By Leon D'souza

Argentina, The 1970s.

The crowing of the cock at first light has been replaced by the banging of guns and the swish of bullets whizzing by.

Left-wing guerrillas have sought to destabilize the country. A militaryjunta has seized power, beginning a systematic crackdown against dissent.

But the junta have another agenda.

Steadily, sons and daughters, husbands and wives are first detained, andthen disappear.

In El Campito, a concentration camp near Buenos Aires, political prisoners are tortured and beaten to death, or shot in the back of the neck. Some are thrown to the sea after being injected with sedatives. Pregnant
women, many in their third trimester, are tossed out of airplanes simply because they appear “ugly,” according to reports in the Mexican newspaper. La Jornada.

The terror is more than the leftists could ever have dreamed of.

***

March 1983.

More than 9,000 people have gone missing since the “dirty war” got under way. Some human rights groups say as many as 30,000 may have been tortured and executed.

Every Thursday, at 3:30 p.m., a group of women dressed in black march in front of the presidential palace in Buenos Aires. They tie white handkerchiefs imprinted with names around their heads, and carry signs splashed with photographs of sons and daughters nowhere to be found. Locals call them “Las Madres de Plaza de Mayo,” or “The Mothers of Plaza de Mayo.” Their voices are loud, and their demonstrations attract international attention.

Bit by bit, military violence declines, but the economy continues to struggle.

Inflation hits 433 percent, according to reports in the Wall Street Journal. The inflation rate is the highest in the world for the third straight year.

People clamor for civilian government.

Democracy is taking root.

***

December 2002.

Three years into the nation’s severe economic crisis.

Democracy is struggling.

The Argentine peso has only recently been uncoupled from the U.S. dollar and is trading weakly, sharply devalued from its 11-year peg of 1-to-1 with the dollar. Exchange houses overflow with anxious Argentines seeking hard currency. Kidnappings and petty theft are a way of life, as are arson and assassination.

It is anarchy. Total anarchy.

Logan residents Omar and JozAnne Salas are spending Christmas with family near Buenos Aires with their three boys in tow. It is only Omar’s second trip back to his native country since he left eight years ago to pursue a degree in computer science at Utah State University. Since then, his parents, Miguel and Velermina, have also immigrated to the United States. They now call Orem home.

The Salases are back in Argentina for a grand family reunion, and they’re headed to Omar’s sister’s place in the province of Cordova.

Miguel, Velermina, Omar’s sister Andrea and her two daughters, 4 and 7
years old, are buying bus tickets to Cordova from Buenos Aires. They find they’re short on cash and need some local currency, so Velermina offers to walk across the street to the exchange office. There, she hands a $100 bill to the man at the window.

He keeps the money and gives her 250 pesos. Confused, she informs himthat $100 is about 350 pesos. They argue. Finally, the man appears to give in.

“Maybe I’m mistaken,” he says, handing her the remaining money.

Velermina walks back to the group and gives the money to her husband, who proceeds to buy the tickets. She and Andrea decide to window shop along the sidewalk. Suddenly, they notice the man from the exchange office behind them. He has a cell phone in his hand.

“Stop right there,” he says. “I’ve just called the cops.

He accuses Velermina of stealing 100 pesos. A short while later, an unmarked car pulls over next to them, and two men claiming to be policemen join the fray. They order the Salases to get in the car. Andrea asks one of the men to produce identification. He refuses.

“You’ll know who I am when we get to the police station,” he says.

A shouting match ensues. Andrea panics and asks her mother to part with the money.

“Give him the money and he’ll leave us alone,” she says.

Velermina gives in and hands 100 pesos to the man from the exchange. But that isn’t enough for the so-called police. They continue to insist that the Salases make the trip downtown. Five minutes later, a marked police vehicle arrives on the scene.

Velermina, Andrea and her two children are arrested. At the police station, they are taken to an interrogation area where they are verbally abused.

“I can make it easy on you and you won’t have to know who I am,” the interrogator tells them as he threatens to take Andrea’s girls away from her.

Meanwhile, Miguel has also been arrested and is being interrogated separately.

The Salases think the policemen are trying to extort money from them, but they can’t be sure. Finally, out of desperation, they mention the name of a ranking officer in the same precinct who happens to be a family friend. Andrea attempts to call him on her cell phone, but it is taken away.

However, the interrogation winds down. The policemen haven’t anticipated an inside connection. As abruptly as it began, the ordeal draws to a close.

It has taken all of five hours, and the Salases are shaken and exhausted.

***

Now, sitting comfortably in their Canyon Road home narrating the whole sordid affair, Omar and JozAnne say those days were quite nerve-racking.

Things in Argentina are not as they remember them.

“For a developing country, Argentina had really good things going on, JozAnne said. “Overall, a middle-class person could live fairly well.

Today, it’s like the “dirty war” all over again, only this time there isn’t a dictatorship to blame.

Which leaves one nagging question: What went wrong in the last two decades? The answer, according to economists: Everything.

And now the fallout may radically alter economic policies and political relations both within Latin America and with the United States.

