“They told us South Americans that the market would solve everything, that the State wasn’t necessary, that interventionism was mere nostalgia. Nonetheless, we’re now seeing the most formidable act of state intervention in living memory, in precisely the place where they’d been telling us that the State was unnecessary.”
Thus spoke Argentina’s president, Cristina Fernandez de Kirchner, in her address to the UN General Assembly today in New York. The remarks follow some serious crowing on her part last week.
“We are witnessing as the First World, which had been painted to us at some point as a Mecca we should strive to reach, is crumbling like a bubble,” Fernández de Kirchner told her fellow Argentines, mixing her metaphors something shocking. “We with our own model, based on building with our own means, are here weathering the storm, firmly, recovered, and ready to face the present and the future.” She neglected to mention that the near impossibility of getting credit in Argentina would tend to insulate it from a major credit crunch.
In an apparent effort to avoid misunderstanding, she told the UN today that the US’s woes “don’t make us happy or at all content.”
But she couldn’t resist further sarcasm. In what appeared an attempt at some sort of wit, she said that just as previous crises that rippled out from the emerging economies have been nick-named with labels like the “tequila effect” (referring to the 1994 Mexican peso crisis) , or the “caipirinha effect” (referring to Brazil’s 1999 financial woes), nor the “rice effect” (presumably a reference to the Asian financial crisis of 1997), this time we’ve got what might be called the “jazz effect,” produced at the centre of the world’s largest economy, and expanding throughout the world.
The US wasn’t the only country to receive a rhetorical boxing around the ears from Cristina K. Earlier in her address, she called on Iran to cooperate with Interpol in apprehending the suspects (of Iranian nationality) in the the terrorist attacks on the Israeli Embassy in Buenos Aires (bombed in 1992, 29 dead and over 200 injured) and the city’s Jewish community centre (attacked in 1994, 85 dead and hundreds injured). Argentina is home to Latin America’s largest Jewish population, with most of its 200,000 Jews living in the capital.
Fernandez de Kirchner finished her discourse by sticking the boot into the Brits, who still have control of the Falkland Islands (known in Argentina as the Malvinas). She said it was an embarrassment that colonial outposts like this still exist. Argentina’s claim over the Malvinas (which it invaded in 1982 in a failed effort to wrest control from the British) is not merely a question of national pride. The UK is seeking to expand its sovreignty over large areas of sea bed surrounding the Malvinas and other South Atlantic islands. With Brazil discovering major oil deposits off its Atlantic coast, it’s hoped there’s more to be had in the region.
Before the general assembly, Kirchner held up her own government as a model of economic wisdom, with the state playing a highly interventionist role that, in her view, has helped produce Argentina’s strong growth following its 2001 financial crisis, placing the country in a position to pay back its debts – perhaps in full.
Yesterday, Fernandez de Kirchner announced that thanks to an appealing offer from major banks, Argentina would pay back the debt on defaulted government bonds, a move she hopes will encourage foreign investment. The Buenos Aires stock exchange responded well to the announcement, gaining 1.67% for the day. With the announcement on September 2 that Argentina would pay off its 6.7-billion-dollar debt to the Paris Club of international creditors, the government hopes to open Argentina up to foreign credit. But many critics say it’s not enough, and that the government will have to stop fiddling with its inflation figures (which it places at around 9% for the year, with independent assessments saying it’s more like 25%) and put the brakes on public spending if they truly want to stabilise the economy.
Click here for the Economist’s assessment of the situation.