ARGENTINA: Argentina reflects on its recovery since the country's 2001 financial collapse, as European nations battle their own crisis

Record ID: 216309

  • Title: ARGENTINA: Argentina reflects on its recovery since the country's 2001 financial collapse, as European nations battle their own crisis
  • Date: 20th December 2011
  • Summary: BUENOS AIRES PROVINCE, ARGENTINA (FILE) (REUTERS) VARIOUS CENTRAL MARKET, FRUITS FOR SALE, AND PEOPLE BUYING BUENOS AIRES, ARGENTINA (FILE) (REUTERS) VARIOUS OF SIGNS OF DOLLAR EXCHANGE RATES
  • Embargoed: 4th January 2012 12:00
  • Keywords:
  • Location: Argentina, Argentina
  • Country: Argentina
  • Topics: Economy,Politics
  • Reuters ID: LVAABJVTZ78KE3DH4RJ8X8S5ZRDB
  • Story Text: Monday (December 19) marks the 10th anniversary of one of Latin America's worst financial crises. On December 19, 2001, thousands of Argentines flooded the streets of Buenos Aires to protest against the collapse of the national economy, a demonstration that led to a run on banks as citizens lost their personal savings and at least 30 died in violent clashes with police.
    Angry crowds descended on Government House, calling for the president to resign and at one point even throwing a funeral wreath over the fence.
    That was the last straw for the police and they fought back.
    A state of siege was declared. Tear gas was shot into the crowd, with protesters pulled up off the streets and taken into custody.
    Anger and frustration rode high as the stand-offs escalated. The riots turned deadly and at least 30 people were killed.
    With the country in chaos, then-President Fernando De La Rua fled the Government House by helicopter.
    Emergency Congress meetings were called and Argentina went through five presidents in 10 days.
    Then, in 2003, Nestor Kirchner, governor of Patagonian province Santa Cruz, was elected to pick up the pieces.
    Kirchner is credited by many with putting the economy back on its feet. Many analysts agree that one of his boldest steps was refusing to apply International Monetary Fund guidelines.
    Four years later, his wife, Cristina Fernandez, was elected as his successor, continuing his combative style and unorthodox economic policies.
    Currently serving her second term, Fernandez is a strong critic of financial systems rooted in United States and Europe. She recently sent a warning that the current European crisis could led to a disaster on a similar scale as Argentina in 2001.
    "I think that also, at a global level, this is one of the key points. They [Europe and the United States] try not to touch profits or to protect profits, and especially in respect to the financial sector. The crisis is paid for by those who have the least. The result of them wanting those who have the least to pay for the crisis is that it will end like it ended in Argentina in 2001," said Fernandez.
    At the height of the crisis, the government froze bank accounts to stop everyone in the country taking out their money at once.
    This provoked the protesters even more. People poured out into the streets, clanging pots and pans and trying to break open cash machines.
    Banks pulled down iron curtains, but frustrated savers tried to force their way in.
    Argelia Del Valle Cruz was among angry bank customers that day, screaming at blank-faced police lines to no avail. The anxiety caused her to pass out on the pavement.
    The government devalued its currency, the peso, which for a decade had been convertible with the US dollar on a one-to-one basis. Many Argentines saw their savings suddenly become worth a fraction of what they were worth before.
    Many customers ended up settling deals with their banks, but some, to this day, continue fighting.
    Del Valle Cruz remains among them. She lost her house during the crisis and says she has suffered illnesses brought on by the stress.
    "In Europe, they should keep their money in their house. Or, I don't know, make a hole in the ground and bury it, but not in the bank, not in the bank. There are now lots of fellow citizens who have got back their money from the banks and have put it back in the bank. They need to go back and take it out right again, urgently, because there is no legal security for having money," said Del Valle Cruz.
    Argentina's recovery was largely boosted by the soaring price for soya exports.
    The country has since jumped from rock-bottom into a boom period.
    Unemployment is currently at a 20-year low and the government has been working to increase national production. Domestic spending has also risen sharply.
    Ignacio de Mendiguren, president of the Industrial Union of Argentina, is among many who still hold the International Monetary Fund, the World Bank and the international market responsible for Argentina's 2001 financial freefall.
    "In that time, we have the risk that they [the establishment, the IMF etc] would take us to the lowest point. The dollarisation of the economy, the surrender of the public bank, the surrender of the revenue. That's to say that in Argentina, after provoking the crisis, they came for everything. That could be avoided. I think that no one would have seriously dreamed that 10 years afterwards we would be where we are," said Mendiguren, recently.
    However, the high growth is underpinned by high inflation. The government says the annual rate is currently just under 10 percent, but unofficial figures put it as high as 25 percent.
    This, along with capital flight, has steadily weakened the Argentine peso.
    Critics also warn the credit boom is setting consumers up for a hard landing against a backdrop of slowing growth expectations.
    Hugo Moyano, General Secretary of the General Confederation for Workers, said that although Argentina's recovery is not yet over, he still believes the country to be in a better position than those in the Eurozone.
    "Today, we have a new Argentina. But we don't want it all to be done, either. There is still a lot to do. It is true that when they say, and I also have said it, that while in Europe and the United States etc they discuss cuts, here we are talking about raising salaries. That is the truth. That is the reality that no one can deny," said Moyano.
    In 2001, over half the population was living in poverty. This number has been dramatically cut to under 10 percent, according to government figures, or over 20 percent by private estimations.
    Ten years on, the images from this tumultuous period - including this famous shot of an immigrant warehouse owner whose business was ransacked by looters - still remain painful. It was a desperate period, which shocked Argentines and the world at large.
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