***

At the heart of the Argentine muddle is the International Monetary Fund, a U.N. agency established to promote trade by increasing the exchange stability of the major currencies.

For more than 10 years, Argentina was the agency’s prized student, and according to former IMF deputy managing director Stanley Fischer, everything about the country’s economy was right on track in the 1990s. The nation was lauded for bringing down inflation and stabilizing its exchange rate.

But Fischer did not get behind the veils of outward seeming.

“In a fog of praise, the IMF ignored the fact that Argentina’s growth rate had stagnated and that double-digit unemployment persisted for half-a-decade,” wrote Stanford professor and former World Bank chief economist Joseph Stiglitz in a column for The Day, Ukraine’s daily newspaper.

Without growth, Argentina was stepping into a debt trap. It would become increasingly difficult for the country to repay its massive loans.

The loans were the result of an ambitious governmental policy that went unchecked for several years.

In 1991, the country’s leadership announced its decision to maintain a fixed exchange rate: one peso for one U.S. dollar. While this may have seemed like a great idea, economists point out that there was, in fact, one key flaw—the U.S. dollar was overvalued. As a result, the peso was also puffed up.

“Contrary to popular belief, a ‘strong’ currency is not like a strong body. It is very easy to have too much of a good thing,” wrote syndicated columnist and economist Mark Weisbrot in a column for The Washington Post. “An overvalued currency makes a country's exports too expensive and its imports artificially cheap."

That’s not all. It gets worse.

When a country has committed itself to a fixed exchange rate, investors become more difficult to deal with.

Weisbrot explains, “When investors start to believe that the peso is going to fall, they demand even higher interest rates. These exorbitant interest rates are crippling to the economy."

Four years into a severe recession, Argentina was drained of all its monetary resources.

Still, there was the matter of sustaining an overvalued currency.

“The IMF's role here was crucial: It arranged massive amounts of loans [including $40 billion dollars in 2001] to support the Argentine peso," Weisbrot said.

He puts this in startling perspective: “Imagine the United States borrowing $1.4 trillion -- 70 percent of our federal budget -- just to prop up our overvalued dollar."

It didn't take long for Argentina to pile up a foreign debt that was literally impossible to pay back.

Argentina wasn’t alone in its plight.

Failures in Indonesia, Thailand, Korea, Russia, Brazil and Turkey were also linked to the problem of overvaluation.

“Attempts to maintain exchange rates at overvalued levels left taxpayers in those countries billions of dollars poorer,” Stiglitz explains. “Preserving exchange rates, however, provided vital time for people with money to get out at more favorable terms."

In the end, devaluation was the only way to restore growth, but the process was devastating. For Argentina, it meant chaos.

The Salases remember the upsetting newsflashes from 2001.

“People rioted because they were angry that the banks were closed. The government froze their money and then devalued the peso,” JozAnne said. “What was worth $10,000 was suddenly worth $300."

That was the last straw for the country’s suffering citizens.

“People lit fires in the streets and threw rocks at buses,” Omar said.

A campaign of destruction would wreak havoc on the city of Buenos Aires in the months to follow. The Salases’ neighborhood was among the worst affected.

“My mother told me of an instance when the police and some thieves were shooting at each other in the street outside my house,” Omar said. “There is so much violent crime."

Some of their old neighbors have even turned vigilante.

“They’ve realized that they will have to clean up their own neighborhood,” Omar added.

There is palpable stress in people’s lives as they worry about keeping their children safe.

“We have a friend who lives in a fairly normal neighborhood, and she has had thieves try to break into her house three times,“ JozAnne said, adding with a grin, “Fortunately they have a big German shepherd."

The dismal state of affairs has the Salases and other Argentines questioning the policies of the IMF.

“Somewhere along the way, their advice was unsound,” JozAnne said.

Many are already blaming their troubles on Washington. They claim that, “U.S. policies got them into this mess and that the United States then abandoned Argentina because, unlike Turkey, it is not of geopolitical significance,” explained Harvard University economist Martin Feldstein in a column for Foreign Affairs last year.

Feldstein suggests the current crisis will weaken the prospects for trade among Argentina and its neighbors—Brazil, Paraguay and Uruguay—and may “kill any chance of a general Free Trade Area of the Americas."

In fact, other emerging-market governments, based on Argentina’s experience, might also move away from pro-market policies, he says.

Others, like Weisbrot, offer a more positive outlook.

“Argentina will undoubtedly recover after it devalues its currency and defaults on its unpayable foreign debt,” he says. “But the people will need a government that is willing to break with the IMF and pursue policies that put their own national interests first."

Either way, the road to recovery will be long and painful.

“It’s really difficult to see people you know working so hard but achieving so little,” the Salases point out.

“People have very little to live for,” JozAnne said. “They have to hire special security, food prices have increased by 40 percent, unemployment is about 30 percent—it has affected the youth. A whole generation of young people has no hope."

She fears that some, among the older generation, might perceive that the country was better off under the junta’s dictatorship.

“It hasn’t been too long ago,” she said.

While JozAnne worries, Omar says he feels a measure of guilt.

“I’ve realized how much I have in comparison. I feel a greater responsibility now to help them."

NW
SR

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