FacebookTwitterGoogle+RedditEmail

What Are They Doing to Argentina?

The head of the IMF’s delegation to Argentina was recently cornered outside his hotel room by reporters from a popular, muck-raking television show. They handed him a set of large, plastic Halloween vampire teeth. “We found these lodged in President Duhalde’s neck,” they told him, “and wanted to return them to you.”

Such views of the IMF are commonly held in Argentina, and contrast sharply with those expressed in Washington media and policy circles. Here, the debate has been about whether the IMF should “help” Argentina, which is suffering from four years of economic depression, a collapse of its currency and banking system, and default on its public debt. The doves say yes, the country is desperate; the hawks say no, not until the government demonstrates more willingness to “reform.”

Both sides are misreading the actual situation. The IMF is not offering any help to the Argentine economy. Even if an agreement is reached, there will be no new money — only enough to pay the Fund and other official creditors such as the World Bank.

Furthermore, Argentina is not facing a simple choice of whether to accept or refuse this “help.” It is much worse than that. The IMF is using its power as head of an international creditors’ cartel to prolong Argentina’s agony. Credit from the World Bank, from European governments, and even the day-to-day credit that businesses need to conduct international trade are being held up until the IMF gives the ok.

This distinction is crucial. Imagine that someone is drowning, and a passerby does nothing to save him. This would be morally reprehensible. But what if the drowning man is trying to claw his way onto the shore, and the passerby kicks him and pushes him back into the river?

The latter case is much worse, not only from a moral but a practical point of view: the drowning man might save himself if not for the outside intervention.

Very simply, the IMF is practicing a form of extortion, and a fairly brutal one at that. A couple of months ago the World Bank was supposed to release some $700 million in funds for the unemployed — now numbering about a quarter of Argentina’s labor force. But they decided to wait for the IMF’s approval.

On a recent visit to Argentina, I met with Dr. Nestor Oliveri, a physician who runs a health clinic for the poor in the neighborhood of Matanza, on the outskirts of Buenos Aires. He pointed to children jumping over an open drainage ditch. “They touch their mouths, and they get parasites. We have 30% malnutrition among children in this neighborhood.”

And it is getting worse, in a country that was until recently the richest in Latin America.

What does the IMF want from Argentina? After more than six months of talks and pressure, it is not even clear. The government has already agreed to just about everything that the Fund demanded, including drastic spending cuts (especially for the provincial governments) and rewriting their bankruptcy laws to make these more favorable to creditors. Yet the IMF keeps moving the goal posts, and coming up with new demands. Some financial analysts have concluded that the IMF is deliberately punishing Argentina for defaulting on its international debt, so as to discourage others from taking this path.

The Fund’s policy conditions will probably worsen the depression, by causing layoffs of hundreds of thousands of workers and reducing aggregate demand in the economy. For four years, the IMF has been arguing that the only way to get the economy growing is to first restore the confidence of investors, especially foreign investors.

But the measures that they have recommended to do this, such as cutting government spending, have further weakened the economy. These policies have therefore had the opposite effect. And now, by choking off credit from most other sources — i.e., its extortion — the Fund is accelerating the decline.

Unlike most countries that turn to the Fund, Argentina is currently running a trade surplus. This means that it does not really need external financing. Nor does it need dollars to fix its banking system, which now runs on pesos.

In other words, the country is capable of recovering on its own. At this point the biggest obstacle to re-starting growth may be the Fund itself. As the crisis drags on, Argentina may have to find a way to get around the IMF.

Mark Weisbrot is co-Director of the Center for Economic and Policy Research in Washington, D.C. He is co-author (with Dean Baker) of Social Security: The Phony Crisis (University of Chicago Press).

 

More articles by:

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

February 18, 2019
Paul Street
31 Actual National Emergencies
Robert Fisk
What Happened to the Remains of Khashoggi’s Predecessor?
David Mattson
When Grizzly Bears Go Bad: Constructions of Victimhood and Blame
Julian Vigo
USMCA’s Outsourcing of Free Speech to Big Tech
George Wuerthner
How the BLM Serves the West’s Welfare Ranchers
Christopher Fons
The Crimes of Elliot Abrams
Thomas Knapp
The First Rule of AIPAC Is: You Do Not Talk about AIPAC
Mitchel Cohen
A Tale of Two Citations: Rachel Carson’s “Silent Spring” and Michael Harrington’s “The Other America”
Jake Johnston
Haiti and the Collapse of a Political and Economic System
Dave Lindorff
It’s Not Just Trump and the Republicans
Laura Flanders
An End to Amazon’s Two-Bit Romance. No Low-Rent Rendezvous.
Patrick Walker
Venezuelan Coup Democrats Vomit on Green New Deal
Natalie Dowzicky
The Millennial Generation Will Tear Down Trump’s Wall
Nick Licata
Of Stress and Inequality
Joseph G. Ramsey
Waking Up on President’s Day During the Reign of Donald Trump
Elliot Sperber
Greater Than Food
Weekend Edition
February 15, 2019
Friday - Sunday
Matthew Hoh
Time for Peace in Afghanistan and an End to the Lies
Chris Floyd
Pence and the Benjamins: An Eternity of Anti-Semitism
Rob Urie
The Green New Deal, Capitalism and the State
Jim Kavanagh
The Siege of Venezuela and the Travails of Empire
Paul Street
Someone Needs to Teach These As$#oles a Lesson
Andrew Levine
World Historical Donald: Unwitting and Unwilling Author of The Green New Deal
Jeffrey St. Clair
Roaming Charges: Third Rail-Roaded
Eric Draitser
Impacts of Exploding US Oil Production on Climate and Foreign Policy
Ron Jacobs
Maduro, Guaidó and American Exceptionalism
John Laforge
Nuclear Power Can’t Survive, Much Less Slow Climate Disruption
Joyce Nelson
Venezuela & The Mighty Wurlitzer
Jonathan Cook
In Hebron, Israel Removes the Last Restraint on Its Settlers’ Reign of Terror
Ramzy Baroud
Enough Western Meddling and Interventions: Let the Venezuelan People Decide
Robert Fantina
Congress, Israel and the Politics of “Righteous Indignation”
Dave Lindorff
Using Students, Teachers, Journalists and other Professionals as Spies Puts Everyone in Jeopardy
Kathy Kelly
What it Really Takes to Secure Peace in Afghanistan
Brian Cloughley
In Libya, “We Came, We Saw, He Died.” Now, Maduro?
Nicky Reid
The Councils Before Maduro!
Gary Leupp
“It’s All About the Benjamins, Baby”
Jon Rynn
What a Green New Deal Should Look Like: Filling in the Details
David Swanson
Will the U.S. Senate Let the People of Yemen Live?
Dana E. Abizaid
On Candace Owens’s Praise of Hitler
Raouf Halaby
‘Tiz Kosher for Elected Jewish U.S. Officials to Malign
Rev. William Alberts
Trump’s Deceitful God-Talk at the Annual National Prayer Breakfast
W. T. Whitney
Caribbean Crosswinds: Revolutionary Turmoil and Social Change 
ADRIAN KUZMINSKI
Avoiding Authoritarian Socialism
Howard Lisnoff
Anti-Semitism, Racism, and Anti-immigrant Hate
Ralph Nader
The Realized Temptations of NPR and PBS
Cindy Garcia
Trump Pledged to Protect Families, Then He Deported My Husband
FacebookTwitterGoogle+RedditEmail