[stop-imf] WPost: Argentina blackmails IMF

[Robert Weissman]

Sometimes the best laughs on the Washington Post op-ed page come not
from Tom Toles, the excellent cartoonist, but the (unintentionally)
hysterical editorial writers.

In today's Post, an editorial accuses Argentina of blackmailing the IMF
by refusing to agree to structural adjustment conditionality, or at
least the latest round of blood-letting demanded by the Fund:

"Mr. Duhalde's government has consistently rejected the IMF's proposals
for reconstructing the collapsed banking system or laying the groundwork
for a genuine economic recovery. Instead, it has resorted to blackmail
tactics to get an agreement, defaulting on payments to the World Bank
and the Inter-American Development Bank and threatening to skip a
payment due to the IMF itself -- moves that could have damaged the
credit ratings of those international institutions."

The full piece follows:


Washington Post
http://www.washingtonpost.com/wp-dyn/articles/A15967-2003Jan19.html

Argentina's New Bailout
Monday, January 20, 2003; Page A22

ONE YEAR AGO, as Argentina wallowed through one of the worst economic
and political storms in its history, two outcomes were commonly
forecast: Either its weak government would muster the strength to
formulate and implement a stabilization program approved by the
International Monetary Fund, or the country would plunge into an abyss
of hyperinflation, plummeting production and, possibly, political chaos.
In fact, neither has happened. President Eduardo Duhalde, who took
office after three previous presidents resigned in short succession, has
failed to develop a coherent plan for rebuilding Argentina's financial
system or restoring its prospects for growth. Yet Argentina has also
avoided collapse: In the past few months the economy has stabilized,
though at a level far below that of the 1990s, and there has been no
renewal of mass unrest. This minimalist muddling-through can't last; at
best it might serve until presidential elections are held and a new
leader replaces Mr. Duhalde on May 25. In an attempt to make that
outcome more likely, the Bush administration and several of its Group of
Seven allies have strong-armed the IMF into signing an agreement that
will roll over $6 billion of Argentina's debt. It's a risky maneuver
that may backfire.

Administration officials tend to see the new accord in political terms:
as a good-faith gesture that could prove valuable at a moment when the
various Argentine presidential candidates are hotly debating whether to
continue cooperation with the international financial institutions. But
the carrot comes at the cost of a rift between the IMF administration
and its government sponsors and the violation of a principle the IMF
previously has been chastised for failing to uphold in Argentina's case:
that an agreement, and the signal of endorsement it usually represents
for international financial markets, should not be granted unless the
government commits to a serious economic reform plan. Although it has
limited its public spending, and thereby avoided the worst scenarios
that loomed a few months ago, Mr. Duhalde's government has consistently
rejected the IMF's proposals for reconstructing the collapsed banking
system or laying the groundwork for a genuine economic recovery.
Instead, it has resorted to blackmail tactics to get an agreement,
defaulting on payments to the World Bank and the Inter-American
Development Bank and threatening to skip a payment due to the IMF itself
-- moves that could have damaged the credit ratings of those
international institutions.

The new agreement gives Argentina only enough money to roll over its
debts to the IMF between now and August, in exchange for a promise of
continued fiscal austerity. But Mr. Duhalde's government is hailing the
accord as a breakthrough that takes the country "out of intensive care"
and vindicates his hardball negotiating tactics. His economy minister
has proclaimed, wrongly, that the country's economic crisis is over.
Bush administration officials are supposing that the IMF will induce the
new president to commit to more serious reforms in exchange for another
agreement next summer. Yet it seems just as likely that the winner among
the leading candidates -- none of whom is seriously committed to
free-market economic policies -- will conclude that adopting Mr.
Duhalde's intransigence is preferable to swallowing the IMF's medicine.
In that case, Argentina, the IMF and the Bush administration will soon
be at loggerheads again -- and real solutions to Argentina's problems
will be further postponed.