- The Washington Times - Saturday, October 26, 2002

Freer trade, not loans, offer the best hope for pulling Argentina out of the deep economic crisis the country has faced since defaulting on international loans in January, a leading Argentine businessman says.

Argentina, for its part, has to reform its economic, political and financial systems rather than look to the international community for a bailout, said Ernesto Gutierres, president of the Aeropuertos Argentina 2000, which manages 33 airports in Argentina.

Mr. Gutierres told a recent Latin American investor summit that rather than granting new loans to finance unproductive public expenditures, developed countries could help more "by eliminating the restrictions on exports from our country and, in particular, by not generating unfair competition with subsidies for the farming sector."

"The right path does not consist of asking for more loans for the public sector; it consists of demanding more trade," he said at the conference in Washington.

Argentina's economy lies in ruins, with a political stalemate blocking reforms and preventing the International Monetary Fund from providing credit.

The crisis prompted President Eduardo Duhalde to offer his resignation this week, effective May 25, 2003, which clears the way for a presidential election in March.

Mr. Gutierres said that despite the crisis, Argentina's economic potential remains intact.

"Its physical assets have not been destroyed. The job that lies ahead is the reconstruction of the judicial, political and economic institutions so that investors can regain their confidence in Argentina."

More than 50 speakers and panelists participated in the Washington conference, where officials from several financial organizations expressed optimism about Argentina despite its difficulties.

Argentina formally defaulted on its $95 billion public debt in January, forcing foreign banks to write off billions of dollars in loans and marking the biggest default by any country. Since then the country has slipped into its deepest recession since the end of World War II.

"While there are some recent encouraging signs in the great stability of economic and financial variables, the unemployment and social situation remains difficult, and a firm foundation for recovery has still to develop," said Horst Kohler, managing director of the International Monetary Fund.

The estimated unemployment rate for 2002 is 21.5 percent, up from 17.4 percent in 2001, he said.

"There are not too many people with authority in Argentina who talk to their people in honesty and transparency. Everybody has a specific interest and fights for it," Mr. Kohler said.

"I am basically optimistic. At end, it is the potential, it is the will, it is the policy which will stay the course. And I have no doubt that there can be and will be a bright future in Latin America." he added.

However, groups on both the right and the left have doubts about the effectiveness of the "Washington consensus," which generally prescribes open markets and privatization as the keys to growth.

"Globalization has turned out to be a lot harder than a lot of us thought it would be," Brink Lindsey of the Cato Institute said in an interview.

"In the early '90s, there was the sense that if you just opened your markets and stabilized prices, foreign investors would come to your door and you could enjoy rapid catch-up growth rates. And what has become painfully clear is that life is much more complicated than that."

Mark Falcoff of the American Enterprise Institute for Public Policy Research said Argentina's crisis is not only economic, social and political, but also "spiritual and cultural."

"A country of immigrants like the United States, today it seems to be a nation that, rightly or wrongly, has lost its confidence in itself and in its possibilities," he said.

Mr. Gutierres disagreed. "Some people think that Argentina is a lost cause. We feel that this is incorrect because there are multiple examples of countries that have successfully recovered after a very deep political crisis," he said.

He noted that Ireland has enjoyed economic success since changing its economic policies.

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