange rate. The owner of a peso had a property right in a dollar and could freely exercise that right by converting a peso into a dollar. And that redemption pledge was credible because the central bank was required by law to hold foreign reserves to fully cover its peso liabilities.

With the passage of the Law of Public Emergency and Reform of the Exchange Rate Regime on January 6, 2002, near-dictatorial powers were transferred to President Eduardo Duhalde and the convertibility system was swept into the dustbin. Consequently, the peso has been devalued and is now floating.

The confusing commentary about Argentina centers on its rather unusual monetary regime and the fact that, unlike the Argentine public, the chattering classes didn't approve of convertibility. In consequence, they have trotted out every half-truth or non-truth under the sun to bolster their claims that Argentina's problems resulted from its convertibility system.

This is nothing new. As Oskar Morgenstern stressed in his classic book, On The Accuracy of Economic Observations, wrongheaded arguments, distortions and lies are common fare for the chattering classes. For example, he recounts that:

When the Marshall Plan was being introduced, one of the chief European figures in its administration (who shall remain nameless) told me, "We shall produce any statistic that we think will help us to get as much money out of the United States as we possibly can. Statistics which we do not have, but which we need to justify our demands, we will simply fabricate." These statistics "proving" the need for certain kinds of help, will go into the historical records of the period as true descriptions of the economic conditions of those times. They may even be used in econometric work! (p. 21)

Alas, much of what has been written about Argentina's convertibility system follows the script for the Marshall Plan. Central to the chattering classes' argument against convertibility was the claim that the peso was overvalued. Supposedly, the peso's link to the strong U.S. dollar made the peso overvalued, rendering Argentina uncompetitive, causing the economy to slump, and forcing the government to default.

Does the story withstand examination? A classic sign of uncompetitiveness caused by an overvalued currency is declining exports. But Argentina's exports increased every year in the past decade except 1999, when Brazil, its largest trading partner, suffered a currency crisis. Exports during the first 11 months of 2001 were about 3.2% ahead of exports during the same period in 2000. Considering that estimated real growth in world trade was only 0.9% last year, Argentina's export performance was relatively strong. Indeed, the export sector has been one of the few bright spots in the Argentine economy. If the rest of the economy had been growing as fast as the export sector during the last two years, Argentina would not be in a recession.

In an attempt to bolster claims of overvaluation, some observers asserted, on the basis of taxi rides from the airport or other casual impressions, that prices were high in Buenos Aires, and that high prices were evidence the peso was significantly overvalued against the dollar. A recent Union Bank of Switzerland survey of prices in 58 of the world's largest cities found that for a basket of 111 goods and services, weighted by typical consumer habits - including three categories of house rent - Buenos Aires ranked 22nd, about midway between the most expensive city, Tokyo, and the least expensive, Bombay. The survey also found those taxi rides that are allegedly so expensive cost about 8% less than in Rio de Janeiro.

There are other indicators that contradict the overvaluation story. For example, the Economist magazine's Big Mac Index indicates that the peso, before its devaluation, was 2% undervalued. And although the Big Mac Index, as well as more sophisticated estimates of equilibrium exchange rates, should be treated with great skepticism, a recent careful study of the matter using data from 1993 to 1999 indicates that the peso was always within 6% of its so-called fundamental equilibrium real exchange rate.

Doing the Math

Ignoring those facts, the chattering classes went on to claim that a devaluation was necessary to boost exports and economic growth. Does this claim hold water? Let's go through the arithmetic. The short-run price elasticity for Argentine exports is about ­0.1. So, to stimulate exports by 1%, the real value of the peso (adjusted for inflation) has to depreciate by 10%. Exports in Argentina only accounted for 9% of GDP last year. Consequently, if the current devaluation of 50% (the floating peso is trading at two to the dollar) doesn't pass through to any domestic inflation - in short, if the nominal devaluation is a real devaluation - exports will increase by about 5%. Under this optimistic scenario, the current level of devaluation would add less than a half percent to GDP - a GDP that, thanks to the new exchange-rate regime, has collapsed.

In addition to errors of commission, the commentary on Argentina is replete with errors of omission, too. I have yet to see mention of the fact that Argentina's real GDP growth rate during the decade of convertibility was more rapid than during any other decade in the 20th century. Never mind. That little fact would have ruined the story.

If not the convertibility system and the peso, then what? Argentina's acute political and economic crises have resulted from an interrelated set of self-inflicted Argentine blunders.

