Friday August 1, 2014 Search
Weather | Athens
32o C
25o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Argentina's way

Argentinians lining up to buy US dollars with devalued pesos at the headquarters of the Banco de la Nacion in Buenos Aires in 2002.

By Nikos Konstandaras

When a nation is at a dead end, it wants to hear things are not so bad, it wants promises of a painless escape through a secret passage. In Greece today, where everyone is experiencing their own personal truth and believes that everybody else is conspiring against them, we often hear (from both left and right) that we should declare bankruptcy like Argentina in 2001 and go our own way. As unshakable proof of their wisdom, the proponents of this argument point out that the rich South American country had the region’s fastest growth rate after 2003.

However, Argentina is not out of the woods and it is fighting alone in a difficult international climate. Before making other comparisons, it is useful to remember where Greece is today. A great part of the difficulty we face in reducing our debt and becoming more competitive stems from the fact Greece does not have its own currency to devalue. But this is also our greatest strength: Our place in the eurozone forces us to introduce reforms that will make our economy viable while, at the same time, it ensures the active support of our partners (as long as it lasts).

If we abandon this unequal battle, the return to the drachma will grant us the freedom to try Argentina’s way. When the peso was unpegged from the US dollar in 2001, its value dropped from an exchange rate of 1:1 to 4 pesos for each dollar. Savings were wiped out. But the international economy was booming and Argentina’s many products and commodities found growing markets and achieved good prices. In 2003-11, GDP grew by an annual average of 7.7 percent, thanks to bumper harvests, a hunger for commodities in China and increased sales of cars to Brazil.

Last month, however, industrial output was down for the first time since 2009; drought has hit crops and demand for its exports has slowed. Argentina’s benchmark dollar bonds due in 2017 have a bond yield 1,339 basis points higher than the equivalent US bonds. Measures to stem capital outflows have been enforced as an estimated $200 billion was spirited abroad in recent years. Inflation is seen at 23 percent in 2012. Argentina is shut out of capital markets and foreign investors are avoiding it (more so after it nationalized a Spanish oil firm’s subsidiary).

Worst of all, as a European diplomat with years of experience in Argentina notes, is that the public administration is overstaffed and inefficient and corruption is rampant. With their own currency, Argentina’s governments have not implemented reforms and now find it difficult to meet their nation’s demands.

Argentina’s lessons are indeed valuable, as long as we understand them before it is too late.

ekathimerini.com , Friday June 1, 2012 (16:45)  
In trying to conquer, Putin unites Europe
Summer turbulence
Capital upgrade
Populism eating up education
Greece to help ´hundreds´ of Chinese leave Libya
With the violence in Libya escalating to its worst level since the 2011 ouster of dictator Moammar Gadhafi, governments from around the world are scrambling to evacuate their citizens from t...
Plan to restore Asopos River enters final stage
Plans are in the final stage for the ecological restoration of Asopos River in Central Greece following a deal to install an integrated water resources management system. The 37.6-million-eu...
Inside News
Traders unhappy with turnover
Three weeks into the summer sales, traders say that purchases are not satisfactory. Shopping levels appear to be lower than during the same period last year, or on the same level at best, ev...
No rivals for Intralot as it bags racing bet permit
Intralot confirmed previous reports on Thursday by appearing as the sole bidder in a tender for the license to operate Greek horse-race betting held by state privatization fund TAIPED. Frenc...
Inside Business
SOCCER
One win and one loss in Europa League
Greece had a hit and a miss in the first-leg games for the third qualifying round of the Europa League on Thursday, as Atromitos scored a 2-1 win at Sarajevo while Asteras Tripolis lost 1-0 ...
SOCCER
Goalless draw at Liege puts Greens in driving seat
Panathinaikos got the upper hand in the battle for entry to the Champions League playoffs after snatching a goalless draw at Standard Liege on Wednesday. If anything, the Greek cup holders m...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. One win and one loss in Europa League
2. Greece to help ´hundreds´ of Chinese leave Libya
3. Traders unhappy with turnover
4. No rivals for Intralot as it bags racing bet permit
5. Energy cost cuts even without EU approval
6. KEPE: Greek economy returned to growth in Q2
more news
Today
This Week
1. Motorists refusing to pay tolls on Corinth-Kalamata highway to be monitored
2. Euro flows reveal shift in sentiment as losses mount
3. Greece may ignore EU and lower energy costs for business, says minister
4. EU puzzles over emergency funds for euro area bank crisis agency
5. Only 5 percent of stores see brisker business during this year's summer sales
6. Fake psychic caught in Thessaloniki after gaining 35,000 from victim
Today
This Week
1. Quadriplegic woman on life support 'dies due to unpaid power bills'
2. Wine cup used by Pericles found in grave north of Athens
3. Defense Minister Avramopoulos to represent Greece at European Commission
4. World’s largest solar boat on Greek mission
5. Greece names fifth privatization agency chief in four years
6. Greek coast guard picks up 77 migrants off Myconos
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.