Four More Years of Kirchner in Argentina?
Sometime this month, Cristina Kirchner will announce whether or not she is seeking another term as president of Argentina. While Kirchner has publicly said that she is still undecided, everyone expects her to pursue reelection. The vote is scheduled for October, and the opposition parties remain hopelessly divided. Meanwhile, Argentina’s export-driven economy has received a boost from high global soy and grain prices. If the incumbent president stands for another term, she will most likely win.
That is a pity. A Kirchner victory would mean a continuation of the authoritarian leftism that has fueled massive inflation, weakened democracy, reduced press freedom, and sullied Argentina’s international image. It would be bad news for Argentina’s former bondholders, bad news for its private businessmen, bad news for foreign investors, and bad news for the United States.
To understand the South American country’s recent decline, we must go back to its 2001 financial collapse, which has distorted its politics ever since. Ten years ago, Argentina experienced the largest recorded sovereign default in world history ($81 billion). The government’s subsequent treatment of its former creditors has been heavy-handed and inequitable. Sadly, this behavior has reflected a broader trend in Buenos Aires: the adoption of irresponsible, Chávez-style economic policies.
In 2005, then Argentine president Néstor Kirchner (the late husband of Cristina) offered his country’s erstwhile bondholders 27 cents per dollar of defaulted debt. The government then repudiated all debts owed to bondholders who chose not to accept the deal. It reopened debt swaps twice in 2010, but the proposed terms were no better than those offered five years earlier. Argentina still owes approximately $16 billion to private creditors worldwide, including $3.5 billion to creditors in the United States. It owes an additional $9 billion to Paris Club member nations. A decade after defaulting, Buenos Aires continues to resist a fair negotiation with its bondholders.
Not surprisingly, the Kirchner government is under significant legal pressure both inside and outside the United States. It faces more than 100 court judgments in the U.S. Southern District Court of New York, along with arbitral judgments in the World Bank’s International Center for Settlement of Investment Disputes (ICSID). Argentina accounts for a remarkable 84 percent of all ICSID cases pending against G-20 countries.
When global investors look at Buenos Aires today, they see a government that has persistently refused to accept a fair settlement with its past bondholders. A government that has nationalized railways, telecommunications, airlines, and private-pension accounts. A government that recently used a presidential decree to acquire much greater influence over private companies. A government that has precipitated runaway inflation and then doctored official statistics to conceal the damage. (As the New York Times reported in February, there is now “substantial evidence” that “the government’s national statistics agency has been grossly underreporting inflation and poverty for four years.”) A government that has introduced economically damaging taxes. A government that has spurred capital flight. A government that has attacked opposition journalists and shown utter contempt for press freedom. A government beset by corruption. A government that has demonstrated increasing hostility toward the United States. (Its foreign minister has accused Washington of operating torture schools.)
Sully the reputation of Argentina? Excuse me, but isn’t Argentina whither escaped some surviving Nazi monsters? Were they not received with open arms? Sully, indeed.
This reads like current events in the US and foreshadows a likely future or high inflation, government power grabs and growing poverty.
After reading the last paragraph on the 1st page I was thinking the same thing. This is like the Obama administration on steroids.
Obama: no leftist he couldn’t love.
Cristina Kirchner: Lenin in a dress.
But who is loaning money to the country now? I doubt anybody would buy their bonds, so how do they finance any sort of debt? Unless they only borrow money from similar countries, like Venezuela. This could be what Greece looks like a year from now if the EU does not bail them out yet again. And if that happens, the world economies are going to take a huge hit and the EU could collapse as well. Things may be so bad economically next year that 2011 may seem like “The good old days.” Too bad we have absolutely no guidance from either Hillary Clinton or Obama on this. I guess it would be too much asking them to do their JOBS and try to help Argentina actually solve its economic problems. But maybe that would be the last thing Argentina needs: Obama and Clinton giving Argentina economic advice.
Venezuela already bought argentinian bonds later resold in the secondary market
After hearing this news, Botox stock just jumped 78% on the Argentine Stock Exchange.
Weakened democracy? It is democracy that is weakening them. She is going to be re-elected, remember?
Two words about this type of democracy: Fidel Castro.
Jaime, are you telling us 18-25% continued unemployment (well.. on the books), much to the chagrin of this Leninite and her minions, as well as the despicable ‘business practices’ incorporated for over a decade are ‘bad’?
Be careful.. Uhbama and his administration will read this as a ‘success story’, whereas our Pinocchio-in-Chief touted ‘success’ with his recent Chrysler visit.
Socialism/Collectivism retards the mind and enslaves both their cheerleaders and opposition.
Can I say “Bring Back Pinochet” without getting beaten up?
pinochet is not the answer. argentina (all the south american countries for that matter ) has a socialist bent.
what is need is a proper education (if there is such a thing) it is the populations that vote for these marxists (as in the USA). the schools and education systems of “democracies” have been subverted into brain-washing and indoctrination to a socialist mind set. if you don’t fix that then the problem will remain.
