Argentina Today

February 14, 2004

Dear family & friends,

Two years after the then President Adolfo Rodriguez Sau announced to a cheering Congress that Argentina was defaulting on it's sovereign debt of $88 billion US, the country remains in economic turbulence. Following the default, the peso, which had been pegged 1 to 1 with the American dollar, fell to its current level of about 3 peso to the dollar. Current President Nestor Kirchener has gained support from more than 60% of his electorate with his hardline position of not negotiating repayment to the international institutions holding the debt, offering a 'take it or leave it' 25 % and no payment of the accrued interest since default. This reduction in the debt is being referred to as a 'haircut' here in Argentina - more than just a trim, more like a scalping.

Kirchener's position is basically that international lenders were "going to the casino" when they made the loans, which were signed by previous governments, at interest rates up to 30%, and they lost their bet. In his current rhetoric he is referring to demands by bondholders as 'genocide' and pictures of starving Argentinean children are being shown just in case one misses his meaning, money for bloodsucking money lenders or starving children. At the same time, Argentina owes the International Monetary Fund $13US Billion for interim financing arranged last September. In addition to being late with one of the scheduled repayments to the IMF, Kirchener's administration has taken to slagging the International Monetary Fund, principally Deputy Anne Krueger who is heading the Argentina file. The IMF must approve a roll over of the debt next month. Not surprisingly the holders of those $88 Billion in bonds disagree with the tabled offer and support at the IMF is shaky. The problem with Argentina's stance is that they are trying to secure new financing at the very time they are reneging on the old debt.

This is not the only economic problem Argentina faces. Many industries, including electrical, water, and telephone utilities, as well as radio and television transmission and the postal service, were privatized in the 1990's, mostly to European companies. Shortages of water and electricity are commonly reported, one of the major postal companies is in the process of bankruptcy, and the deal with a French company for radio and television transmission has been abrogated by the government, ostensibly because of non-performance but also because of allegations of huge bribes being paid to acquire the franchise. Since the meltdown two years ago, all utility rates have been frozen. And through all this, Kirchener is demanding the new owners increase their investments to alleviate shortages (they say they wont until rates are un-frozen), and at the same time, he is trying to encourage foreign investors to make new investments. It will be Houdini magic if he pulls it off, I would think.

In addition, the papers are full of corruption allegations of past and present politicians and officials. They range from allegations of federal government employees drawing unemployment while working, to three major investigations of ex-President Carlos Menem (1989 - 1999), including allegations of accepting a $10US million bribe for suspending an investigation into a terrorist bombing of a Buenos Aires Jewish community center in 1994 which killed 85 people. A fourth new allegation has just arisen of he and his associates having accepted a $25US million bribe in the sale of the radio/television franchise. His successor, Fernado de la Rua, is likewise being investigated for corruption involving millions of dollars in payoffs to several senators. Four Supreme Court Justices have been forced out of office under suspicion of politicizing the judiciary, or worse. Many Provincial politicians are likewise in the news.

Police corruption is accepted as a given. Amongst other current stories, four policemen were convicted in the Jewish community center bombing, and last week a policeman was arrested following the murder of a prostitute who had leveled charges of police payoffs. The Argentine military is also under scrutiny. Three weeks ago photographs were released showing army torture training camps, apparently still operating in the mid 1990's; pretty surprising considering the trauma inflicted by the military during the Dirty War of 1976 to 1983. Meanwhile, picketers and protesters for all manner of grievances daily disrupt traffic in Buenos Aires. And believe me, there is more of this, much more, in the daily Buenos Aires Herald that I buy and read each day.

All the while that this goes on, Argentineans seem quite oblivious to the potential calamity facing them. They tango on.

I tell you all this stuff to point out how petty our problems at home really are. We are so lucky.

On the other hand, though, pink dress shirts are again (or still) making a fashion statement for men here. And thongs are very in at poolside and at the beach. I remember when thongs first appeared back home. We wore them on our feet then. And they are smaller now. Also, low rise jeans for women are reaching new lows. It's a bit like the limbo, how low can you go? But I do swear, they cannot go lower in Argentina.

Mate, a tea-like beverage, is drunk everywhere, at all times, and by almost everyone in Argentina. Mate is not a tea; it is an infusion of leaves from a species of holly. Mate drinkers pile the leaves against the sides of a round vessel, traditionally a gourd, and pour water into the void. It is drunk through a straw, often of silver, with a spoon shaped filter at the bottom. Gourd and straw are passed around and everyone has a slurp. It is very social.

Public displays of affection, love, even passion are commonplace in Buenos Aires. The first night I had my excellent dinner at La Brigada, a young couple was having dinner at the table immediately adjacent to mine. At cues only seen by them, they would both rise from their chairs, strain forward till their faces met, then eyes closed, lips and mouths working amorously, they would exchange a passionate kiss, then calmly sit down and start eating again. Maybe it's because they are Latino. Or all the red meat.

I have been somewhat surprised by the news of Canada I get in the Buenos Aires Herald. It is not unusual to have something on Canada at least twice a week whether it be about Justice Arbour's pending appointment to a UN position, the NHL hockey scores, travel information, or, as in the paper two days ago, the picture of the Spruce Grove Alberta farmer with his pet buffalo in his kitchen. So that's it for now. I hope you are all well.


Merv.