Self-Inflicted Harm

In the 1990s, Argentina failed to carry out comprehensive free market reforms. Contrary to claims by Eduardo Duhalde, Argentina's new president, the neo-liberal economic model was never more than partially implemented. The fiscal system is a mess and tax rates are sky-high. For example, the tax wedge between gross labor costs and net wages is a whopping 42%, comparable to the biggest wedges in socialist Europe and almost double that of the U.S. No wonder official unemployment has remained so high and the underground economy is so vibrant. In addition, over half the working age population in some provinces is employed by the government. The Mussolini-style labor laws and the public health-care and social security systems remain unreformed and in need of modernization.

·         In 1999, former president Menem failed to follow through on an experts' report that I co-authored with Kurt Schuler ["A Monetary Constitution for Argentina: Rules for Dollarization." Cato Journal, v. 18, no. 3, pp. 405-19]. We had recommended the replacement of the peso with the dollar. Menem's failure left the peso vulnerable to the meddling of the always unreliable Argentine politicians.

·         In 1999, Argentina's voters elected a weak left-wing government. It was led by President Fernando de la Rúa. Although a decent man, he remained distant and removed from the economic realities of Argentina and was tone deaf to Argentina's politics.

·         In 2000 and 2001, the de la Rúa government introduced three large tax increase packages on the recommendation of the International Monetary Fund. These pushed the top tax rates in Argentina to very high levels, much higher than those in the United States. Not surprisingly, these tax increase packages forced the economy to slow rapidly and total tax revenues collapsed. As a result, Argentina was unable to service its debt.

·         In March, 2001, Domingo Cavallo was appointed Minister of the Economy. Cavallo's economic principles were subject to constant change and as fluid as the assets in a well-managed bank. This fact, combined with his hyperactivity, was a deadly cocktail.

·         On April 25, 2001, President de la Rúa replaced the president of the central bank, Pedro Pou, with Roque Maccarone, a man who was inclined toward meddling with the rules governing the peso-dollar exchange rate.

·         On June 19, 2001, Argentina introduced a multiple exchange-rate system. Under this set-up, exports (excluding oil) took place with a devalued peso; imports with a revalued peso. All other transactions took place at a peso-dollar rate of one-to-one. This was the beginning of the end because Argentina abandoned the convertibility rules. Consequently, external drains of foreign reserves out of Argentina accelerated and interest rates shot up.

·         On June 25, 2001, a law was put into effect in which the peso's anchor would switch from the dollar to a basket of 50% euros and 50% dollars once the euro reached parity with the dollar. This constituted another breach of the Convertibility Law and gave rise to further external drains of foreign reserves.

·         In November 2001, Domingo Cavallo engineered a local debt swap in which domestic financial institutions, including banks and private pension funds, were forced to provide credit to the government. This destroyed billions of dollars worth of assets at these institutions and also replaced liquid tradable assets with illiquid, non-tradable assets.

·         In early December, 2001, Argentina imposed an interest rate ceiling on interest paid in pesos. Consequently, bank runs and internal drains of deposits out of Argentina's banks accelerated. Then, in an attempt to slow the external and internal drains in Argentina's money and banking system, exchange controls were imposed. These totally abrogated the property rights people had been granted under the Convertibility Law. Argentines viewed this as theft and went to the streets.

·         On December 26, 2001, interim President Adolfo Rodriquez Saa proposed the issuance of a parallel currency, the Argentino. Whenever Argentina has found itself in a tight pinch in the past, it has resorted to the printing of more fiat paper money. Since these experiments have always ended badly, the public responded by rioting and the Argentino never saw the light of day.

·         On January 6, 2002, the Duhalde scrapped the Convertibility Law and devalued the peso, which is now floating. In addition, the government is in the process of "pesofying" the economy.

During the past three years, Argentina's economic policy can be summed up in three words: intervention gone wild. No wonder Argentina's economy has imploded.

Argentina's devaluation was like no other

What set Argentina's devaluation apart from other devaluations is that it involved what Frédéric Bastiat termed legal plunder. The Convertibility Law gave a peso holder the right to freely convert a peso into a U.S. dollar. Argentina's redemption pledge was credible because the central bank was required by law to hold foreign reserves to fully cover its peso liabilities. This right of redemption made the convertibility system unique and distinguished it from typical fiat money systems. Accordingly, with the repeal of the Convertibility Law, the redemption pledge was thrown to the winds and the peso holders' claims on foreign reserves held at the central bank were revoked. Consequently, Argentina's devaluation represented a great bank robbery, one in which the rights to 17.8 billion U.S. dollars in foreign reserves were abolished by the government. For the Duhalde government, that was just the beginning. Indeed, the government has passed a string of new laws that trample on property rights, make a mockery of the rule of law and are worthy of the Bolsheviks.

