Tag: Acque & Terre

At present there is a good deal of talk about a supposed ongoing shift to the left in Latin America. The remarkable coincidence of twelve presidential elections being held in the period from December 2005 to December 2006, not to mention many legislative elections, tends to corroborate the importance of the change, which could effectively radically shift Latin America to the left, especially if there is a swing that way in Mexico and Brazil.

There are several factors apparently adding up to a very significant political change: the recent elections results in Bolivia and Chile, the possible election of the populist Ollanta Humala in Peru, the consolidation of Nestor Kirchner’s position in Argentina, Chávez’s growing influence throughout the subcontinent, the possible success of Lopez Obrador at the head of the PRD in Mexico, and the probable re-election of Lula in Brazil, despite the via crucis his Workers’ Party (PT) has undergone.

In this article we will analyse the similarities and differences in the various situations, seeking to understand if there is really a precise trend in Latin America, or if we are simply witnessing a phenomenon due to the electoral coincidence.

Everything began with the historic election of Lula in 2002. This was the first time that the historic left rose to power in the largest Latin American country – Brazil.

That election was hailed as marking an epoch-making turning point for Brazil and Latin America. After the former union leader had been elected at the first round, the contagious enthusiasm affecting Brazil soon spread to the rest of the world, especially Europe, where the advent of Lula was greeted with – to my mind -rather rash expectations.

While the figure of the patient Lula – elected president at his fourth stab – was being feted, most commentators tended to neglect or even deride the legacy from Fernando Henrique Cardoso’s two terms in office. Those years were hastily written off as a failure. But in actual fact they were a key transition period in Brazilian history. Cardoso’s administration was the first Brazilian government capable of balancing the books, modernising the economy, and boosting growth.

Cardoso’s legacy has emerged clearly in the Lula years: a financially sound and competitive Brazil is acquiring growing stature on the international economic scene. Without Cardoso’s economic austerity, the conditions for Lula’s election would never have been in place. Some observers, however, simplistically tend to attribute the new president with magical powers. Lula is said to have redistributed wealth, eliminated illiteracy and poverty, and changed the course of history for ever.

Clearly the reforms introduced by Cardoso did not yield sufficiently significant results in the social field. But equally, moving the government’s focus for action towards the social world would have been impossible without economic austerity.

Lula has always been aware of this and from the outset he was committed to respecting the agreements with the International Monetary Fund (IMF), subsequently not renewed.

Large sections of the Brazilian left were disillusioned with Lula’s austere approach. He too was written off as being neoliberal, and there was fierce opposition in Brazil from the left during his
term in office.

The greatest disappointment came, however, with the crumbling of the PT, the party of the honest par excellence. It got caught up in a complex mesh of favours, corruption and connivance, reducing its prestige to an all-time low. Once in power the PT turned out to be just like all the other parties. Although the emphasis was shifted towards the social world, their policies did not break with liberal financial orthodoxy, as many both inside and outside Brazil had hoped. The farm reform did not make much progress compared to the previous period and the environment policy (i.e. for Amazonia) was sorely neglected. Some education and health programmes were implemented and then extended successfully. But the Big Bang many had dreamed of in Brazil just did not happen.

With six months to go to the presidential elections, it seems Lula’s personal prestige will be enough to keep him in power. But his second term will be much more complex politically than his first, given that he will no longer have a solid parliamentary majority (this was the issue that gave rise to the scandals, especially the Mensalão scandal).

Has Brazil really moved to the left over the past few years? The left has taken power for the first time, but its scope for action has been structurally limited by the lack of a strong coalition, the need to safeguard economic austerity, the disproportionate expectations created, and the extent of social problems requiring at least a generation of reforms to be solved and not only four years.

Clearly Brazil has set an international benchmark. Lula’s presidency can certainly not be described as a failure while on the international scene the new Brazil has acquired a role unthinkable even a few years ago. Similarly, the new front of emerging countries is a powerful force in terms of international governance.

The enthusiasm surrounding Lula in 2002 has now been echoed in Bolivia with the election of Evo Morales, the new niño bonito of the international left.

This leader of the traditional producers of Bolivian coca is viewed favourably for several reasons: his ethnic origins, his sincere hard talk, his proven capacity to mobilise people, accounting for his electoral success, unprecedented in the complex Bolivian political history, and his ideas for exploiting the Bolivian energy resources for the benefit of the local population.

Since the advent of democracy in Bolivia in 1982, no government has ever managed to give the country stability and implement the right economic and social reforms able to meet the needs of the population and solve the energy equation satisfactorily (see the Sanchez de Lozada crisis and the regional tensions threatening to implode the country).

The crisis in traditional political forms of expression, a feature shared by many Latin American countries, has brought the historical parties to their knees, and encouraged the emergence of the platform of associations and movements, the MAS, which buoyed Morales to electoral success.

We thus come to the first of the similar ongoing developments in Latin America: the traditional parties, expression of the ruling classes, are no longer able to offer convincing prospects. This has happened in Bolivia but also in Peru, where the election of Toledo coincided with the break-up of the traditional parties, except for the social-democratic APRA. It also happened in Venezuela, where Chávism has made the traditional parties irrelevant, but also in Argentina, where radicalism is undergoing a deep crisis and Peronism has split into a left-wing family (Kirchner) and a right-wing family (Duhalde). The phenomenon also partly emerged in Brazil, where the parties have never had strong organisations, except for the PT, but rather electoral cartels. Lula won more votes than his party. He thus was made president by an overall mobilisation that went well beyond the traditional PT electorate. This also happened in Uruguay, where Tabaré Vázquez’s Frente Amplio decreed the end of the traditional blanco-colorado bipolarism.

In Chile the election of the socialist Michelle Bachelet seems to be an exception to the rule, because this is the fourth consecutive election of a representative from the Concertatión. In fact Chilean political history differs from the rest of Latin America, as does its recent economic history. Fifteen years of much higher growth rates than those recorded during the dictatorship, a wide consensus on economics and an open trade policy without precedent worldwide have created a situation in which the concept of left is associated with good economic results.

No one, not even the Chile Communist Party, would now challenge these essential choices. Moreover, they created great difficulties for the right of Piñera and Lavín. A few years ago the rightwingers seemed bound to sweep to victory in this year’s elections after having finally laid the ghost of Pinochet for good.

