Argentina does not deserve to be a member of the G20 and President Barack Obama is right not to stop in Buenos Aires on his first state visit to South America. That is the stark view of James Roberts, a former US diplomat and research fellow at The Heritage Foundation, a conservative US think tank.
The Foundation’s annual ranking of economic freedom, compiled in conjunction with The Wall Street Journal, ranks Argentina a lamentable 138th out of 179 countries in an annual classification of economic freedom. Thus one of the world’s major food and commodities exporters is sandwiched between Guinea and Vietnam and only a few spots above the likes of Ethiopia, Burundi and Togo. The index is based on assessment of such areas as trade freedom, fiscal freedom, government spending, currency freedom, investment freedom, property rights, freedom from corruption and labour freedom.
To do better, Argentina needs to clear up its outstanding defaulted debt, says Roberts. Talks with the Paris Club are good news but “we need to see real, tangible progress” – something Argentina hopes will come within weeks. Flawed property rights and transparency, distorted official statistics and a less-than-entirely-independent central bank are all further blots on Argentina’s copybook which need resolving, he says.
“Great sovereign countries just don’t behave in this way. Argentina doesn’t belong in the G20,” he said during a trip to Buenos Aires. “They have to clear the books to have more of a claim to the leadership role to which they aspire.”
As such, “I applaud the decision of President Obama (not to visit Argentina in March, when he will tour Brazil, Chile and El Salvador to forge a new “alliance for progress” across the Americas).”
Argentina’s nose was put sharply out of joint by the US president’s decision, which was seen in Buenos Aires as a snub, but Roberts said it just reflected “international sentiment that Argentina is not a serious country”.
He noted that Argentina’s US$52bn in central bank reserves makes it one of the wealthiest countries to receive trade benefits under the US Generalised System of Preferences, and its flouting of US court judgments in the wake of its huge default in 2001 and market-blocking tariff tactics should make it unworthy to be a recipient.
Argentina holds presidential elections in October. As Roberts concludes, in a soon-to-be-published paper on the outlook in Argentina:
US interests would be best served by election of a conservative government in Argentina in 2011. The rule of law and free-market principles, which have been weakened under the Kirchners (the late Néstor Kirchner was president from 2003-07 and his wife, Cristina Fernández, has been president ever since), will restore economic freedom and enhance US national security. A sovereign debt resolution and a free-trade agreement negotiation would benefit both countries.
Candidates for the elections are not yet clear and it is too early to say whether Cristina Fernández or an opposition figure will win. The ruling Peronists, which have a well financed and organised party machinery, will campaign hard on the fact that opposition parties have never, since democracy was restored in 1983, finished their term and the opposition remains bitterly fractured.
Roberts might like to see a change of political hue in October. But as he noted wistfully: “It’s tragic, the political paralysis on the conservative side, compared to the continued dominance of the Peronist machine.”
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