Much of this centers on the pesofication of the economy. Embraced by the Duhalde government, this policy was first articulated by Ricardo Hausmann, a Harvard professor and former chief economist of the Inter-American Development Bank, in the October 30, 2001 issue of London's Financial Times. The Financial Times leader of October 30th dutifully endorsed pesofication, as did most of the chattering classes that reside in Washington, D.C. Prior to his pesofication manifesto, Hausmann had been one of the strongest advocates of dollarization. [I am reminded of George Orwell's 1984, in which the world was divided into three countries at war with one another. Oceania was in alliance with Europa against Eastasia. An orator from Oceania was haranguing the crowds, reviling Eastasia and praising Europa. Then a message was delivered from the central office; the alliances have changed! And without hesitation or change of inflection, the Oceania orator simply substituted the new ally for the old enemy. So it was with Hausmann's switch from dollarization to pesofication.]

Pesofication has dealt a series of blows to the property rights of Argentines:

·         Dollar reserves held by commercial banks were seized by the central bank and converted into pesos at 1.40 pesos per dollar. As of February 1, dollar reserves held by commercial banks plus dollar vault cash was U.S.$5.4 billion. At two pesos per dollar, the windfall loss for commercial banks and the corresponding windfall gain for the central bank is about US$1.6 billion.

·         All bank loans originally made in dollars will be converted into pesos at 1 peso per dollar, generating a windfall gain for borrowers of dollars and a corresponding windfall loss for lenders. As of February 1, the last business day before the new measures were announced, dollar loans were U.S.$45.8 billion. At two pesos per dollar, the windfall gain for borrowers and the corresponding loss for banks is thus about U.S.$23 billion.

·         All bank deposits originally made in dollars will be converted into pesos at 1.40 pesos per dollar, generating windfall losses for depositors and windfall gains for banks. As of February 1, dollar deposits were U.S.$39.8 billion. At two pesos per dollar, the windfall loss for depositors and the corresponding windfall gain for banks is thus about U.S.$12 billion. Overall, then, banks suffer a windfall loss of about U.S.$1.6 billion + U.S.$23 billion - U.S.$12 billion = U.S. $12.6 billion (The capital of all privately owned banks, which constitute roughly three-quarters of the banking system, is U.S.$12 billion.)

·         Under privatization agreements with private utilities, many which are foreign-owned, utility rates were denominated in dollars and indexed to the U.S. inflation rate. These agreements have been redenominated in pesos at 1 peso per dollar. The contract nullification costs, as yet to be calculated, will run into the billions of dollars.

The only way to rectify all this plunder is to reverse it and restore the property rights regime that existed prior to January 6th. Argentina should dollarize the economy, as Kurt Schuler and I recommended since February 1, 1999. This should be done at an exchange rate of 1 peso per dollar. In addition to restoring property rights, this would give Argentina a much needed confidence shock. The rationale is similar to that employed by Alexander Hamilton in paying the Revolutionary War debts of the United States at their par value, even though they had long since depreciated. Hamilton wanted to establish the United States as a good credit risk. He succeeded so well that the federal government soon became able to borrow on terms similar to those available for long-established European countries.

Argentina is now a terrible credit risk, and the government needs a dramatic step to re-establish the years of painstakingly established private and public credit it has destroyed in accelerating stages since December 1, when then-president Fernando de la Rúa and his minister of economy Domingo Cavallo imposed a freeze on bank deposits.

If Argentina's central bank was put out of business and the peso liquidated, the turnaround would be just as rapid as in Ecuador, which dollarized its economy in early 2000. In two short years, that country has pushed its growth rate to the top of the Latin American charts, unemployment has fallen from 15% to 9%, and 30-day interest rates on deposits have fallen from about 60% to 3.65%.

If the Duhalde government fails to respect property rights by dollarizing the economy at a rate of one peso per dollar, the Bush administration should refuse to fill Argentina's begging bowl. Indeed, the Bush administration should refuse any direct aid and should veto any proposal for the International Monetary Fund, the World Bank and the Inter-American Development Bank to lend money to Argentina. Fortunately, the U.S. Government is required to do just that. Title 22, section 2370 of the U.S. Code requires the suspension of U.S. assistance to any country that seizes property owned by U.S. citizens or corporations or nullifies contracts with them. If that wasn't enough, President Bush echoed U.S. law in his State of the Union address of January 29th. In that speech, the President said, "We have no intention of imposing our culture. But America will always stand firm for the non-negotiable demands of human dignity: the rule of law; limits on the power of the state; respect for women; private property; free speech; equal justice; and religious tolerance." As a matter of principle and law, then, the U.S. will be on firm ground if it sends Argentina's plunderers packing.

This article originally appeared in Liberty Magazine in April 2002.