Although Chile is still a very classbound, socially imbalanced society, the right-left divide hinges more on approaches to the increasingly less urgent political past than any possible different conceptual visions in economics. The challenge for the new Chile government is to share the benefits in the economic growth wider rather than revolutionising the nature of growth. Many countries in Latin America would like to emulate this post-left challenge. Nestor Kirchner’s presidency in Argentina can in a certain sense be labelled as left, even if sui generis. He will almost certainly be re-elected in 2007, given the results in the recent legislative elections. His success is due to the return to institutional stability after a year with five presidents, sound economic growth (nine per cent annually since 2004, albeit following on from the great recession of 2002-2003), and well-managed negotiations with the international creditors. All of these successes were achieved without following the dictates of the International Monetary Fund (IMF).

We must also add some bold choices, although partly steeped in populism, such as reopening court cases from the time of the military dictatorship, and a degree of economic nationalism, which, for example, has even created a crisis in Mercosur.

So I am not sure we can really describe Kirchner as a left-wing president. But he is certainly an unconventional, personalist and populist president who has been able to achieve results, unthinkable even until recently. Moreover, most people have seen their living standards rise, a phenomenon which can hardly displease those who claim to be left wingers.

Chávez’s Venezuela is often cited as an emblematic case of an alternative vision to traditional policies. The Chávez phenomenon is certainly very complex: his populist talk, his ability to reach the poorest sectors of the Venezuelan population and social programmes adopted on a continental-wide scale are certainly anti-establishment. His unbridled personalism, verbal incontinence and militarisation of the economy and politics have raised disquieting questions. Just how far can the Chávez model be replicated?

The Bloque Regional de Poder, the new regional alliance suggested by Chávez as an alternative to traditional models of economic integration opens up interesting prospects for co-operation on energy, trade, and repeating best practices in successful social programmes. I would not go so far as to pompously describe this as the ‘Socialism of the 21st century’ as some do, but I don’t think anyone should be alarmed by the prospect of new forms of South-South international co-operation able to generate closer associations and new prospects.

Of course so far Chávez has been able to rely on the oil manna, enabling him to fuel ambitious dreams and policies at home and elsewhere. Chavism may be interpreted as the latest disguise of Venezuelan oil-based populism. But the real litmus test is the wider distribution of the oil dividends among the population, and any assessments of this can only be made in the future.

If Chávez is successful in this undertaking, I feel that labelling him left or right will be irrelevant. He will simply have achieved a remarkable political result.

Similarly, a president diametrically opposed to Chávez and certainly no leftwinger, Alvaro Uribe, owes his popularity and his certain re-election to the results at times obtained with not wholly orthodox methods – in the struggle against narcoterrorism. Increased security in the Colombian streets, associated with discreet есоnomic results have created an undoubtedly solid platform, leaving little hope for his potential rivals.

Chávez’s populist talk also features in the new phenomenon of Peruvian politics, Ollanta Humala. He seems to be the great favourite in the second round against the eternal candidate Alan Garcia, leader of the APRA.

Ollanta Humala’s programme is fairly unclear, and so far he has only played on his populist message and charisma. His surprising success is once again down to a capacity to communicate with the masses who feel left out of the benefits of economic growth, which was fairly significant in the Toledo years.

The first Andean president in the subcontinent, Toledo did not lived up to expectations because he failed to implement the necessary political reforms and draw up more effective social policies to the background of economic growth.

Pending Mexican elections in July, when Lopez Obrador’s PRD could take the left to power for the first time (let’s hope the PRI militants don’t hear me, since this party has always claimed to be on the left or a least revolutionary…), what similarities are there between all the cases considered?

The ‘lost decade’ of the 1980s was followed by an age of economic reform in the 1990s focused on balancing public accounts, privatisations, and the modernisation of the economy.

These reforms were not equally successful in each country. Brazil and Mexico were strengthened in the 1990s and their main problem lay in the small social dividends (the very slow elimination of poverty) albeit within a fundamentally sound economic situation. On the other hand, the orthodох approach respecting the IMF recommendations in Argentina was not accompanied by suitable internal reforms. This led to a dramatic economic collapse from which the country only seems to be recovering now.

Chile is the exception. The economic reforms introduced earlier than elsewhere and the open-market model meant that the solutions for social problems – although still insufficient – were managed much better than elsewhere.

The Andean countries were less successful in their economic reforms. Peru obtained the best results, but Ecuador and Bolivia where beset by very complex institutional convulsions, and Venezuela lived off the income from oil. Columbia gave priority to solving the security problem, adopting a model of unilateral cooperation with the United States, making it a unique case in a region now characterised by strong economic nationalism.

The macro-economic financial reforms (labelled as neoliberal by their denigrators) have been more or less successful according to the size of the specific economies. But then at the beginning of the decade the need to focus closer on social problems became more pressing in the whole region.

The second-generation reforms go much further than the strictly economic dimension and concern key issues such as the distribution of wealth, healthcare, education, and the use of energy resources. In one way or another, the new generation of Latin American politicians tends to stress the social dimension of politics, without neglecting economic austerity but no longer attaching an almost religious value to the formulas of the Bretton Woods organisations.

The new leaders tend to go beyond traditional party politics, in crisis everywhere, especially the left-wing parties, and develop a direct dialogue with the people. Often they become charismatic leaders with their own personal credibility, which is much more than the specific weight of the political areas supporting them.

In the international field, the Latin American countries have overcome their traditional acquiescence to the United States, whose interest in the region, moreover, has waned drastically since 9/11. They now flaunt economic independence in the international context (the emergence of the G-20 bloc at the World Trade Organisation, the standstill of FTAA negotiations biased in favour of the North American countries, and redrafting the rules of the game for energy).

Can all of this be described as being the outcome of left-wing policies? Once again what counts least are labels and generalisations. Latin America needed to tidy up its housekeeping and it did so at times painfully – in the 1990s. Then when the need to share out the benefits from economic growth more equally came forcefully to the fore, traditional politics was unable to manage this new dimension and was superseded by new, more direct and charismatic forms of political expression. At times this took place in the context of the old organised parties (e.g. Brazil and Argentina) but more often in new aggregations more in tune with popular sentiment. In the Andean countries, the new political phase has often assumed indigenist tones.

What direction is Latin America moving in? Like the analysis of the phenomenon, the answer to this question cannot be unequivocal. We are certainly in the presence of processes forging new forms of conceiving and managing politics, verging on both populism and a new humanism. This approach to politics responds more effectively than the classic liberal model to the problems of the complex countries in Latin America.

