WASHINGTON, June 12 (UPI) -- Whatever dire straits Argentina now finds itself, it has nothing to do with policies taken in the past decade, the country's former president said Wednesday.
Carlos Menem, who remains a leading figure in Argentina's influential Peronist party and who Argentine press report could run for election once again, told academics and policymakers that far from languishing, the country flourished while he was its leader from 1989 to 1999.
Argentina currently faces its worst economic downturn yet, as the government holds the unenviable record of accumulating the largest amount of public debt by any single country. The country's total public external debt stands around $160 billion, with $15.18 billion in principal owed to international institutions, including the International Monetary Fund. It owes at least $4.8 billion to the international community this year alone, and it appears unlikely that Argentina will be able to service its debts for some time.
According to many economists, one key reason for Argentina's ballooning debt was the country's decision in 1991 to peg its currency to the U.S. dollar at parity, which allowed Argentina to combat hyperinflation. But by pegging its currency one-to-one against the greenback, it made Argentina's exports far more expensive than products from other Latin American countries, leading it to lose out heavily to its more competitive neighbors on the global markets.
But Menem dismissed such arguments, pointing out that Argentina's exports actually reached record levels in 1997, and he added that the country should actually now adopt the U.S. dollar as its own currency as one means to stabilize the economy.
"The one-to-one parity...was absolutely essential for Argentina to grow," Menem said, and argued that whatever economic difficulties the country now faces is largely due to the weak political leadership.
He noted that public support for President Eduardo Duhalde remained weak, particularly as the government "seizes assets and freezes bank accounts, which were never seen under my government."
The Duhalde government began freezing Argentine bank account last December, once it became clear that the IMF would no longer provide any new funding to the country unless it went forward with more economic reforms. Argentina had been provided with nearly $40 billion from the IMF and other multilateral financial institutions to pick up the flagging economy in December 2000. But the following year, the IMF decided to pull the plug on $9 billion of the $22 billion it had committed to the country, as the Argentine government failed to meet the fiscal targets it had agreed upon as conditions to gaining access to funds.
The former president said that the country needs at least another $50 billion from the international community to get back on its feet. But Menem suggested that Argentina would not be able to go forward with the stringent reforms outlined as prerequisites by the IMF for more money to be available, given the Duhalde government's lack of public support.
Questioned about his own prospective candidacy as president, however, Menem merely said that such talks were "still ongoing."