Pinochet ruled Chile. he began aplying the same argentinian politics before correcting course. Argentina was destroyed by military rulers. First Peron, then Peron again. His widow, not evita but Maria Estella who was the puppet of a spanish Rasputin, Lopez Rega.This mismanagement brough a military coup leaded by Videla. he killed 20k. People were thowed from planes. The children of comminunists werekidanaped with the blessing of the a Cardinal.Then in 1980, whe Carter embargoed the URSS for Afgahnistan , Videla sold wheat to the URSS. he was replaced by galtieri that began the Falkland war to try to avoid the impopularity of a 5k % inflation. The cowardice and incompetence of teh military brought back democracy. The first president was as bad in the economic realm as military. Then a peronist, Menem, introduced market reforms that put Argentina in the road of growth with low inflation. But corruption made him fail. he was Berlusconi kind of politician.
Argentina was the 4 th economy of the world by 1920.
BTW: but for Pinochet the military brought economic failure, they were socialist in the economy. And thousands of death.It was the same in Brasil, Peru, Ecuador, Bolivia, Uruguay and Paraguay. Chile was headed in the same direction until some economist arranged a seminar with Friedman and pincochet called him and abide by his advice. Thats why is he heated. He killed 3k. Castro 300k
Democratic goverment have done well in Uruguay were a communist introduced market reforms. Chile where they followed tha path set by Pinochet.Brasil leaded by Cardozo , the father of the dependency theory that fred the economy, liberal press and Vargas LLosa attribute the success to Lula, but he only maintained Cardozo ´s policies.Or El Salvador where an ex guerrillero is proamerican and pro market. Colombia, Panama, Costa Rica have been also success stories. Even mexico under Zedillo recovered from the tequila effect and did not change course
In 2005, then Argentine president Néstor Kirchner (the late husband of Cristina) offered his country’s erstwhile bondholders 27 cents per dollar of defaulted debt.
Better than what Iceland offered.
or obama motors
In 2005, then Argentine president Néstor Kirchner (the late husband of Cristina) offered his country’s erstwhile bondholders 27 cents per dollar of defaulted debt.
Better than what Iceland offered
How would you, dear readers, like to reside in the Falklands and hear the chatter from the US State Dept about “returning the Malvinas to Argentina”?
Pinochet saved Chile. Period.
Argentina sounds just like America. Herbert Spencer said it more then a hundred years ago, lessons available from history on government failure are very rarely learned.
The problem is not Kirchner but the Argentines. Here are some stories; my Jewish Argentine wife voted for Juan Peron many years ago even though he was a pro-Nazi anti-Semite. Why, because the opposition was worse. (Juan was also a pedophile who had an organization national collecting schoolgirls for his private use)
Next story; I met a former Argentine who left the country during the Falklands crisis when he realized the people had “sh*t for brains”.
When expatriate Argentines meet they used to ask each other when they left the country, that way they know if the the other fled out of fear of the death squads.
An international diplomat from Argentina was afraid to admit while living in DC that he had to burn some economics books in Argentina because he was afraid the military would find them and kill him because they thought he was a communist. He was still afraid even after moving to the US.
Kirchner is an ideal president for such a people.
On the topic Bob,you said several words on the argentinan default in progress.
I agree on the times you resume.But,I will reading Borges.Not surprise here.
On the other side,I hope,and hope,this story shall not be in circular ground.
“she has taken the onetime “jewel of South America” — a country rich in commodities, infrastructure, and highly educated workers — and turned it into one of the “sick men” of South America.”
Just to be fair the transformation of Argentina from the one of the world’s top 5 wealthiest countries in 1900 into providing case study after case study of economic mismanagement has been ongoing for almost 50 years. This Evita wanna-be is just the latest manifestation.
“Foreign creditors found out the hard way that Argentina is not a reliable debtor.”
Argentina has a lengthy history of defaulting even before what happened in 2001. Foreign creditors should have known what they were getting into when they loaned money.
i live in argentina. Parallels between obama and cristina run far deeper and are more troubling than those mentioned here
alex I sympathize with you. I’ve a very close friend in Mendoza. He too is very frustrated by your country’s woes.
He and his wife are at their wit’s end. B A was once a possibility but the steady, albeit lower wages in Mendoza keep them there.
I often talk with him via Skype and always ‘share’ a Malbec.
Chau chau Marcos..
If Obama is not defeated what will Obama offer our creditors? Anything like 27 cents on badly deflated dollars?
Argentina is an excellent example of the failure to absorb the incalculable importance of certain basic understandings and custom which made those in Western Civ wildly successful exactly in proportion to the degree they absorbed that leaned experience. Argentina is wealthy in land, in resource, and, I will be blunt, in white people–who cannot manage to get out of their own way, and are determined never to get over themselves. I do not crow; we are right behind you Argentina. Leftism cannot be cured by experience, or it would have been annihilated by this time. It must be our natural state.
It is tragic that a country that was so prosperous and so wealthy is struggling desperately to survive. Unfortunately, the left are infamous for mishandling and damaging the economy. Argentina needs to study the years when she was so prosperous and do the things Argentina did then that made Argentina prosperous. Also study the amazing economic turnaround that Canada has made.
Well,Argentina’s gov.made some lateral messages on the matter concerning the two terrorist incidents in Buenos Aires.The problem is the ties with countries in deep alliance with the iranian regime.Focus in double think or searching help out?
My country was indeed very wealthy 100 years ago,and explanations on the declive,is a matter for economics researches and local political.Populism,anamerican thinkers,military coups,and mixed politics,contributed to the decline,but not was the whole reason.I think here are some political candidates in afraid to do an long term plan on the national and international agenda.
Los pueblos tienen los gobiernos que se merecen