It is crucial, however, that this new humanism does not undermine the basic rules of economics. Growth is an indispensable premise for countries with a pyramid-shaped social structure like those in Latin America. The irresponsible approach leading to the debt crisis in the 1980s and generating greater poverty completely failed to alter the pyramid structure.

Take, for example, the energy issue in Bolivia. This is no longer a question of ‘kicking out’ the foreign investors, indispensable both from the technological and financial points of view, but of renegotiating in a more balanced way the long-term agreements providing certainties for both sides and allowing for a more balanced distribution of the benefits of resources. This ‘left-wing’ objective should be in everyone’s interest, even that of the international companies.

The world has changed greatly over the last decade. The emergence of new Asian economic powers is self-evident. Latin America is integrating into the new international balances in a more varied and certainly less forceful way. But the new developments in Latin America over the last few years could turn out to be very significant and create an example to be followed in other parts of the world.

The failure to launch the so-called Millennium Round at Seattle marked a crucial moment in the history of the World Trade Organisation (WTo) and also for multilateral diplomacy. From then on, everyone clearly realised that, given the strong opposition to an indiscriminate extension of trade liberalisation, the days of the big powers (USA and Eu) imposing their agenda on the others had come to an end. This opposition was basically due to an awareness that the benefits of globalisation are not equally shared. Since there were no corrective mechanisms and ad hoc measures for developing countries, they stand to gain very little from globalisation,
and this is to the detriment of their development processes and planetary balances. At Seattle it emerged that the scepticism about unlimited globalisation was also shared by significant sections of the populations in the north of the world.

The Doha Development Agenda, drafted in late 2001, approached the new round of trade talks in a very different way, stressing aspects encouraging greater participation in trade and, therefore, greater growth for countries in the south.
The Ministerial Meeting in Cancún (10-14 September) had been convened to assess progress at the mid-term of the talks begun in Doha and due to end in December 2004.

But what progress has been made in the talks? Let’s consider the main aspects that will be the focus of debates in Mexico.
Firstly, a very important agreement on marketing life-saving drugs has just been reached and will be ratified in Cancún. This agreement is required for the struggle against very widespread diseases in developing countries (AIDS, tuberculosis, malaria).
Reaching agreement was very difficult, but the topic had become so central to the agenda that it would have been impossible to have avoided a total failure at Cancún without a positive outcome on this issue ahead of the conference. Thanks to this agreement, patent rights on essential drugs for treating these diseases, mostly in the hands of American and European pharmaceutical compаnies, have been suspended in countries with a high incidence of the said diseases. Local companies will be able to manufacture at cost price for their national markets and even export low-cost drugs to countries with no production capability. The packaging of these drugs must be very different from the original and the products can’t be marketed in developed countries, where royalties will continue to apply.
In short, this is a good agreement giving access to essential medicines for millions of people for whom the cost was prohibitive. It is also a good example of how a multilateral forum such as the WTo, if used properly, can produce positive results for humanity.

This is the heart of the Doha Agenda!
We also note that proposal, sponsored by Brazil and South African, was accepted by the European Union from the outset and opposed by the American pharmaceutical industry to the bitter end, until they finally had to give in.
But let’s briefly look at the other issues on the agenda:

• 1) Agriculture: a key theme. Farm trade is still much less liberalised than industrial and services trade. The Eu has proposed opening up markets compatible with the recent Common Agricultural Policy (CAP).
  These are substantial proposals but considered not to be enough by the exporting countries (Cairns Group) and the United States (who are also protectionist but with a different model from Europe). What was discussed was the whole system of subsidies for farmers, especially export subsidies, which should disappear at the end of the talks. But the European Union is still reluctant to make precise commitments. The debate in Cancún will be very lively, especially for this reason.

• 2) Industrial goods: talks will focus on further reductions in industrial tariffs and the proposal to completely liberalise trade in seven key sectors for developing countries (textiles, electronics, jewellery, leather and derivatives, etc.).

• 3) Services: they will not be a key issue in Cancún. But there will be a report on the various proposals by member states. The Eu has already suggested opening up in some sectors (especially high technology) to professionals from the rest of the world, but not, as some had expected, the sectors of health and education.

• 4) Geographical indications: backed by others, the Eu has requested the extension of ‘protected designation of origin’ to other products in addition to wine and spirits, the only sector where it currently exists. Opposing this move are farm exporters – including the United States – who produce food with misappropriated names. There is little hope of agreement on this issue at Cancún.

• 5) New themes: the so-called Singapore issues. They consist of four sectors currently not covered by WTO regulations but strongly related to trade (investments, competition policy, trade facilitation, and transparency in government procurement). The developed countries would like to table talks aimed at defining a framework of minimal multilateral rules. Some developing countries fear the extension of the WTO powers and a further reduction to their room for manoeuvre. The outcome to the Cancún discussions is difficult to predict and will probably be conditioned by progress in other parts of the agenda (especially agriculture).

• 6) Special and differentiated treatment: this means defining a set of specific rules in favour of developing countries to help them integrate further into international trade circles and play a more active part in the WTO and its arbitration system.

There will also be other topics on the agenda, but these are the main ones.
Cancún will not see the end of the trade round, but it is of crucial importance that progress is made in the direction established at Doha. The trade talks have the advantage of being able to offer favourable (win-win) solutions for everyone, but for this to happen negotiating must be realistic and at times generous. So far the European Union has demonstrated it is both, but there is still much to do, especially on the hot theme of farm subsidies.
After Cancún we will comment the results of the conference: it is still not clear if the talks will end in 2004. But what is certain is that the WTO is an extremely important forum deserving closer attention. Because anyone who does take a closer look soon realises that the reality is much richer and more complex than the extremists on either side claim.

The election of Ignacio Lula da Silva (or simply Lula as the Brazilians know him) as President of the Republic is a highly significant historic turning point for Brazil. For the first time in the history of the Brazilian republic, the politician who has risen to highest institutional office has not emerged from the country’s economic or intellectual elites. While his predecessor Fernando Enrique Cardoso gradually moved in the course of his political career from radical left to social democracy, Lula, a metalworker and trade unionist, is a bona fide representative of the historic left.

The left wing of the Partido dos Trabalhadores or ‘Workers’ Party’ (PT) often accuse Cardoso of being a social democrat only in name and that in his two terms of office (1994-2002), he has pursued a liberal political programme, dictated by the International Monetary Fund.

