President Mauricio Macri has put the country back on the neoliberal path with policies that favor big agricultural producers inside the country, and investors both inside and outside of Argentina.
by Jon Jeter
Part 2 - Snatching poverty from the jaws of prosperity
For most of the 20th century, Argentina’s was the most prosperous and industrialized economy in Latin America, and virtually everyone who wanted a job could find one. Israeli agents managed to kidnap the fugitive Nazi Adolf Eichmann in 1960 simply by waiting for him to finish his shift at a Buenos Aires water plant.
Then in 1991 — with the encouragement of the world’s two most powerful financial institutions, the World Bank and the International Monetary Fund — Argentina’s investor-friendly government decided to root out inflation by fixing the exchange rate of the local currency: one peso for one U.S. dollar.
Within two years, the peg had sharply curbed inflation, from an annual rate of 84 percent to one of 7.4 percent. But it also raised prices on locally produced goods, making Argentina’s products too expensive to sell abroad and goods shipped into the country artificially cheap. Brands made in Spain and the U.S. began to fly off the shelves and — much like the disillusioned, bankrupt protagonist of Ernest Hemingway’s The Sun Also Rises — Argentina went broke, “gradually at first, and then suddenly.”
In the postwar period, the country had never seen its unemployment rate rise above 4 percent; by the time of Albino’s self-immolation, it was 22 percent. The percentage of Argentines living in poverty soared to 56 percent, more than the previous peak by a factor of 10.
But, beginning with the 2002 devaluation of the peso and President Nestor Kirchner’s default on nearly $100 billion in government loans the following year, Argentina’s economy began to recover. With less money leaving the country to buy foreign-made goods and pay foreign bondholders, more was available for investment and poverty relief; Argentina’s economy grew by an average of 8 percent a year for the next five years, and continued even after Kirchner died unexpectedly and was succeeded as head-of-state by his widow, Cristina, in 2010. As a result of its default, Argentina was a pariah in the capital markets but a quarter of the population put poverty in their rearview mirror.