Pode ler sobre o assunto um extenso artigo de Kurt Schuler aqui.

 O ponto de vista do

Press Statement by the IMF Mission to Argentina

Anoop Singh, Director for Special Operations and head of the IMF mission to Argentina, issued the following statement in Buenos Aires today:

"Over the past 10 days, an IMF mission team has been in Buenos Aires to assess the economic situation and discuss with the government the elements of a comprehensive economic program to resolve the current difficulties faced by Argentina and pave the way for sustained growth.

"The discussions were conducted in a very cooperative atmosphere and the mission was privileged to meet with President Duhalde, senior political leaders, economic officials, and with a broad spectrum of civil society. The mission was encouraged by the government's determination to implement a comprehensive economic program, in close cooperation with the international financial institutions.

"Such a program aims at stabilizing Argentina's financial situation and establishing the foundations for resuming growth. The discussions centered on putting fully in place a realistic macroeconomic framework, consistent fiscal and monetary policies, fundamental structural and institutional reforms to restore confidence in the banking system, and steps to establish an orderly and fair business environment.

"On the macroeconomic framework, the program aims at containing inflation and restoring confidence as key conditions for minimizing further output decline and resuming growth. Monetary policy would play a key role through containing pressures on the peso within the framework of a freely floating exchange rate system. The central bank has already initiated auctions of central bank bills, and is working with commercial banks to develop savings instruments with positive real rates of interest.

"A primary concern of the mission was to address the issue of fiscal sustainability while protecting the poorest members of society. As a first step, the government intends to secure a significant improvement in the primary balance of the consolidated public sector in 2002, through the combined efforts of the central government and the provinces. Approval of the 2002 budget by Congress, as well as the recent agreement between the Government and Provincial Governors, are important steps in this direction. In the coming weeks, the government will develop the additional measures that will be needed to achieve the objectives in this area, including the finalization of a core social safety net to protect the poor.

"Anticipated structural and institutional reforms include measures to rebuild confidence in the bank and corporate sectors, thereby helping to create the conditions for the dismantling of the freeze on bank deposits. Steps have already been announced to inject public capital into banks and restore their adequate capitalization, and begin liberalizing exchange controls. The government and the central bank are working on additional measures to restore depositor and investor confidence. This includes creating an internationally recognized insolvency regime. The government also intends to move quickly to establish close contacts with its external creditors aimed at normalizing relations and restoring trade finance.

"Over the next few weeks, the mission team will continue its work at IMF Headquarters, preparing for the negotiations on a new Fund-supported program. During this period, IMF staff will remain in close contact with the Argentine authorities as they elaborate the details of their comprehensive strategy in the above areas."

 Statement by the IMF Mission to Argentina

April 17, 2002

1. The mission has continued its discussions with the authorities toward a comprehensive economic program whose major planks were outlined in our remarks to the press last week. Such a program is designed to address the current difficulties faced by Argentina and to pave the way for sustained growth.

2. The discussions have continued to take place in a very cooperative atmosphere. As in March, the mission was privileged to meet with a very broad spectrum of society. These contacts with the wider community on specific elements of the program are helping develop consensus and pave the way for its full adoption by the authorities.

3. The fiscal framework of the program is being developed. We expect that the federal government will soon be in a position to finalize all the measures to keep the consolidated deficit in line with available financing. Special attention is being given to strengthening the social safety net and increasing protection for the poor. Finalization of the fiscal framework will depend upon reaching firm bilateral agreements with provinces to implement their recent pact with the federal government. A timetable to complete this exercise with provincial governments over the next few weeks has been finalized.

4. The mission has discussed with the government the elements of a comprehensive strategy to begin restoring confidence in the banking system. Monetary policy will play an enhanced role in stabilizing expectations and the central bank is working with commercial banks toward introducing high yielding deposit instruments.

5. In this context, the government has told the mission that it remains resolved to work with the Congress and the Judiciary to establish a legal framework conducive to maintaining depositor confidence, encouraging corporate restructuring, and restoring the confidence of investors. Such a framework is essential to help revive investment and growth in Argentina. A crucial step in this process is to establish an internationally recognized framework for the insolvency process, one that provides an appropriate balance between creditor and debtor interests, and to undertake other reforms of laws that inhibit engagement by the international community.

6. The government intends to make speedy progress in all these areas in the next few weeks. The mission then expects to return and to work with the government to complete all elements of a comprehensive economic program as soon as possible. Thus, as mentioned in our remarks of last week, there should be no doubt of the IMF's commitment to help Argentina, and that this help be anchored in a program that gives genuine promise of addressing the present difficulties in an enduring way and paving the way for growth.