But what is Lula’s position on Cardoso’s legacy of reforms? Are the fears expressed in several quarters (but especially outside Brazil) of a backward slide well founded? His election would allegedly mean greater trade protectionism, a return to state intervention in the economy and a questioning of the structural reforms. Some even prophesise a new season of ‘communism’ in Latin America.

I have just left Brazil after four years following political and economic events in the country. Like many others, I predicted that Lula’s fourth presidential bid would see him an honourable runner-up for the fourth time. We believed the left should have gone for a more moderate ‘modern’ leader to have any real chance of victory, and that the ‘strong powers’ would never have allowed a former worker to become President. Lula seemed an honest respectable politician destined to morrer na praia, as the popular Brazilian saying goes.

The course of events over the last year have proved us wrong (once more demonstrating that political analysts don’t determine the fate of the world).

Challenged for the presidency by Eduardo Suplicy, Lula gradually consolidated much more support than the other candidates over the six months’ run-in to the elections and this trend never changed at any time up to the vote. The difference in the opinion polls between Lula and his main rival was never less than fifteen per cent, even after the announcement that Health Minister José Serra would be standing with backing from outgoing President Cardoso. The Governor of Maranhão, Roseana Sarney, the former Finance Minister Ciro Gomes, the Governor of Rio de Janeiro, Anthony Garotinho, took turns being second, but they were all always way behind Lula.

Brazil thus gradually grew accustomed to the idea of Lula as President and elected him with a more than comfortable majority in October. While in the first round Lula just missed out being elected (even though he had a much larger number of votes compared to Cardoso four years earlier), the gap of 20 million votes between him and Serra turned out to an insuperable gulf in the runoff three weeks later. Lula thus achieved the best electoral result in the history of the república nova. He received 52 million votes in the second round (62.48 per cent), compared to 33 million (37.52) for José Serra.

Under the guidance of Lula and Party President José Dirceu, the Workers’ Party had moved towards the centre and social democracy in recent years. A clear sign of this change was the local elections in 2000 which took many candidates from the moderate faction of the Party (the so-called ‘light’ PT) to power in a host of Brazilian municipalities. Marta Suplicy, Mayor of São Paulo, Olivio Dutra, Governor of Rio Grande do Sul (cradle of the Porto Alegre social forum) and many others rose to power as the respectable competent face of a new and finally mature party ready to take over the reins of the country.

The PT’s programme for Lula’s fourth presidential bid set it apart from the more traditional positions of the Brazilian left by making a commitment to defend the reforms of the economy and administration introduced in the 1990s: what they proposed was to complete the reforms with a greater emphasis on social aspects.

This new image was a successful response to a feeling of weariness with the reformist policies of the government of Cardoso, who had won approval but basically was in a similar situation to that of Gorbachev – greatly esteemed abroad and underestimated at home. History will undoubtedly decree that Cardoso was the President of the definitive turning point, taking Brazil down the road to modernity, but the country was tired of macroeconomy, structural reforms and IMF plans. Lula’s election is not seen as reneging on the path taken by Cardoso, but rather opening up new prospects, with a greater emphasis on development and the distribution of wealth rather than simply following financial orthodoxy.

The feeling of weariness was so widespread in Brazil in recent years that all the candidates, including José Serra, proposed programmes based on the need for change in continuity. No one overtly defended Cardoso’s legacy, because it was not expedient to do so in electoral terms. In fact if Serra had been elected President there would have been just as much a break as with the future Lula presidency.

This is undoubtedly unfair to Cardoso, whose performance was very positive, but the speed of history and politics do not always coincide.

But how much room for manoeuvre does Lula have in shifting the accent in Brazilian politics? Unfortunately very little.

In early 2002 the positive signs for Lula were already clear: the Brazilian business world showed it was willing to accept the prospect of Lula as President, while in 1998 this idea would have been anathema. The Argentinian crisis only slightly affected Brazil, whose economic foundations were and still are sound, despite considerable financial fragility due to the heavy foreign debt.

But from Spring on, Lula’s consolidated position as the leader in the polls and the markets’ confusion of the catastrophic Argentinian situation with the much more solid Brazilian situation led to a spiral of speculation that pushed the real down to artificial levels against the dollar, thus aggravating the Brazilian economic situation in an unjustified exogenous way.

In several quarters the spectre of Lula was flaunted to create an artificially Brazilian crisis which, however, was basically groundless: the Brazilian economy is strong and competitive; the reforms are here to stay; and Brazil is not Argentina.

The few reliable experts wrote and shouted their indignation but in all the confusion the stronger voices of the incompetent and illinformed (at times even high-ranking people, who we will leave nameless) tended to prevail.

The IMF rightfully intervened at the height of the crisis (July 2000), providing aid that was denied to free-falling Argentina.

But the extension of the IMF agreement, granted only after written guarantees about the reforms had been signed by the four candidates, including Lula, was not enough to calm the markets, unreasonably shocked by the prospect of Lula.

As Soros cynically but shrewdly commented a few months ago: ‘Brazil can’t elect its own President, the markets do it’. But Brazil paid no heed. The question is now whether the markets will allow Lula to govern. The answer is far from clear, since new waves of speculation affecting the Brazilian currency could push the foreign debt up to unsustainable – and unjustifiable – levels in a context of a sovereignty limited not by the force of tanks but by financial speculation.

In this sense the transition months from the current Cardoso presidency up to December 31 and the beginning of Lula presidency will be critical. Despite the different political colouring of the two men, the process is taking place in an orderly fashion and a common agenda, agreed for the coming months, has been also extended to work in the two houses of Congress. The message for the world is clear: Brazil is not going through a cataclysm, but it is simply changing political guard in a realistic significant move that will leave in place many of the Cardoso government’s reforms.

In fact the main reforms left unfinished by Cardoso (tax system, welfare and labour market) will probably be more easily completed by an openly left-wing government than a fragmented coalition like that supporting Cardoso. And the contents of the PT proposals are very similar to those of the previous government (which the Pr fiercely opposed…).

On the foreign policy front, Cardoso’s exit means Brazil will lose the objective strength of his charismatic figure. But no spectacular changes should be expected in the areas of Brazilian foreign policy, still guided with great skill by the very competent Ministry of Foreign Affairs (Itamaraty): Brazil will do as much as possible to inject fresh life into the ailing Mercosur. It will negotiate trade agreements in the Wro, with its neighbours in the American Continent (in the FTAA) and with the European Union. It will attempt to consolidate its increasingly evident sub-continental leadership in Latin America (much to Washington’s chagrin) and the links with other emerging countries (China, India and South Africa) to build a world as little unipolar as possible.

