CULTURE
-----------------------------------------The Argentinian Economy and its People Since the 1990s
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In the summer of 2005, whilst travelling the length and breadth of the country's varying landscapes, I had the opportunity to find out more about the catastrophic collapse of the Argentinian economy and the drastic changes that affected the lives of its inhabitants.
Argentina was Latin America's economic front-runner throughout the 1990s. Between 1991 and 1997 the economy grew at a consistent annual rate of 6.1%. Not only was Argentina rich in monetary terms, but also in terms of education and culture as well. The intellectually driven café society of Buenos Aries, for example, earned it comparisons with bohemian Paris.
However, the country's rigid exchange-rate regime, which fixed the peso against the dollar in 1991 and helped the economy so much during this period, proved to be the country's downfall. It was fixed in such an unusually binding way as to make it impossible for Argentina to respond to external shocks in 1998 and the economy slid into a deep recession.
The economic decline led to a sustained period of political turmoil and successive governments were unable to cure the country's ills. The Fernando De La Rua-led government of 1999 through to late 2001 was the first casualty when it stepped down following 42 months of recession culminating in street protests and riots. Following this, two more governments fell in quick succession, as Argentina announced the largest sovereign debt default in history at $155 billion. The peso was devalued leading to increased public anger and anarchy on the streets as citizens lost access to their savings and livelihoods, turning to scavenging and stealing to survive.
One particular example of the Argentine's desperation takes us to Rosario, just north of Buenos Aries, as an overturned cattle truck on a highway just outside of the city attracted 600 hungry residents wielding machetes and carving knives blindly hacking away at dead, injured and living cows. This once proud nation found itself turning to such drastic measures after, only a few years previously, they were the crown jewel of all the Latin American countries. Now up to 11,000 people a day were falling under the poverty line and becoming impoverished. An elderly resident of Rosario, once a member of the thriving middle-class, had now resorted to pawning his wedding ring and talked to me of the loss of everything he had ever known, including his much-famed Argentinian pride.
Nevertheless, the Argentines have bounced back from such dark periods in their history before. In the 1970s 'Dirty War', for example, the military arrested tens of thousands of people, 15,000 of whom were never seen again, after the Perons declared war on the rich. The country managed to fight back from this to become one of South America's most economically and politically forward thinking countries. Yet again, thanks to their tenacity, they are slowly on their way to doing so once more here.
Since 2002, exports have increased by 50% and the central bank's reserves tripled to $27 billion, allowing Argentines free access to their savings for the first time since 2001. By the time I was circumnavigating Argentina, the economy had grown by a quarter since its collapse, due to the hard work of the nation as a whole and increases in tourism thanks to the natural resources Argentina holds such as the Patagonian mountains, the Iguazu Falls and wildlife reserves.
In spite of this, there is still a long way to go before Argentina is back to the strength it was only a decade or so ago. Argentina suspended an agreement it had with the International Monetary Fund (IMF) in 2004 while it persuaded aggrieved private creditors to accept a debt-restructuring offer of 50% of the original loan. The current president's decision, in December of last year - to mirror Brazil's resolution in repaying its entire IMF early - also showed that Argentina is still somewhat worried for about its current state. Escaping from the IMF in such a fashion provides general freedom for national decisions without added outside pressure and tutelage. Even as of this month, the rate of inflation is still far from being acceptable and the economy minister has recently been sacked.
It is clear that persisting protests and public anger are still a very distinct reality that troubled Argentinians must continue to face.
Argentina was Latin America's economic front-runner throughout the 1990s. Between 1991 and 1997 the economy grew at a consistent annual rate of 6.1%. Not only was Argentina rich in monetary terms, but also in terms of education and culture as well. The intellectually driven café society of Buenos Aries, for example, earned it comparisons with bohemian Paris.
However, the country's rigid exchange-rate regime, which fixed the peso against the dollar in 1991 and helped the economy so much during this period, proved to be the country's downfall. It was fixed in such an unusually binding way as to make it impossible for Argentina to respond to external shocks in 1998 and the economy slid into a deep recession.
The economic decline led to a sustained period of political turmoil and successive governments were unable to cure the country's ills. The Fernando De La Rua-led government of 1999 through to late 2001 was the first casualty when it stepped down following 42 months of recession culminating in street protests and riots. Following this, two more governments fell in quick succession, as Argentina announced the largest sovereign debt default in history at $155 billion. The peso was devalued leading to increased public anger and anarchy on the streets as citizens lost access to their savings and livelihoods, turning to scavenging and stealing to survive.
One particular example of the Argentine's desperation takes us to Rosario, just north of Buenos Aries, as an overturned cattle truck on a highway just outside of the city attracted 600 hungry residents wielding machetes and carving knives blindly hacking away at dead, injured and living cows. This once proud nation found itself turning to such drastic measures after, only a few years previously, they were the crown jewel of all the Latin American countries. Now up to 11,000 people a day were falling under the poverty line and becoming impoverished. An elderly resident of Rosario, once a member of the thriving middle-class, had now resorted to pawning his wedding ring and talked to me of the loss of everything he had ever known, including his much-famed Argentinian pride.
Nevertheless, the Argentines have bounced back from such dark periods in their history before. In the 1970s 'Dirty War', for example, the military arrested tens of thousands of people, 15,000 of whom were never seen again, after the Perons declared war on the rich. The country managed to fight back from this to become one of South America's most economically and politically forward thinking countries. Yet again, thanks to their tenacity, they are slowly on their way to doing so once more here.
Since 2002, exports have increased by 50% and the central bank's reserves tripled to $27 billion, allowing Argentines free access to their savings for the first time since 2001. By the time I was circumnavigating Argentina, the economy had grown by a quarter since its collapse, due to the hard work of the nation as a whole and increases in tourism thanks to the natural resources Argentina holds such as the Patagonian mountains, the Iguazu Falls and wildlife reserves.
In spite of this, there is still a long way to go before Argentina is back to the strength it was only a decade or so ago. Argentina suspended an agreement it had with the International Monetary Fund (IMF) in 2004 while it persuaded aggrieved private creditors to accept a debt-restructuring offer of 50% of the original loan. The current president's decision, in December of last year - to mirror Brazil's resolution in repaying its entire IMF early - also showed that Argentina is still somewhat worried for about its current state. Escaping from the IMF in such a fashion provides general freedom for national decisions without added outside pressure and tutelage. Even as of this month, the rate of inflation is still far from being acceptable and the economy minister has recently been sacked.
It is clear that persisting protests and public anger are still a very distinct reality that troubled Argentinians must continue to face.
