Category Archives: Politics

By Leslie Elliott Armijo* To overcome the multiple challenges of the COVID‑19 crisis, Latin America’s leaders will need to build regional cooperation around pragmatic solutions – an elusive goal for countries with a legacy of disunity and weak collaboration. The coronavirus has hit at a moment of economic vulnerability. Regional growth averaged only 1.9 percent […]

via Regionalism in the Time of Coronavirus: The Only Way Forward? — AULA Blog

The AULA blog always offers insightful and well-written articles. This one is no exception to the norm.

Clearly, the region’s countries should work together politically and economically to resolve the many problems that the pandemic has caused. The virus is a global problem that needs to be resolved by nations working in unity.

Yet, this post starts by acknowledging that this is not likely to happen because of the regional countries’ legacy of disunity and weak collaboration. These observations are as true as they conflict with each other. Look at the Eurozone nations for an example of non-regional cooperation. These nations are bound by a treaty to act jointly on fiscal and economic matters. Yet, national politics and fiscal objectives constantly stretch and pull the organization apart at its legal seams. Why should we expect more political cohesion from South America/Caribbean nations that are bound only by loose regional organizations that have no enforcement teeth or money?

The pandemic coronavirus will end either by the hand of science or mother nature. Countries like Argentina, Venezuela, Ecuador, and to a lesser extend Bolivia will form a de facto bloc of irrelevant and unwilling players in the scheme of regional cooperation. These countries have  “weakened immunity system” in that their underlying political and fiscal system are already compromised. It is the lack of pragmatism that has led to their severe problems. Cooperation on a regional level can only be considered as wishful thinking.

By Arturo C. Porzecanski* The Argentine government’s current attempt to force investors to accept a punishing debt-restructuring plan puts the country at risk of yet another sovereign default on foreign-law, foreign-currency debt. The attempt validates the massive loss of confidence that took place last August, when local and foreign investors ran for the exits in […]

via Argentina: Yet Another Generalized Default? — AULA Blog

Professor Porzecanski makes credible arguments in the post. He demonstrates using a historical timeline the build up a lack of confidence in the Argentine economy. Once again, the intelligent economic and political policy that the country deserves takes back seat to cult politics. Investor confidence evaporated more with each victory of the A. Fernandez-C Fernandez de Kirchner ticket. Once they officially set in the country’s highest office, investor confidence hit bottom and remained there. The country’s spiral into the now too familiar position of being on the brink of default terminated before the coronavirus crisis existed.

The winds of political change blew hard in the direction of the Peronists leading up to the election. The general electorate votes for the candidate who promises to restore credibility and respect in the Argentine way of doing things. Rational economic policy sits in the back seat of the car of rationality. The average Argentine believes his country’s eternal economic meltdown is the result of the imposition of unfair lending practices and policies.

I am puzzled as to why the IMF would lend (again) the country money.