10.30.2008

Argentina: Letter from Buenos Aires

by Rick Rockwell

Springtime in Argentina's capital of Buenos Aires comes with blooming flowers, picnics by families in the city's many parks and squares, a brisk breeze blowing along the Rio Plata, and plenty of smiling faces.

But nothing flips those smiles faster in this city in the southern hemisphere than economic news from the north. And that means the U.S. and Europe.

Argentina had its own financial meltdown in 2001. Seeking help from the U.S., Argentines were disappointed to hear the Bush administration tell them to basically figure it out for themselves. So they did. And along the way, they found support from the always controversial but often clever Hugo Chavez of Venezuela. But now, just as Argentina had seemed to rebound under President Cristina Fernandez de Kirchner (and her predecessor and husband Nestor Kirchner) the global financial crisis hits. And Venezuela is no port in this storm, as Chavez is figuring out a new game plan while the price of oil tanks, and with it, so goes his political and economic clout in the region.

Just so there is no confusion — Argentina is not Venezuela, nor Mexico, nor Central America. Buenos Aires is a city of wide boulevards, Spanish architecture and a very European atmosphere. Sad rancheras and passionate tangos still echo in the city's nightclubs. Although the differences between rich and poor are as stark as anywhere in Latin America, the country has a growing middle class. More than 70 percent of Argentines have cable television. The standard of living is close to Central Europe and is the highest in all of Latin America.

But that growth and advancement faces a real challenge with the new global economic crisis.

This week, President Fernandez further cemented her program that seized private pension funds, as a way to cope with the crisis (although Argentina's Congress has yet to approve the plan). This seizure gave Argentina an immediate infusion of billions in cash but, of course, was criticized as creeping socialism by a president with strong leftist and socialist tendencies. Fernandez' move put the Argentine government in the position of backing all retirement accounts in the country.

Fernandez' moves have also created friction with Spain. Various Spanish companies such as Telefonica have strong investments in Argentina, and some of the private retirement funds seized by the government were held by Spanish banks. After Fernandez nationalized the pension funds, Spanish authorities initiated a round of high-level meetings to express concern. Spain has invested heavily in Latin America in the past decade and many of those loans and gambles appear to be turning sour during the current crisis. The tense meetings between Spain and Argentina follow Fernandez' nationalization of Aerolineas Argentinas earlier this month, an airline that had been owned by the Spanish-based multinational corporation, Marsans.

Meanwhile, Argentina's media have roundly criticized the president for her moves to bolster the economy. Clarin, the country's top newspaper (and the most read Spanish-language newspaper site in the world) noted that in their opinion the president had fumbled the so-called El Campo trade controversy earlier this year and that was just a harbinger of what was to come with this economic challenge.

And this all puts Argentines in the streets, not to enjoy the spring, but as is the tradition here, to bang pots and pans, while telling authority they want certainty and better economic conditions.

Unfortunately, those may be elusive concepts for quite some time to come.

(The photo of President Cristina Fernandez de Kirchner of Argentina is by José Cruz of Agência Brasil, the Brazilian news agency, which allows use of its photos through a Creative Commons license.)















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