07 Oct 2012 | Tony Leon | Original Publication: Financial Times
Argentina is heading, and not for the first time, over an economic cliff as the population races to dump pesos for dollars and a zealous government fights back through draconian currency controls, manipulating economic data and import-suppression measures.
At the UN Ms Kirchner hit back at Christine Lagarde, IMF managing director, who had threatened to “red card” Argentina because of its fudged national statistics. Invoking “sovereign independence” to justify Argentina’s outlier behaviour, Ms Kirchner sounded like the vanquished white president of yesteryear whose UN representative encouraged the world “to do its damnedest”, which it duly obliged to do.
A crucial difference is that Ms Kirchner received an emphatic democratic mandate in October last year, something no pre-1994 South African government ever won. And Argentina’s president is hardly alone among political leaders in displaying symptoms of political hamfistedness.
South Africa, whose $400bn resource-dependent economy almost exactly matches Argentina’s, also received its own yellow card from Moody’s in September when its government bond rating was downgraded one notch. The rating agency cited concerns about political stability amid labour unrest and socioeconomic stresses. In South Africa there is much talk about nationalisation. In April, Ms Kirchner seized control of the oil company YPF from Spain’s Repsol. In both cases, the effect on foreign investment is chilling.
The writer is the former South African ambassador to Argentina