Argentina. Defy the Creditors and Get Away with It

Published on, by Walden Bello, Nov. 15, 2010.

The recent death of Néstor Kirchner has been perceived as a great loss, not only to Argentina but to the region and the world. In May 2003, Kirchner took the reins of a country crushed by its most severe economic crisis and riddled by massive debt. His audacious and successful face-off with the International Monetary Fund showed the world that a country could defy the IMF and live to tell about it.

The unexpected death on 27 October 2010 of Nestor Kirchner deprived not only Argentina of a remarkable, albeit controversial leader. It also took away an exemplary figure in the Global South when it came to dealing with international financial institutions.  

Kirchner defied the creditors. More importantly, he got away with it.

The Collapse: … //

… Recovery:

Argentina did not collapse. Instead, it grew by a remarkable 10 percent per year over the next four years. This was no mystery. A central cause of the high rate of growth was the financial resources that the government reinvested in the economy instead of sending outside as debt service. Kirchner’s historic debt initiative was accompanied by other moves to throw off the shackles of neoliberalism: the adoption of a managed float for the Argentine peso, domestic price controls, export taxes, sharply increased public spending, and caps on utility rates.

Kirchner did not confine his reforms to the domestic sphere. He undertook high-profile initiatives with other progressive leaders in Latin America, such as the sinking of the Washington-sponsored Free Trade of the Americas and efforts to bring about greater economic and political cooperation. Emblematic of this alliance was Venezuela’s $2.4 billion purchase of Argentine bonds, which enabled Argentina to pay off all of the country’s debt to the IMF.

Along with Hugo Chavez of Venezuela, Lula of Brazil, Evo Morales of Bolivia, and Rafael Correa of Ecuador, Kirchner was one of several remarkable leaders that the crisis of neoliberalism produced in Latin America. Mark Weisbrot, who captured his continental significance, writes that Kirchner’s moves “have not generally won him much favor in Washington and in international business circles, but history will record him not only as a great president but also as an independence hero of Latin America.” (full text).

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