Argenzuela — an invented word that has been on the minds and lips of Argentines for the past year; the jokes that Argentina is following an eerily similar path to that of Hugo Chavez’ Venezuela are no longer funny.
The fact that the man who almost single-handedly has destroyed the former economic juggernaut of Venezuela was re-elected to the presidency is Oct. 6, is totally without logic. Christina Fernandez de Kirchner, current president of Argentina, has copied many of Chavez’ policies, including economically harmful ones that the middle class has begun protesting against. Yet, despite the increasing groundswell of opposition toward Kirchner, there is a possibility that she will successfully change the country’s constitution to allow for her to run for a third presidential term (http://foreignpolicyblogs.com/2012/11/11/southern-cone-voting/).
The most evident example of Argentina following the path of Venezuela is the parallel money market. Venezuela has had a fixed exchange rate of 4.3 Bolivares to the US Dollar for years, yet the going “blue” rate is around 9.5 (http://mariemetz.com/2012/09/19/honest-money/). Similarly, since October 2011, the Kirchner government has prohibited the exchange of pesos for dollars, an attempt to keep dollars in the country and pay off debts. The Kirchner government has desperately tried to keep the Argentine exchange rate artificially low, allowing it to nudge up to about 4.8 pesos to the US Dollar. It should come as no surprise, that the two countries are rivals for having the highest inflation rate in Latin America. Argentina’s inflation rate is estimated at about 25 percent; Venezuela’s is around 22.
Exhibit B of Argenzuela is a rash of self-defeating government expropriations. In Venezuela, government expropriations are no longer news worthy. There are nearly 20 claims with the World Bank’s arbitration tribunal (MIGA) from foreign companies demanding compensation for business expropriations in Venezuela. Venezuelan businesses have fled the country over the past decade for fear of expropriation, mostly setting up shop in Bogota, Panama City and Miami.
While private businesses in Argentina have suffered in silence- having vital equipment stuck in customs for up to two years simply due to outrageous, inefficient import controls — the world didn’t take real notice of Kirchner’s irrationality until April 2012. Kirchner signed an “urgency decree” seizing control of 51 percent of shares of Yacimientos Petrolíferos Fiscales (YPF), previously controlled by the Spanish oil company Repsol. YPF’s shares on the New York Stock Exchange saw a near instant drop of 15 percent to USD 18.60 per share. The seizure was immediately condemned by Spain and the EU. At a local level, the Argentine Government wished the Rural Society a “Merry Christmas,” by expropriating the Argentine Rural Society (SRA) grounds in Palermo, Buenos Aires on December 21. The move was deliberately made days before the holiday in order to avoid backlash, and was excused by saying the sale of the grounds to the group in 1991 was illegal.
The third Argenzuela parallel, currently in development, is the slow but steady crack-down on private media. The largest shutdown of an opposition media outlet occurred in January 2010 when Chavez revoked the public broadcasting license of RCTV, a major national channel that had been critical of his government. Since then, the government has prosecuted other smaller opposition channels, including USD 2.2 million fine on the channel Globovision for coverage of July 2011 prison riots. Argentine media prosecution has been more subtle, but equally as dangerous. In early 2012, the government tightened its grip on news outlets by seizing control of Papel Prensa, Argentina’s only newsprint manufacturer. On December 15, an Argentine judge ruled against Grupo Clarin, one of Latin America’s leading media conglomerates. The government claims that Clarin, typically critical of the government, is a monopoly and therefore unconstitutional.
While a plethora of other Argenzuela parallels abound, the most difficult for citizens is a rise in insecurity. Venezuela’s current murder rate is estimated at 68 per 100,000 people. While Argentina is a far cry from that level, a rise in perceived insecurity and street crime is one of the populace’s major concerns.
What started out as a joke is now being taken as a reality to be dealt with. Though it is highly unlikely Argentina will reach the levels of insecurity and economic degradation seen in Venezuela, it remains to be seen how soon Argentines will rescue their country from Argenzuela.