This post can also been seen in the FPA’s Latin America Blog
Today the world anxiously waits to see whether or not the Greek government will pass its austerity measures in order to save the Greek economy in the long run, hold off another wave of global recessions and perhaps save the Euro itself. While a Greek meltdown would have an amplified effect on world markets, where investment trends turn into floods of liquid capital moving from market to market, fears of the end of a national economy always seem to be worse than the actual end results. While a bankrupt country is always a serious matter, the strategies of repairing such economies exist, and Argentina is an example of how to turn a broken nation into a relatively stable one.
In 2001 Argentina suffered a major economic meltdown, leading to a quick succession of many Presidents, each of whom failed to handle the 2001 economic crisis. The last appointment and election ended with the election of the late Nestor Kirchner and the eventual election of current President Cristina Kirchner, both of whom have pushed Argentina into a more stable state of being, albeit with a lot of effort and struggles in the process. In the last ten years Argentina has become the test case of how to bring an IMF resistant country back into the world economy. Argentinians learned how to manage sacrifices; an entire population had to personally change the way they lived and financed their own lives in order to place the country in a healthy economic position after generations of national economic mismanagement. Today Greece is facing the realty that in order to bring their economy back to its full functioning state, reforms must first be passed by the Greek government. A difficult and necessary ten years of reform might be the only response to economic struggles in the Mediterranean and the EU, as well as in the global economy as a whole.
During the 2001 economic crisis in Argentina, the word “contagion” was tied with the act of moving capital away from emerging markets- a result of investors’ fears that a collapse in Argentina might produce or foreshadow economic losses in other emerging economies. But Greece’s economic situation could be seen as a “mega-contagion”, as Europe’s currency and trading partners would take a hit if Greece fails to reform its economy. A positive example of what proper reform can do will likely be shown in the next Argentinian Presidential election this October. It is predicted that Cristina and the Kirchner name will stay in power for another term as a reward for the positive economic measures her government has taken over the last ten years. While the depletion of national treasure and inflation in recent years has been the result of trying to get Argentina to reengage with the global economy, the political support needed to pass additional reforms might only come with popular support for President Kirchner’s next term in office. Political stability in Greece might also be necessary to pull Greece out of its current crisis. Protests against the Greek Prime Minister could very well halt the proposed economic reforms. In the end tough and unpopular choices need to be made, but the reality is that there are few options available. A positive outcome requires a guaranteed difficult period of reforms in Greece.