In this sense the already rather cool relations between Washington and Brasilia can hardly be expected to improve much. Over the last few years Brazilian diplomacy has taken on an increasingly active role to counterbalance (as far as possible) the American political and economic power on the continent. The Colombian and Peruvian crises, but especially the disagreements over the creation of the Free-Trade Area of the Americas (FTAA) has highlighted the importance for Latin America of Brazil’s independent decisionmaking. The US administration, less inclined to refined analysis than to raising the master’s voice, is not pleased with this situation, as the amazing statements made by the Treasury Secretary Paul O’Neil and others during the Brazilian financial crisis this summer demonstrated.

Dialogue between Bush’s Republican administration and Lula’s government will be far from easy. But it’s a very large step from this situation to the hysterical American analyses published in reviews and journals, which ought to express more balanced views than rant about a potential ‘axis of evil’ involving the communists Lula, Chávez and Castro. This is quite simply nonsense.

In this picture, the European Union has every interest in strengthening its relations with Brazil, especially since Europe is Mercosur’s leading trade partner and European countries are the main investors in the region. The slow but sure progress in the bilateral Eu-Mercosur talks is in significant contrast with the deadlock in the FTAA negotiations.

But to consolidate Europe’s role in the region and to counterbalance in an increasingly effective way the weight of the United States, Europe must make bold decisions: if we ask for trade concessions from our partners, we must open up our markets also to those sectors we tend to protect for political reasons. This is the key to the negotiations.

In Brazil the election of Lula has occasioned an outbreak of typically Brazilian euphoria. Independently of the political ideas we may hold, this is an important and historic moment for the whole of Latin America. It is in everybody’s interest that Lula succeed, but the challenge awaiting him will be far from easy.

The acute Argentine crisis is rapidly evolving from one day to the next. At the time of writing (April 1, 2002), we have no certainty as to what the institutional and economic situation will be in the country when this review comes out. Events have developed very fast since December 2001, and the issues at stake are so complex it would be unwise to consider the current situation as settled or definitive in any way. Centuries seem to have passed, yet it was only a year ago that Domingo Cavallo returned to the helm of the Argentine economy as a super Minister with special powers (April 2001).

One year on, Cavallo not only completely failed in his mission, but President De la Rúa, who had desperately staked all on this last card to save his own presidency, had also resigned. In the absence of a Vice-President (De la Rúa’s Vice-President Chacho Alvárez, had bowed out a few months earlier without being replaced) and given the political vanishing act of the government alliance of Radicals and Frepaso, which in any case had become a minority after the autumn legislative elections, the Peronist majority in the Congress elected Adolfo Rodriguez Sáa as President ad interim until March 3, 2002, when there should have been a general election with a very original formula: each party was to present several candidates.

Having assumed power without giving the impression he had fully grasped the gravity of the situation, Rodriguez Sáa made a series of mindless populist statements. He lost the support of the Peronist top brass, however, since they were unwilling to share with the newly-elected President the costs of an almost desperate administration and thus ruin their chances of being elected in March.

Adolfo Rodriguez Sáa handed in his resignation after a week. On January the 1st, 2002, the Congress elected Eduardo Duhalde, the defeated Peronist candidate in the 1999 elections, who was to complete the term of office left vacant by De la Rúa (to the end of 2003).
After Rodriguez Sáa’s failure to keep order in the streets (thirty people died at the time of his fall), the assaults on institutions and supermarkets, and popular disgust expressed by mass peaceful demonstrations (the cacerolazos), the political majority opined that the conditions were still not right for a new election.

After two months President Duhalde is still beset by serious difficulties and only the lack of any feasible alternatives seems to keep his weak government on its feet. There are no guarantees whatsoever that Duhalde will be able to continue in office.

The crisis affects all aspects of Argentine life: politics, economics and society. The peso-dollar convertibility, the key element in Argentine economic policy over the last decade has gone, as has the Duhalde government’s attempt to keep the peso in a range from 1 to 1.4 pesos per dollar.

Today the country is on the verge of anarchy: the economy is practically paralysed, the peso is plummeting (last week it fell to four pesos per dollar, and then rose back up to less than three, stillvery far from the fixed parity of the last ten years), inflation is galloping out of control (prices have risen by fifty per cent in the last three months, and there is a genuine fear of a return to three figure inflation which had been definitively defeated during the ‘virtuous’ decade), and forecasts for economic growth in 2002 are catastrophic.

This is all aggravated by absolute uncertainty about future strategic choices (the state budget for 2002 was approved on the basis of optimistically unreal predictions making if not even worth the paper it is written on) and the absence of political credibility both in the Peronist majority, divided over the road to be taken, and the opposition, often completely cut off from all decision-making after the failure of De la Rúa’s presidency. There is also a complete lack of credibility in all state authorities (the ineffective executive and legislative powers are accompanied by the image ‘below all suspicion’ of a political judicial institutions, embroiled in the wide spread crisis in the country), and the desperation of millions of Argentines facing problems of subsistence with their savings running through their hands like water.

It’s difficult to imagine a grimmer scenario than that confronting Argentina today, ехасerbated by the sudden indifference shown by the international financial organisation conditioned by the Bush administration’s unresponsive attitude, they seem loath to come to the Buenos Aires’ rescue with practical measures.

Once the model pupil of the Bretton Woods Institutions, today Argentina has been left to its own devices and seems unable to rise to the challenge.

Bearing in mind these factors, and the current high degree of uncertainty, I believe it is worth while reflecting in more general terms on the lessons from the Argentine crisis, rather than trying to grapple with the details of asituation that is far from clear.

The first question to be raised is: given that Argentina was acclaimed for years as a model in terms of its economic liberalisation, privatisation, re-balancing the public books, and monetary system, how come the scene has changed so dramatically in only a few months?

It is all their own fault, as American Treasury Secretary Paul O’Neill rather glibly claims in every pious statement, or is there something rotten in the state of the international financial system?

Similarly, is the situation in Argentina today the outcome of the last government’s misguided economic policy or does it go back further to long-term contradictions? In short, are Argentina’s problems due to a temporary crisis or deeper structural factors?

I believe that the crisis is the outcome of persisting with an economic model that had already fulfilled its task and the Argentine authorities’ lack of resolve to thoroughly reform the country’s competitive system, at a time when the umbrella of the currency board would have allowed them to do so.

