An Argentine renaissance?


 

It’s been said that the only problem that Argentina has is that it is populated by Argentineans. With its incredible endowment of resources – the richest soils in the world, a variety of climates including a huge temperate zone, mineral resources including oil and uranium, vast hydroelectric resources, a homogenous population of European descent –.it should be one of the world’s most prosperous and stable societies.

It’s in the lost annals of history that less than a century ago, Argentina seemed destined to become just that, one of the major countries of the world, just behind Italy. In fact in 1909, per capita income in Argentina was 50% higher than in Italy, 180% higher than Japan, and almost five times higher than in neighboring Brazil. Buenos Aires was – and remains — one of the leading cultural centers of the Ibero-American world.

But Argentina’s dependence on unprocessed agricultural exports set it up as a particular victim of the Great Depression and the adverse terms of trade for commodities. What followed were decades of far-fetched efforts to industrialize through state capitalism under demagogic leadership, most famously represented by Juan Peron and his consort, Evita – romanticized in the U.S. but in fact an insidious influence..

Pres Barack Obama’s short visit to Buenos Aires scheduled for March 23 and 24 is a recognition that something is afoot. In fact it’s a revolution in Argentine politics brought about by the election last November of the U.S.-educated, pro-business conservative Pres. Mauricio Macri, former mayor of Buenos Aires One of Macri’s announced principle aims is too strengthen Argentina’s foreign ties after years of combative relations under his leftist predecessors, particularly with the U.S.

“We believe this is really a new beginning and a new era in our relations with Argentina,” top Obama foreign policy adviser Ben Rhodes says. Recognizing this, French President Francois Hollande and Italian premier Matteo Renzi scooted in for visits just ahead of Obama.

Macri’s election was a surprise and he has an enormous job ahead of him..Although Argentina’s 38 million live in Latin America’s third largest economy, a $100 billion default in 2001 made it a financial pariah, closing it out of international capital markets.

Macri has moved swiftly to try to clear the remaining $9 billion in claims by offering a $6.5 billion settlement. Within days of taking office, he whacked 21,000 public sector workers from the bloated public payroll, devalued the peso and zeroed out long-running fuel subsidies, Macri has made it clear that he is against a government role in promoting industry,. He has proposed tax cuts for upper-income groups. That suggests that budget cuts are in the offing, since Macri has pledged to reduce the government deficit.

But Macri’s rapid policy moves have already created largescale opposition. Within a few weeks of his taking office, he was already hit by public sector workers as a protest against rocketing inflation — at a stubborn 30%.– and his job cuts. Polls indicate Macri still has the approval of much of the electorate that put him in office, with polls saying support runs relatively high at 60%. Still it has fallen 11 percentage points in the two months since he took office. And some 12% of those polled who voted for him said they would change their vote now.

Macri has made his new orientation for Argentine foreign policy clear. He has denounced the taking of political prisoners by the increasingly leftist dictatorial government in Venezulea and called for it to be tossed out of Mercosur, the South American politico-economic alliance. His pro-U.S. sentiments have been made equally clear,

Instead of continuing his flirtation with the Cuban Communist dictatorship, Obama and the U.S. would be better served with some kind of dramatic gesture of support for Macri, perhaps new and more liberal insurance to back promotion of U.S. investment.

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