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Argentina's Upheaval

The director of the Council on Hemispheric Affairs (COHA), Larry Birns, has made two extensive trips to Argentina over a number of months, where he met with a large number of government officials, economists, legislators, journalists and members of the judiciary. While in Buenos Aires, he appeared on a number of Argentine TV and radio programs and a press conference was held.

Among those with whom he met were the country's then-vice president, the Chief Justice of the Supreme Court, several cabinet ministers, academic figures and the editors of a number of Argentine newspapers, as well as several Jewish leaders concerned with the bombings of two Jewish-related buildings.

The theme of his visit was the issue of corruption and the serious problems afflicting the Argentine legal system, as well as threats to civil society.

Argentine crisis far more than just economic

A major contributing factor to the current Argentine crisis comes from non-economic causes, in spite of the fact that it was Economy Minister Domingo Cavallo who resigned. The dispute over economic issues represents just the iceberg's tip, with the basic foundation of Argentine society being increasingly revealed as rotten to the core. Today, Argentina is largely a lost cause, with a huge foreign debt of $155 billion being a product of the crisis rather than its generative force. Portrayed as an array of financial problems including liquidity, service on the country's foreign debt and massive dollar flight due to faltering investor confidence, which saw one-third of the country's foreign investment portfolios withdrawn this past year, these should be seen merely as manifestations of a profoundly leprous society. In fact, while the trigger of the crisis was mainly economic, its fundamental genesis was principally non-economic.

Argentina today is the antithesis of the good civil society. Due to the massive corruption which for decades has been the protoplasm of the country's bureaucracy, media, armed forces, judiciary and presidency, the vast bulk of Argentines are alienated from the establishment. Today, it is a country that clearly no longer works. As a result, the population views its leaders with raw cynicism and only trusts its athletes.

Argentina is a country whose military had murdered upwards of 25,000 citizens in a "dirty war" that took place during the 1970s and early 80s. In spite of this fact, the armed forces are unrepentant for their barbarous behavior, and could be the beneficiary of the current crisis if the population turns to them to get rid of President Fernando de la Rúa. The military was extended amnesty by several civilian presidents, including Carlos Menem, who after being released from house arrest, today waits anxiously in the wings for De La Rúa's downfall. Of those found guilty, many were punished with a light slap on the wrist. Menem also had been honored with a state dinner by President Clinton, at which the White House was transformed for the night into a tango studio.

In spite of Argentina's reputation for violence, lawlessness, corruption and venality (IBM gave senior officials of the country's Central Bank a bribe of between $25 to $27 million in order to land a $250 million computerization contract), the country still is being treated as if it were a model for democracy. The IBM scandal is joined by almost daily revelations in the press of payoffs to the government and defalcation of public funds, many of which were cases of embezzlement that occurred during the Menem presidency.

The U.S., IMF and World Bank all share culpability for Argentina's current plight because all of these actors were well aware of the fact that the country was less a democracy than a kleptocracy, and that a portion of any funds sent there would be siphoned off into private hands. Regarding Menem's release from house arrest, the case indicates how justice prevails in that country. Argentines have very few reasons for optimism or espousing their traditional smugness. The two major parties - the Alianza and Justicialista -- are both renowned for their corruption and cronyism; Fernando de la Rúa, the so-called reformer, has proven to be a disaster, with his vice president Carlos "Chacho" Alvarez having the political courage to resign soon after taking office because De la Rúa would not fire some of his cronies for their corrupt practices. Tourism revenues have plummeted as Buenos Aires has become one of the world's most dangerous and crime-ridden cities; the middle class is being pressed to the poverty level; and the poor are without hope. All that can be expected from the political parties is demagoguery; older Argentines bitterly recall that some of the current burdensome foreign debt dates back to the late 1970s and early 1980s, and is due to loans that David Rockefeller personally arranged for his Chase Bank to make to the Argentine military junta, after the constitution had been suspended and the legislature disbanded. There is little doubt that Rockefeller and his advisors had the ability to calculate that these loans were unnecessary and would most likely end up being pocketed by the Argentine military, which is exactly what happened. Nor is adding more bailouts to the $48 billion already provided to Argentina in recent months any solution, because it can be reliably anticipated that much of it will be misallocated or purloined.

COHA Research Group

The Council on Hemispheric Affairs, founded in 1975, is an independent, non-partisan and tax-exempt research and information organization. It has been described on the floor of the Senate as being "one of the nation's most respected bodies of scholars and policy makers."

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