Going further back in time, the Argentine crisis today is the outcome of a series of decisions – or rather non-decisions – made by various Argentine governments over the last century, that is from 1880 to the present day. In the outbreak of the crisis short-term factors (such as clinging too long to the currency-board model and shortfalls in the modernisation of the economy) coincided with the structural factors that had long been stifling Argentina’s potential.

From 1880 to 1930, the Argentine economy was driven by the growth of an economic model based on farm exports, fully integrated into the British international trade networks. Argentina exported farm products and imported industrial products from Europe, mainly from Britain. This trade allowed the country to achieve per capita incomes almost on a par with those in Europe at the time, and a respectable share of world trade (3 per cent).

The Argentine crisis that began with the First World War and the weakening of the British trade system highlighted the excessive dependence of the country on international trade. This realisation led to the second phase of Argentine economic history, from 1930 to 1975. The new economic model was based on replacing imports, through a process of industrialisation with considerable public funding (which, moreover, was a dominant feature in all late industrialising countries).

The results were appreciable both in industrial and infrastructural terms. During the Peronist period, great efforts were made to increase the working classes’ purchasing power and there were also ambitious policies for health, education and welfare leading to a significant rise in the living standards for those classes forming Perón’s power base. Perón’s terms in office, especially the first triumphal presidency (1946-1951), created the illusion of Argentina as a power with world ambitions.

But this was a mirage. It was more due to the unusual situation created by the repercussions of the Second World War and the relative impoverishment of the main world industrial powers, than any effective solidity of the Argentine industrial system. The industrial Argentine trade balance continued to be in the red for the whole of this period and Argentina failed to emerge as an innovative industrial power.

Then in 1976 the military dictatorship imposed an orthodox neo-liberal model on the country. The hub of the economy shifted from the industrial sector to the financial sector, and public finances ran wild. The return to democracy took place in the context of this economic catastrophe caused by the resignation of the albeit charismatic popular Radical President Raúl Alfonsín (in Argentina there is a caustic running joke about radical presidents’ inability to complete their terms of office).

Menem’s two terms in office (1989-2000) were dominated by the drive to liberalisation: deregulation, privatisations, freer trade, the globalisation of the labour markets and services, and regional economic integration in the framework of Mercosur. This was a genuine revolution for Argentina, whose bulwark became the currency-board system (the one-to-one parity of the peso and the dollar). This effective radical measure successfully froze inflation, which had had destabilising effects in the 1980s.

But in fact wecan say that this kind of system is only sustainable in the short to medium term. Unlike Brazil, which having brought inflation under control through the Real plan, abandoned fixed parity with the dollar four years later (through the model of controlled devaluation at a rate of 7.5 per cent annually), in Argentina the fixed peso-dollar parity had become sucha point of national pride that no one dared call it into question.

To do so would have meant political ostracism, given that in the meantime the middle classes’ debts were in dollars, since they trusted in the long-term reliability of the system. The system undoubtedly had its merits, but over time, especially after the Brazilian financial crisis and its abandonment of the monetary-system model, the Argentine economy became increasingly stifled by this straitjacket overpricing Argentine products and dramatically raising the cost of living.

If we then add the spectacular rise in foreign debt,which grew fivefold from 1975 to 2000, but especially in the Menem decade, we can conclude that the ‘wild’ liberalisation of the Argentine economy and society, although bringing some definite benefits, rested on fragile foundations.

But the problem was not only monetary. Making fixed parity with the dollar permanent only on financial grounds was certainly an illusory move.The dollar reserves in Argentina were so large that the politicians responsible believed the Argentine financial system was impregnable. From the strictly technical point of view this was true, given that the dollar reserves were equivalent to the peso, that is the fixed parity was materially guaranteed, but what brought the crisis to a head was the inert industrial sector. It is unthinkable that the Argentine economy, based, like a century ago, on the export of raw materials (today wheat, soya, meat and oil), could be the basis for permanent monetary parity with the America economy, forty times stronger in terms of volumes and the leading player in the 1990s in the extraordinary rise in productivity due to new technologies.

The mirage of dollarisation can be useful in a country like Panama, which is so small that it lays no claim to influence international trade. But for an intermediate country like Argentina, giving up the national currency to adopt a strong currency permanently was a short-term scenario, in which the existence of cheques could still be useful in stabilising the economy. This choice was not sustainable in the long term, especially in the context of globalisation making the financial resources available for emerging countries very costly.

The mistake made by Cavallo and his colleagues was not that of relying on the currency board, but to insist with this model when it had already served its time. In economics there are many theoretical models which are valid in practice, but none of them will be valid in all circumstances. Any economist claiming to have identified a universal model suitable for all situations is labouring under an illusion.

Unable to meet the challenge of a lame economy, De la Rúa called in Cavallo believing he had some kind of magical gifts. Cavallo was given almost absolute powers to pursue the reforms required to breathe new life into the country-model.

What did this mean in practice? Menem’s real great shortcoming had been not the misguided monetary regime, which was only a mistake in terms of duration. Nor was there too much focus on the social, a consequence, not a cause. Neither can excessive corruption be blamed, although it too was there. The real problem was the lack of rigour in the liberalisation process.

The wildfire Argentine privatisations in the early 1990s were the outcome of a limited and partial vision of the concept of privatisation. In those years the Thatcher-Reagan idea that ‘public equals bad’ and ‘private equals good’ prevailed. By definition and unequivocally. Privatisation was good in itself. This type of approach to the issue was rife almost everywhere in the world. But after ten years of this type of operation, we know that privatisation must not be assessed in ideological terms. Rather, it must yield results in terms of more efficient markets and better choices and quality for consumers.

In the 1980s, and in Argentina in the early 1990s, unregulated privatisation took place without making provisions for the new market being created. It was a question of first come first served, without any new framework of rules to ensure the overall economy effectively benefited. The logic was ‘fill the coffers’ and in rigidly ideological way. Since then well conceived and well implemented privatisations have led to improved market workings worldwide, made up of mainly private operators but not only, working within a system of fair rules.

Privatisations without this kind of framework have yielded terrible results and this is especially true in sectors like transport or energy, in which they have created problems almost everywhere.

In the Menem years privatisation was pursued in this way. In some sectors (especially telecommunications), spectacular improvements were made, but in many others the new economic context did not provide those virtuous stimuli for competition which are the main aim of privatisation.

