A rchive Date
[ 18-08-2002 ]
Category
[ International Relations ]
sub-Categoy
[ Argentina ]
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[http://www.canoe.ca/Columnists/margolis_aug18.html
Yes, we should cry for Argentina
By ERIC MARGOLIS -- Contributing Foreign Editor
August 18, 2002
The French used to say someone of great wealth was "rich as an Argentine." That was after World War I, when Argentina, blessed with verdant land, a small, well-educated European population, and natural resources, ranked among the world's five most prosperous nations.
Latin Americans used to call Argentines insufferable snobs - "Italians who speak Spanish, who think they're British" went the old saying. Today, the once haughty Argentines, reduced to near paupers, are an object of pity. Buenos Aires, formerly the "Paris of South America," with its elegantly dressed men and chic, unapproachable ladies, is headed in the direction of Calcutta.
During my last visit to Buenos Aires, Argentina's then minister of the economy, Domingo Cavallo, gave me a book he wrote about the many similarities between his nation and Canada, another huge, underpopulated nation with vast resources and agricultural bounty.
Today, Argentina has become a horrifying economic and political disaster, having gone in a single century of manic profligacy from riches to rags. Its northern mirror-image, Canada, has also wasted its natural endowments, ending up with a semi-worthless currency and an increasingly unproductive economy, in spite of being a branch of the mighty U.S. market. The reason for Canada's anemic performance is simple: increasingly corrupt, ossified, one-party rule that has debauched the currency and bleeds productive wealth from the economy through high taxes to buy popularity. The description of Canada made in the late 19th-century, "rich by nature, poor by government," alas, still holds true.
As for wretched Argentina, these biting words should be its national motto.
Eduardo Duhalde, the country's fifth incompetent president since last December, barely clings to power. The world's two worst jobs are leader of Argentina and of Pakistan.
Last fall, the government reneged on its $141 billion US debt, causing international lenders, upon whom Argentina's economy depended, to cut off the cash, plunging the country into political, economic and social crisis. The economy is declining at 9% annually. Depositors' bank accounts and life savings - mostly in dollars - have been "frozen," i.e., confiscated. Argentina's financial system is bankrupt. Almost half the nation's 37 million inhabitants have fallen below the poverty level, including a once vibrant middle class.
Angry mobs are burning, rioting, and looting. Kidnappings and armed robberies have become common. Argentina is teetering on the brink of anarchy, illustrating Lenin's dictum that the fastest way to wreck a nation is to debauch its currency. The Argentine peso is now 70% worthless; Canada's "northern peso" has nosedived 40% in three decades, thanks to the bloated welfare state created by Pierre Trudeau, the Juan Peron of Canada.
Peron and his blonde wife, Eva, a former bar girl, rose to power in the 1930s by the simple method of offering the "unwashed" masses free or subsidized food, housing, medical care, transport, education and vast numbers of jobs in overstaffed nationalized industries. The government became the sole dispenser of patronage and a partner with powerful trade unions in what closely resembled Mussolini's fascist corporate state in 1930s Italy.
Peron and his glamorous wife were adored by Argentines. Many credulous Argentines still venerate Evita as a saint. But the Perons left behind them a toxic legacy that poisons their nation to this day. In simple terms, Argentina could not, and cannot, afford the bloated welfare state created by the Perons 70 years ago. Once governments begin handouts and subsidies they are almost impossible to end, or even diminish. New York City, for example, instituted "emergency six-month-only rent controls" in 1945, yet they remain in force today.
No elected government in Argentina has been able to cut unaffordable social spending or face down domineering unions. To paper over deficits created by reckless Peronist extravagance, every government had to borrow abroad and resort to fraudulent accounting. Last year, the credit ran out.
Foreign lenders, notably the U.S.-dominated International Monetary Fund, made huge, irresponsible loans to Argentina under the mistaken assumption governments can't really default. Giving billions of "free" borrowed money to politicians is like giving alcohol to children.
Every Argentine government, including the military regime of the 1970s and '80s, was rife with corruption. Even so, billions from abroad poured into Argentina. As U.S. Treasury Secretary Paul O'Neill correctly, but unpolitically noted on his recent foray to Latin America, much of these foreign loans ended up in Swiss bank accounts.
The U.S. has had to rush to the rescue to avert a South America-wide financial crisis that could have triggered an international panic. Brazil just got $30 billion US to prop up its currency and fend off a left-wing challenger in upcoming elections. Tiny Uruguay got $1.5 billion, and Argentina is set to receive $14-$15 billion from the IMF. Without emergency American aid, Argentina, Brazil and Uruguay all face economic agony and social chaos that could bring to power leftist or dictatorial regimes. The rest of the continent is in a similar fix.
No one is to blame for wrecking Argentina, one of the world's most beautiful countries, save the Argentines themselves. Their astounding foolishness and dazzling irresponsibility is a stark warning to us all.
Eric can be reached by e-mail at margolis@foreigncorrespondent.com. Letters to the editor should be sent to editor@sunpub.com or visit his home page
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