Fact Check: Argentina

958 days, 18 hours, 33 minutes ago

SINCE RUFO EXPIRED

Receive email alerts

Perhaps the “G-19” Would be More Appropriate…

It has been exactly one year since President Cristina Fernández de Kirchner and her co-conspiring Finance Minister, Axel Kicillof, subjected Argentina to the embarrassment – and real-world economic consequences – of an historic censure by the International Monetary Fund (IMF) for providing what was charitably characterized at the time as merely “inaccurate” financial data.

The ensuing 12 months have featured a series of reckless Kirchner/Kicillof fiscal policies – culminating in the decision to voluntarily default on the Republic’s loan obligations – that have debilitated Argentina’s economy to the point where Kirchner is currently on mainland China, begging for the chance to sell the Republic’s national treasures for urban sidewalk-sale prices.

All of which may seem like fairly damning evidence that the world’s economic super-powers – the proverbial “adults in the room,” as represented by the venerable G-20 – should cease to take Argentina seriously…at least as long as President Kirchner is in power.

It’s a view that many might find receptive, reading between the lines of a piece in yesterday’s Wall Street Journal…

An article by Paul Hannon details a just-released report by the Organization for Economic Cooperation and Development (OECD) that says the annual rate of inflation in its 34 members fell from 1.5% to 1.1%, during the November to December period, representing the “the lowest level since 2009”.   

It’s a decline the OECD attributes “largely” to the steep decline in energy prices over the second half of 2014, but also to the “disappointingly weak performance of the global economy.”

Importantly, and independent of the larger conversation regarding disinflation and its effects on the global economy, there was this telling gem: “After many months of concern about the accuracy of its data on consumer prices, the OECD counted Argentina in its calculation of the G-20 inflation rate.  By this expanded measure, it rose to 2.8% in December from 2.4% in November.”

What more compelling recent demonstration does one need of Argentina’s outlier status?

The OECD, a thoroughly fact-based, non-political organization, actually considered excluding data from a country due to accuracy issues?  It is alarming.  And, entirely in conjunction with all other evidence of Argentine fiscal mismanagement.

But will it serve as impetus for the global community to reexamine Argentina’s membership in the G-20?

Turns out, this is not an entirely novel argument, even if it has been a while since it was articulated.

Henry Smith, a British Tory MP, addressed the House of Commons in September of 2013.  He gave an impassioned defense of booting Argentina from the G20.  Here below are just a few of his eloquent soundbites:

“Argentina has expropriated the property of European companies, provides a safe haven for drug dealers bringing methamphetamine to Europe, is developing a strategic relationship with Iran, it deliberately falsifies its economic statistics, it refuses to abide by international court judgments and refuses to pay its debts to other nations and institutions and even refuses to honour the most basic laws of contracts.

“Argentina’s refusal to repay its debt obligations, even though it has billions of dollars in reserve, sets a terrible precedent for other nations…”

It is simply unacceptable that a country that is a member of the G20, one of the most important and prestigious international bodies, should behave in this manner.”

“I believe that Argentina’s membership of the G20 should be revoked.

“The country has been named and shamed by Transparency International as one of the worst in Latin America for corruption, even outstripping Venezuela, and the International Monetary Fund (IMF) has starkly stated that Argentina’s government is lying about its economy and cannot be trusted.

“We cannot and should not allow Cristina Kirchner to be rewarded with a welcome at the world’s top table.”

“Argentina is an international outlier – no other country, including in Europe, is behaving so irresponsibly in relation to its debts, no other country is in receipt of an IMF censure for falsifying inflation figures.”

“We should stand up for the rule of law, sanctity of contract, and respect for international legal and financial obligations.”

“We should not stand with those who refuse to abide by court judgments and who steal private property.”

Well said, Mr. Smith.  We urge the global community to heed your argument and its reasonable conclusion: “It is time now to take a tough position on Argentina’s membership of the G20.”