At the last political forum of the year, Christian Harris, professor of political science, said the United States and many other countries are not aware that the international community’s economic success is partially based upon the the stability of Argentinean and Latin American economies. In Harris’ speech, “Managing Financial Crisis: Lessons from Argentina,” he spoke about the idea that throughout its history, Argentina has a struggled with its economy.
With a history of difficulty with International Capital Movement policies, Argentina has grappled with high investor expectations and a low interest rate in exporting countries.
During the fiscal year in 1999, as a result of the poor situation of Argentina’s economy, Brazil was forced to devalue its currency and fell into a recession.
As a result of the struggling economy the government made unrealistic attempts to patch up the economy, according to Harris.
He said the attempts were as realistic as “attempts to be more Catholic than the pope.”
As a result of unsuccessful plans of currency revaluing, the initiatives led to mass failures, a loss in confidence in the government and record high unemployment rates.
As a result, the Argentinean government froze all bank accounts.
This led to a $1 billion deficit a day in Dec. 2001. As a result, Argentina went through three presidents in one day.
The U.S. was not willing to offer much at this time. According to Harris, U.S. Secretary of Treasury, Paul O’Neil was wary of trying to bail Argentina out of the crisis.
On the other hand, some leaders knew that the negative affects of their economy could have devastating effects upon the world economy.
Secretary of State Colin Powell knew that an adverse domino effect would take place as a result of the suffering economy.
It was realized that many nations would struggle as a result of Argentina’s difficult time in the financial market.
“The U.S. is not playing the leadership role that it should be playing in the financial market,” Harris said. “There is contagion, there is transmission of financial crisis in the world markets.”
Argentina wants to find their own solution to their financial difficulties and didn’t want to work with the IMF doesn’t mean that the IMF can’t be of great assistance to other nations.
Harris said, “Even without the IMF reform, one could taunt it, flaunt it and even ignore it. Working with IMF is still possible, especially in larger amounted loans.”
“What has prevented Argentina to be more successful agricultural market like New Zealand and Australian markets?” Dan Crofts, chair of the history department, asked.
According to Harris, as a result of Australia’s dependency upon borrowing money from large land-owners it was able to main a certain level of success due to its relationship with Great Britain. Without the support of nations like the U.S., Argentina is left out in the cold.
Harris said that until the United States shows their eagerness to take the steps toward assisting Argentina and taking on the leadership role that it has always prided itself on, Argentina’s economy will continue to struggle and remain in recession.