For Argentinian Delegation, Nation’s Rocky Financial Road Leads to Rome

COMMENTARY: Argentina is a rich country that has made itself systematically poorer for a century, not due to war or natural disaster, but by generations of failed leadership.

Pope Francis exchanges gifts with Argentina Republic President Alberto Fernández and his domestic partner Fabiola Yáñez during an audience at the Apostolic Palace on Jan. 31 at the Vatican.
Pope Francis exchanges gifts with Argentina Republic President Alberto Fernández and his domestic partner Fabiola Yáñez during an audience at the Apostolic Palace on Jan. 31 at the Vatican. (photo: Vatican Pool/Getty Images)

It’s Argentina week at the Vatican.

While Argentinians still ask about when Pope Francis will make his first visit home, there is no doubt that he is paying close attention to the latest economic disaster to hit his country.

On Jan. 31, Argentina’s newly-elected president, Alberto Fernández, made his first visit to Pope Francis. That meeting produced a minor embarrassment when the Holy See Press Office released a statement that the Pope and president had discussed abortion. The president promptly said that they didn’t. The Holy See conceded that their original press statement was not accurate.

This week, the Pontifical Academy of Social Sciences, led by Argentinian Bishop Marcelo Sánchez Sorondo, hosted a seminar on international economics entitled “New Forms of Solidarity: Towards Fraternal Inclusion, Integration and Innovation.”

The Holy Father addressed the seminar himself, and participants included the head of the International Monetary Fund (IMF), Kristalina Georgieva, and Argentina’s new finance minister, Martín Guzmán.

 

Argentina on the Brink

Those two held their first bilateral meeting while in Rome, as Argentina needs to restructure $100 billion in sovereign debt. In 2018, it required a $57-billion bailout from the IMF just to stay ahead of its creditors.

Argentina is in a steep recession — the economy is expected to shrink for the third straight year — and inflation is running at more than 50%. The kind of austerity measures usually required to pay back such high levels of debt are not feasible in Argentina. Either Argentina secures some sort of debt relief or forgiveness, or it will default.

Argentina is the great delinquent of sovereign finance, needing some 30 relief packages from the IMF over the years; the 2018 bailout was the largest ever in IMF history. Not that the bailouts have helped much; Argentina has defaulted on its sovereign debt an astonishing eight times, including the mammoth $100-billion default in 2001.

It is to be expected that the first Argentinian pope would give special attention to Argentina. Given that Cardinal Jorge Bergoglio had traveled minimally before his election as pope — he had never been to the United States, for example — it is the Argentinian economic experience that led him to his popular diagnosis that “this economy kills.”

 

A Century of Decline

It is important to understand how unique Argentina is in the global economy. It is a rich country that has made itself systematically poorer for a century, not due to war or natural disaster, but by generations of failed leadership.

There is a (disputed) quotation attributed to the Peruvian novelist and Nobel laureate Mario Vargas Llosa:

“There are countries that are rich and countries that are poor. And there are poor countries that are growing rich. And then there is Argentina.”

There are no other countries like Argentina. In 2014, The Economist ran a feature on Argentina, “A Century of Decline.” The figures are startling:

In the 43 years leading up to 1914, GDP had grown at an annual rate of 6%, the fastest recorded in the world. The country was a magnet for European immigrants, who flocked to find work on the fertile pampas, where crops and cattle were propelling Argentina’s expansion. In 1914 half of Buenos Aires’s population was foreign-born. The country ranked among the ten richest in the world, after the likes of Australia, Britain and the United States, but ahead of France, Germany and Italy. Its income per head was 92% of the average of 16 rich economies. From this vantage point, it looked down its nose at its neighbors: Brazil’s population was less than a quarter as well-off.

It never got better than this. Although Argentina has had periods of robust growth in the past century — not least during the commodity boom of the past ten years — and its people remain wealthier than most Latin Americans, its standing as one of the world’s most vibrant economies is a distant memory. Its income per head is now 43% of those same 16 rich economies; it trails Chile and Uruguay in its own back yard.

And it has gotten worse since 2014. In 1929, when Pope Francis’ parents emigrated from Italy to Argentina, it was roughly as wealthy as Canada, which is why it attracted so many immigrants. Jorge Bergoglio would grow up to become a “bishop of the slums,” admired for his pastoral closeness to the slum-dwellers. Had the Bergoglios emigrated to Canada, Cardinal Bergoglio could not have become a “bishop of the slums.” Toronto, for example, does not have the slums that Buenos Aires does. And Argentina didn’t, once upon a time.

 

An Argentinian View of the Global Economy

Pope Francis delivered a very pointed address to the Vatican economic seminar, calling for the world’s “top 50” richest individuals to eliminate child starvation globally. He inveighed against tax shelters and unpaid taxes, which he argued denied the poor the government services and economic assistance they need. And, without specific reference to Argentina, he addressed the problem of indebtedness. His emphasis was not on the bad governance that produced the latest debt crisis, but on the need for debt forgiveness now.

“Poor people in heavily indebted countries bear overwhelming tax burdens and cuts in social services as their governments pay debts contracted insensitively and unsustainably,” Pope Francis said. “[Debt repayment] can become a factor that damages the social fabric.”

The view from Argentina might explain the economic assessment of global conditions in the Holy Father’s speech. Pope Francis claimed that “the poor increase around us” and that “the poor are always poorer, and today they are poorer than ever.”

Global economic data suggest that extreme poverty has been falling rapidly and that it is at its lowest level ever, less than 10% of the world population.

Indeed, the Millennium Development Goals on poverty reduction, set in 2000, aimed to cut extreme poverty levels in half from 1990 levels by the year 2015. It met the target in 2013.

“The Millennium Development Goals are the most successful global anti-poverty push in history,” states the United Nations on its MDG website. “Governments, international organizations, and civil society groups around the world have helped to cut in half the world’s extreme poverty rate. More girls are in school. Fewer children are dying.”

Poverty is not eradicated, of course. Reducing extreme poverty still leaves plenty of actual poverty. Inequality is a related phenomenon but not exactly the same. Nevertheless, there is actually plenty of good news since the millennium on the global development front.

But not in Argentina. There was a severe crisis in 2000. There is another severe crisis now. But the whole world is not Argentina, even during Argentina week at the Vatican.

Father Raymond J. de Souza is the editor in chief of Convivium magazine.