Skip to main content

Argentina’'s Decline

Jaime Daremblum

Two recent dispatches from Buenos Aires highlight the travails of Argentine president Cristina Kirchner, whose foolish populism and economic mismanagement have created serious headaches for her government.

On February 4, the Wall Street Journal reported that U.S.-Argentine relations had “hit a new bump” after remarks by Foreign Minister Héctor Timerman. Speaking to local media, he blasted conservative Buenos Aires mayor Mauricio Macri for sending a pair of police officers to study at the Salvadoran campus of the International Law Enforcement Academy (ILEA), which was created by the United States during the Clinton administration. Timerman likened the ILEA to the Georgia-based School of the Americas (SOA), a U.S. Army-run training facility that has been unfairly denigrated because of the human rights violations committed by some of its graduates during the era of Latin American military rule. “In the past, they were dedicated to training the military in coup techniques and courses in torture and persecution of political enemies,” Timerman said. “It seems to me that these are limits that we shouldn’t cross.”

The SOA is an old bogeyman of the Latin American left, so those comments weren’t terribly surprising. Like her late husband, Néstor, who served as Argentine president from 2003 to 2007 and died of a sudden heart attack last October, Cristina Kirchner is an ideological leftist, one who has fostered anti-U.S. sentiment and cozied up with the likes of Venezuelan strongman Hugo Chávez. The statements by Timerman reflected the broader intellectual disposition of her government.

But those statements were also quite imprudent. As Buenos Aires metropolitan police chief Eugenio Burzaco said in response to Timerman, two Argentine federal police officers are currently receiving instruction at the ILEA. Thus, if we accept Timerman’s logic, “the federal government itself is sending [police] to a course where they supposedly torture.”

U.S. diplomats were understandably angered by the Timerman remarks, which came at an inopportune moment for Buenos Aires. Argentine officials are upset that President Obama will not be visiting their country during his Latin American tour next month. (That tour will include stops in Brazil, Chile, and El Salvador.) They consider this a snub. In reality, it is a sign of diminished Argentine influence in the region. The country is simply not a high priority for the Obama administration, as Assistant Secretary of State Arturo Valenzuela has indicated. And having the Argentine foreign minister suggest that the U.S. operates torture training programs is not going to win Kirchner any new friends in Washington.

Once celebrated as “Argentina’s Hillary,” Kirchner is also battling significant domestic economic woes fueled by herand her husband’sirresponsible governance. “High inflationa weakness of the Argentine economy for decadesis soaring again,” the New York Times reported last week. “Independent economists say inflation rose by 25 to 30 percent in 2010, the highest level since the calamitous 2002 devaluation that sent the economy into a tailspin.” Yet rather than tackle the problem through a comprehensive anti-inflation strategy, Kirchner is still trying to conceal it by fudging the numbers: “The government’s official 10.9 percent inflation rate is less than half the estimate of private economists and firms like Ecolatina, which put inflation at 26.6 percent in a report last month. The official 12 percent number for poverty is also well below independent estimates of about 30 percent.”

By embracing profligate spending, nationalization measures, and other anti-business policies, the Kirchners have done severe damage to the Argentine economy. (Back in October 2008, the Wall Street Journal editorialized that Argentina “serves as a cautionary tale on how to ruin an economy.”) By doctoring official government inflation and poverty statistics, they have done severe damage to their country’s reputation among global investors. As the Times points out, “The manipulation of the statistics has drastically increased Argentina’s risk profile, driven away foreign investors and complicated the country’s efforts to return to the credit markets, even as it moves to settle $100 billion in debt from a 2001 default.”

Cristina Kirchner would argue that her spending and investment policiesfacilitated by high global soy priceshave helped the Argentine poor. Yet those same policies have produced runaway inflation, which is much harder on low-income citizens than it is on the rich. Indeed, the Kirchner economic agenda has been disturbingly similar to the Chávez agenda. While Kirchner has not created a dictatorship (as Chávez has), she has often behaved in an authoritarian manner. For example, Kirchner has frequently bullied opposition journalists, and press freedom has deteriorated significantly under her watch. Meanwhile, she fired Argentine central bank president Martín Redrado in January 2010 after he refused to transfer $6.7 billion worth of foreign exchange reserves to help the government repay defaulted debt. 

Argentina used to be hailed as “the jewel of South America.” Today, it is a country in serious decline. Kirchner continues to deny that inflation poses a real economic threat, thereby weakening her (already diminished) credibility and exacerbating investor fears. Argentines deserve better political and economic leadership than they have received from the current government. Whether they get such leadership will depend on the outcome of the next national election, which is due in October.

Related Articles

Argentina's Downward Spiral

Jaime Daremblum

An essay by Jaime Daremblum on the decline of Argentina under President Cristina Fernandez de Kirchner...

Continue Reading

Mexico's Game-Changing Energy Reform

Jaime Daremblum

What happened in Mexico last week represents one of the biggest global economic stories of the year. It may eventually be counted among the biggest st...

Continue Reading

Un acuerdo explosivo

Jaime Daremblum

Research by Jamie Darenblum about Latin America and Iran at Hudson Institute, a think tank and research center dedicated to nonpartisan analysis of US and international economic, security, and political issues. ...

Continue Reading