In the 1990s Argentina missed a golden oрportunity to rewrite for good the regulations for the workings of its own economy, to finally establish a competitive sustainable economic model. After the end of the farmexport model and the entrepreneurial-state model, a turn to liberalism was required. But it should have been informed by a strategic spirit, involving efforts to modernise the Argentine economy, and not simply to hand it over to other people.

The strictly financial approach pursued by Menem and Cavallo (who later split up over questions of personal political ambition) was valid in the years when the enemy to be defeated was inflation. But inflation is like a high temperature, a symptom of the illness, and it’s no good believing that once prices are under control, the economy will work of its own accord with no other intervention required.

Argentina was unable to create a model to go beyond an economy based on the export of raw materials. In 2002 Argentine foreign trade still depends on exports of meat (despite this, foot-and-mouth disease has still not been brought under control), wheat and oil. It is difficult to argue that a country wishing to modernise and enter the First World can do so on the basis of a production structure with these features.

In the years of more open trade, Argentina should have pursued much more resolutely the path of economic structural reform for its production system, taking advantage of the stability guaranteed by the monetary model and the country’s high standing with international financial organisations, which would have funded ambitious development plans.

But the Argentine institutions and entrepreneurs sat back during the crisis, throwing away an historic opportunity to modernise the country. When will they get another chance? Certainly not in the short term, since Argentina has now become an international ‘untouchable’ (we will return later to the attitude of the international financial organisations).

Not surprisingly minister Cavallo, aware of these shortcomings, called his reform project implemented from April to December 2001 the ‘Competitiveness Plan’. This was the right objective, but the plan came too late.

It was late because on political grounds, Cavallo could no longer abandon the monetary model. Unable to backtrack, he focused on two objectives: postpone the medium-term deadline for Argentine debt, thus warding of the encroaching stricture, and seek to make the monetary system more flexible by an choring it to both the euro and the dollar thus paving the way to a de facto, albeit partial, devaluation of the peso.

On the international scene, Cavallo tried to work up new international confidence in the
country, blaming the Argentine situation on Brazilian disloyalty. After Brazil’s change of monetary regime (January 1999), Argentina goods became much less competitive in the Mercosur, thus weakening the country considerably. Thus although Argentina certainly had something to complain about, the situation in which the country had a trade deficit with all states in the world except Mercosur members was no longer sustainable. This was the basic problem: Brazil saw the limits of monetary rigidity in good time, but Argentina did not. Brazil successfully used economic stability to implement ambitious structural reforms required for growth. These reforms need a clear firm political approach, as adopted by Cardoso in Brazil. This explains why the plans agreed by Brazil and the IMF after the financial crisis of 1999 were successful, while ten Argentina-IMF plans have failed over the last two years. This is not simply an economic issue, but a political one: the Argentine political system, both on the Radical and Peronist sides, at the centre and in the periphery, have failed to devise scenarios to renew the country.

Cavallo’s palliative measures turned out to be insufficient. When the international economic crisis after September 11 made the Argentine economic situation unsustainable (since 1999 it has shown negative growth) Cavallo’s number was up. The introduction of the corralito (setting 1,000 dollars a month as the ceiling for withdrawals from bank accounts), together with a thirteen per ent cut in public salaries and pensions, creted an untenable situation. People in the treet lost all their trust in Cavallo, and the hew miracle had failed to materialise.

Cavallo’s demise also brought down De la Rúa, an honest but ineffective President inexplicably absent from the scene. Dubbed by Argentines as ‘Frenando de la Duda’, he even dithered over resigning, before completely disappearing from the scene after handing over power to the opposition.

As we said, Adolfo Rodriguez Sáa, Peronist Governor of the province of San Luis, was elected provisional President by the Legislative Assembly. None of the bigger Peronist names (Ruckauf, De la Sota, Duhalde and Reutemann) wished to take on the job for only two months. They had their eye on the March elections.

But the Peronist leadership seems to have failed to grasp the gravity of the situation. Rodriguez Sáa declared a moratorium on public debt with a triumphant air, as if it had been a victory for the country. Wishing to defend the peso-dollar parity at all costs, he announced the issue of a new currency, called the argentino. This rather bold idea (which in fact failed) was to maintain the peso-dollar parity, but given the lack of cash in the economy (blocked by the corralito, a measure aimed at protecting the bank system from bankruptcy), a new currency was to be created to replace all the bonds used as money issued by the provinces (the so-called patacones in Buenos Aires, which had equally picturesque names elsewhere, such as bonfles, quebrachos, bocaflores, lecops and even evitas).

This was the outcome of the intransigent defence of unsustainable model. To maintain a by then sham parity between peso and dollar, the cash in circulation was cut to a minimum and in practice the country had to invent other currencies: there was a total of seventeen (peso and dollar, and fifteen kinds of patacones). The argentino would have been the eighteenth currency in the country. This was no way to bring some relief to the stifled Argentine economy. The Peronist provincial governors with political ambitions were aware of this and did not show up for a meeting convened by Rodriguez Sáa to work out new strategies. This resulted in Rodriguez Sáa walking out.

Once elected, Duhalde, a Peronist from the social current (i.e. a rival of Menem and the neo-liberal faction), had to size up the situation and adopt more realistic decisions than his ephemeral predecessor.

The key question was the monetary issue, associated with the highly unpopular corralito. Since the new government could no longer revoke the measure limiting access to the banks, it tried to attenuate the negative effects by establishing regulations more favourable for credits up to 100,000 dollars and by raising the ceiling on withdrawing funds. Convertibility was ended by the introduction of a new fixed parity (1.4 pesos = 1 dollar) for foreign trade, and fluctuating
rates for all other purposes.

In practice anyone with access to credit in peso-dollars up to 100,000 dollars, had their money ‘pesified’ to 1.4. This seems to be a rip-off, but only partly so, given that over the years the deposited pesos had enjoyed very high real interest rates (around 15 per cent). There was a net loss, but within reasonable bounds. For operations over 100,000 dollars, the exchange rate was that of the market.

The big losers in this system were business firms, especially Europeans, who came to the Argentine market to offer services (telephony, energy, etc.). Their concession contracts were bound to the dollar, but now their incomes are in devalued pesos. The situation, especially in the banking sector, is critical: many banks will probably go bust, generating a fairly uncontrollable situation.

