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The U.S. Shares Culpability In Argentina's Plunge

The U.S. Shares Culpability In Argentina's Economic Plunge

* Economic mismanagement is merely a symptom of Argentina's fundamental institutional crisis, which stems from a flawed political culture

* The cure to the country's woes must come from both Argentine officials and from the general populace, which is finally beginning to demand accountability and civic rectitude from their leaders

* Despite their denials, the U.S. and the IMF are in part to blame for the crisis, and must reexamine their pseudo-science of "free markets + fair elections = democracy" if they are to prevent Argentina's turmoil from infecting the rest of Latin American

Argentina's ongoing crisis, which began with a succession of presidents unable to muzzle the public's spurning of their ineptitude, is as much a product of distressed institutions as unsound financial planning. The core rottenness of the country's bureaucracy, which for a decade has been concealed by spurious attributions of democratic governance, finally triggered a flood of public outrage that even President Eduardo Duhalde's populist rhetoric may be unable to cap. The country's current malaise cannot simply be solved by hurling billions of new dollars to revive the economy. To resolve Argentina's ongoing turmoil, the inherent flaws of its failed political culture must be tackled, with the cure coming as much from below as above.

In the past two decades, the three civilian presidents who followed upon seven years of brutal military rule barely primed the country's democratization. Nor are Argentines renowned for demanding equable rulers (as long as they did well from the balcony), as witnessed by their past enthusiasm for the notorious President Carlos Menem. Finally, near-daily revelations of gross corruption and cronyism contributed to a fatal skepticism that the country was irredeemably in the hands of unworthy officials motivated more by greed than public service.

Early on, the Bush administration sought to distance itself from Argentina's crisis, defining it in strictly technocratic terms. While the U.S. and its dependency, the International Monetary Fund, insist that they are blameless for Argentina's chronic economic mismanagement, this may not be entirely true. The U.S. consistently had supported IMF aid programs to Argentina that were solely conditioned on monetary and fiscal standards. As a result, Argentina's leaders chronically misused such funds on ill-advised projects - when not pocketing them - while the citizenry was periodically lashed by crippling IMF-mandated austerity measures to service a mountainous debt resulting from uncontested budgetary deficits.

What perhaps is most astonishing about the country's current crisis is that Washington and the IMF refuse to acknowledge that the economic policies upon which they insist cannot be implemented without a corps of officials possessing an elevated standard of professional rectitude. This was never demanded by U.S. or Argentine authorities, let alone the average porteño.

Accountability has been noticeably absent from U.S. regional policy. Since the Cold War's demise, Washington has maintained that open markets, together with free elections, were binary factors in constructing true democracy. While this ideological preference has been converted to high science by a series of U.S. administrations, it failed to prevent their backing of tawdry regimes like Argentina's Menem, whose democratic sheen barely camouflaged its venal marrow. But rather than giving Menem only a cold handshake for his administration's undeniable record of defalcation, the Clinton White House opted to throw him a tango party. Such a gross flight from reality unquestionably helped breed the "anything goes" attitude that brought on Argentina's current institutional crisis.

The prevailing self-deception was helped along by President Clinton's superficial Latin American policies and his repeated references to the "34 democracies and 1 dictatorship." Recent revelations about the stygian workings of such pathogenic "democracies" as Fujimori's Peru and Lopez Portillo's Mexico, where death squads terrorized civilians, or Alemán's Nicaragua and Menem's Argentina, where state thievery achieved celebrity status, call into question the dubious criteria behind Washington's appraisal of what characterizes a democracy.

Lionized as the decade's "miracle" for its alleged success in twinning democratic institutions with free market policies, only now are Argentina's calamitous underpinnings being fully exposed. Yet alarmingly, its basic sub-structure differs only marginally from most of the hemisphere. As a result, while the "contagion effect" of Argentina's debt default and devaluation appears momentarily contained, the same may not be true of an even more virulent political contagion.

Latin America's range of internal weaknesses, as exemplified by Argentina's current plight, has raised serious questions regarding Washington's regional strategy. President Duhalde feeds populist phrases to his people yet embraces orthodox economics when dealing with international financial institutions. As a result, he may not be able to control the political volatility on the street, as poverty and unemployment stoke the flames. Venezuela's Hugo Chávez even more sharply challenges the "savage neo-liberalism" that Washington adamantly defends, while the leading candidate in Brazil's upcoming presidential elections is a vociferous critic of free market policies. Does this mean that Washington's trumpeting the virtues of unrestrained free trade is being met by a countervailing challenge of the lending agencies' dogma?

Clearly, Washington cannot walk away from churning Argentina, nor can it continue to rely on narrowly conceived macro-economic solutions to Latin America's now overwhelming problems. Unless the Bush administration speaks out against the inequities of the grossly imperfect institutions that are concealed by the "34 democracies" mythology, and insist upon policies that address their societies' basic grievances, Argentina could only be the first in a series of hemispheric dominoes.

Larry Birns and Jeremy Gans, 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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