Article Summaries

by Alexander Lindee

by: Linda Schuster

from: Wall Street Journal - 6/26/84

“We can live without money from the banks, Argentina has it all, it doesn’t need anything from other countries,” yells Daniel Perez, a college student in Argentina, while marching in a demonstration in Buenos Aires against imperialism and the IMF. This way of thinking is highly shared in this proud nation. The Argentine government insists that it is not seeking support from international banks, and that support from anybody is not likely. But what the message that the people are trying to get across is that the country can survive a funds cutoff that will probably happen if Buenos Aires does not reach and agreement with international financial committee to reschedule part of its $45 billion foreign debt.

Many Argentines, including many government officials, do not seem to be bothered by a credit cutoff from the banks, and some even embrace the idea. They argue that enough money is made from agricultural exports to compensate for necessary imports and with food production and petroleum more than sufficient for domestic needs, the country would be just fine.

Other arguments in Argentina agree that their country could manage itself for awhile, but, economically in the long run they are looking to spell disaster, even worse off than the austerity program that the IF is offering. With the loss of credit, hence loss of investment, chances for growth would be minimized greatly, not to mention the 560% inflation and the chronic recession.

Two-thirds of Argentina’s grain is sold abroad, generating 70% of Argentina’s $8.6 billion in export earnings, which could easily be the reason for the estimated $3.8 billion in trade surplus. Also noted by Argentine government officials that the Soviet Union, China, and Iran - countries that accounted for 60% - of Argentina’s exports last year did not mind a boycott by western banks.

Since hard currency is used by the big customers, the Argentine government could use that pay for the $4.8 billion of imports expected this year. And since much of trade service is dealt with in the banks, using interest payments, a breakdown of the banks would presumably save $5.5 billion in interest due this year.

It is also believed that foreign trading companies and other Latin American and European countries will move in to fill the credit vacancy. Triangular trade, barter, and black marketeering would be highly likely, and boycotts and embargos are easy to get out of, as proven by Argentina’s last military regime managing to keep there U.S. built war planes flying even with a six year U.S. ban of selling parts to them.

Then you have your other economic observers that are thinking that Argentina can not endure a period of isolationism, realizing that most producers in Argentina depend of imports.

Last week the Peronist- dominated General Confederation of Workers, the group that control’s the countries unions, demanded higher wages or a general strike will occur.

“Peronist leaders deep down believe Argentina must reach an agreement with banks by way of a prior accord with the IMF,” says Dante Loss, a Peronist Party organizer. “But for electoral reasons, any of them want the government to adopt a position that will take it to economic disaster. This is their position: urge him on and then say how irresponsible he was to get us in this mess.”