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Argentina to Drug Lords: Money Wanted, No Questions Asked


Over at Foreign Policy, Douglas Farah has an interesting piece on Argentina in the wake of its bizarre (if not surprising) plan to boost energy production by effectively encouraging money laundering. Farah tells of the Camporistas, a group of young, influential political advisors and officials led by President Cristina Fernández de Kirchner’s son Maximo. The group, named for Héctor José Cámpora, the one-time president and prominent ally of Argentina’s old military dictator Juan Perón, is allegedly behind some of Argentina’s more…unconventional policies:

Most of the Camporistas cut their political teeth in radical university politics in the early 2000s as the country in 2001 defaulted on some $100 billion in sovereign debt and fell into chaos. Now they offer a blend of Marxism, Fascism, and utopian policies that has led to Argentina’s free fall rather than its rebirth. The group, with Máximo’s support and the president’s ear, has taken over many of the most important government revenue sources, including the national airline, Aerolineas Argentinas, which, since being re-nationalized, loses $2 million a day and operates with virtually no accountability or oversight, according to airline audits and investigative reports.

Nahón’s mentor and co-author of many academic publications, Axel Kicillof, was the CFO of the airline as it imploded, and is the architect of the 2012 expropriation of the Spanish oil company YPF, whose oil production has dropped sharply since the takeover. Kicillof, now deputy minister of economy, and Nahón also helped engineer the “nationalization” of billions of dollars in private pension funds, now also under control of Camporistas.

If Farah is right that the economic fate of ordinary people in Argentina is largely in the hands of a few radical thirty-somethings nostalgic for Perón, it would go a long way toward explaining the country’s current state of affairs. Argentina is now well into the capital shortage phase of its latest, repetitive cycle of failure. The government has stolen all the money that wasn’t nailed down, and neither foreigners nor rich Argentines will voluntarily lend it any more.

The temporary answer is to go bottom fishing in world capital markets: to welcome dirty drug and arms money into the country in an era when bank secrecy in more respectable places is beginning to erode. This is what the Kirchner government is doing with its recent passage of a tax amnesty that would allow drug dealers and terrorists to put their money in Argentina without the usual formalities and queries. But we wouldn’t advise any international drug lords to trust Argentine politicians; precisely because their money is illegitimate, it will be easy for the authorities to confiscate the money through some clever trick.

This is the kind of desperate decision one might expect from a Peronist youth group that finds itself  at the helm of a failing state; it’s unlikely to end better than any of the other gimmicks and dodges tried at similar stages of the Argentine failure process over the decades.

A country with as many natural resources as Argentina has no excuse for the kind of chronic failure that has beset it ever since Juan Perón first took power.  But seventy years of unbroken failure and more than a century of economic decline has yet to convince enough Argentines that less exciting but more practical growth strategies just might work better.

[Photo of Cristina Kirchner with son, Máximo, courtesy of Wikimedia]

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  • BobSykes

    Stop blaming the Peronistas et al. Argentina’s problems are created by the stupidity and greed of its people. The people are not the victims, they are the transgressors. There is no solution to Argentina’s problems given its current population.

  • bpuharic

    Could be worse. They could have our crop of hedgefund managers…then they’d really have problems

  • lukelea

    The Argentines lost control of their country when they lost control of their immigration numbers a century ago, according to one theory I recently read about (and linked to here if I remember). There is apparently such a thing as having too big of an influx of foreign born persons into a country in too short of a period of time. It can tip the balance of political power in a democracy, leading down a road from which evidently there is no return. The “Sicilianization” of a country would be one way to describe it. I’m not sure if this theory is true but I think it shouldn’t be dismissed out of hand either. There might be some lessons to learn.

  • Alexander Scipio

    One could write the closing paragraph virtually unchanged about America. The idea that anything will change in the long run without throwing Dewey out of “Schools of Education,” is of course absurd. And accepting into teaching our dumbest college students (lowest SATs) is equally an existential failure.

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