Although the exchange rate of the peso remained at a reasonable level for a few weeks, under two dollars, in recent weeks the uncertainties due to the confused picture as regards reforms and the lack of prospects of international intervention have pushed up the exchange rate to almost four dollars. The government had to introduce draconian measures to bring the rate backed down to acceptable values, but the devaluation of the currency has triggered of inflation, which will probably be into three figures by the end of the year. This marks a dramatic return to the past for Argentina, to a climate thought to have been left far behind. As regards the GDP growth rate, current figures suggest values are around -8.5 per cent for 2002. This is a very serious situation, especially considering that the figures for GDP growth have been negative since 1999.

The impoverishment of the country is also dramatic. Around 40 per cent of the population is estimated to live in poverty, which must be even harder to bear given that the country had become accustomed to much higher levels of well-being.

In this complex picture, the international community is asking Argentina for credible reforms on tax, monetary policy and the organisation of the state. As mentioned above, Argentina has already missed many opportunities to seriously reform the system in the country, where there is a good deal of parasitism, macroscopic inefficiencies, and squandering off public funds due to political nepotism.

But in fact the issue is not always purely economic, but also a question of the way the country is organised. We may well wonder where to begin or what is left, if the political system is no longer able to offer credible alternatives, the private sector is inefficient and often lives off favours and rents, and judges are politicised (even the credibility of the supreme court is very low because its members are notoriously associated with former president Menem and have gone to great lengths to clear his name in the case of international arms traffic).

For the moment the only strength left seems to be that of those banging pans in the street in the name of a civil society which has been deceived and swindled. But the understandable indignation must be articulated into positive political action, and nobody in Argentina today seems able to rise to this challenge.

Significantly, to remedy the lack of ideas and projects, Duhalde’s government has proposed a tripartite social dialogue. This is the so-called Argentine Dialogue, bringing together representatives of politics, economics and Argentine society, and promoted jointly by the government, the Catholic Church and the United Nations Development Agencу (UNDP). In other words, public players are so discredited in Argentina that the government has turned to institutional help from the Church and the United Nations in trying to work out a new project for the country.

Arguably the only comforting note in the current Argentine debacle, concerns the role of the army. Faced with such a deep crisis throughout society, the Argentine army has never for an instant considered moving into action. And, given the past role of the armed forces in Argentine political history, this is very significant! It means two things. Firstly, from a domestic point of view, the armed forces got such bruising after the last dictatorship that they are no longer a credible alternative. Secondly, from the Latin American point of view, it confirms a theory we have defended for some time in this review: the army, once such a powerful force in the political history of the sub-continent, has gone back to the barracks for good, having played out its political role. The separation between the civil and military sphere is now clear cut, and it has been left up to civil society to govern, since the military ‘shortcut’ is no longer an option.

We have thus answered some of the initial questions. The Argentine collapse is not only due to a temporary conjuncture-type crisis but is structural and the outcome of a series of factors, some recent, others going back a long way in time.

But what can be said of the international community’s approach to the problem? Can we rightfully claim that the crisis is an Argentine issue and must be solved by the Argentines alone? Certainly the basic mistakes thatwe have listed are mainly internal. Since over the last few years the political class has failed to organise the country on solid and efficient foundations, they must take a large share of the blame.

But until recently Argentina had been considered a model to be emulated in financial matters. It was the country (along with Chile) where reforms had been made in a radical drastic way, and was a very promising market, etc. The mistakes which we have mentioned, on the other hand, are far from new. We might argue that the assessments of the achievements of the last decade were a little hasty, and that everything that glittered in the Menem years was not gold. But more importantly, we must ask if the international financial organisations, which until a few months ago had insisted on the importance of the currency board, may also be accused of contributing to the sinking of Argentina. Now they have backed off, claiming that those decisions were Argentine and the problem lay in the inability of successive governments to implement the plans agreed with the IMF.

Serious reforms were required, it is true, but all this rigour applied to a country in such a deep crisis is hypocritical and unfair. Argentina must be helped in everyone’s interests. Unfortunately, the new American administration’s priorities lie elsewhere. At the time of the Brazilian crisis a rescue plan, drawn up under Us leadership and with a decisive financial contribution from Europe, was of crucial help in getting out of the impasse. After only a year of zero growth, by 2000 Brazil showed a positive growth rate again, surprising almost all analysts, and shocking the Wall Street boys – the whiz kids who decide the world’s fate from the limited viewpoint of their computer screens.

Today the Bush administration points out that Argentina has already burnt 63 million dollars of aid in a year without solving its problems and does not deserve to be helped any further. These figures are all very well,but we must ask who stands to gain from the Argentine disaster? The United States has lost considerable ground in Mercosur over the last few years, while European firms have been much more dynamic in taking up the opportunities offered by the region’s economies in the 1990s. The Eu-Mercosur Trade Round has progressed much further than the Free Trade Area of the Americas (FTAA).

Thanks to successes in the 1990s, Mercosur, and in its wake the whole of Latin America, has acquired a much greater strategic weight, which would have been almost unthinkable only ten years ago.

Perhaps my view is a little cynical, but at times being cynical does no harm: keeping Argentine in a tight corner means dealing a fatal blow to Mercosur, an integration project that has always irritated the United States, reluctant to find itself with strong partners in Latin America. One way out for Argentina could be forced dollarisation, associated with indiscriminate and rapid trade liberalisation in the framework of the FTAA as the extension of NAFTA on a continental scale. This project is opposed by Brazil, the only country able to counter (in relative terms) US geopolitical dominion in the region. A continuing Argentine crisis would mortally wound Mercosur and would inevitably have negative consequences on Brazil, which for the time being
has been holding up.

But who do we find behind Argentina and Brazil? Europe is Mercosur’s prime investor and principal trade partner, and thus risks much more than the United States in the region. This is another picture in which the United States is not all that upset about letting the Argentina troubles simmering on. The message cuts across borders and is not only directed at Buenos Aires.

Moreover, this kind of picture highlights the need for the Eu to sharpen its strategies and modalities of action in crises like these. Although geographically remote, Argentina is culturally and economically close to Europe. European countries should make more efforts to co-ordinate their action in the international financial organisations in order to exercise more influence, theoretically considerable (when it is a question of footing the bill) but in practice too dependent on US choices (when it is a question of making decisions). And here we are not even talking about military action, a field in which the United States is clearly light years ahead of us, but about economic and financial issues, in which the Eu counts as much as the United States.

This, then, is the situation in Argentina today. The picture is far from positive, the rain clouds have gathered, but we must not fall into the error of believing that this is only a domestic problem. The Argentine crisis raises doubts and issues that must be analysed seriously and require coherent and bold responses.