What Happened to People in Argentina, Our 'Economic Cousin' With Endless Inflation

Talking about the economic situation is quite common among Argentines. Even the kids in Buenos Aires know what the dollar rate, the level of inflation means. Just like us! Argentina was one of the richest countries in the world at the beginning of the 20th century , even surpassing France and Italy. The country’s economic performance has declined for various reasons and has exhibited severe imbalances, especially since the late 20th century. The Argentine peso became the second most depreciated currency against the dollar in 2021. Guess which currency is the first one by far?So how did Argentina come to this situation and now what is going on in the country? One of the richest countries in the world a hundred years ago, Argentina has experienced an annual average inflation of 105% since then. Had to change currency 5 times. It was the only country that fell from the developed countries class to the developing countries class. In 2021, Argentina’s economy is again in the middle of the curse of high inflation and devaluation . It has become a more acute problem over the years. Former President Mauricio Macri kept the price of the peso and the dollar close to each other. But after the right-wing Macri lost to left-wing Alberto Fernandez in 2020, the price of the peso rose sharply. Thus, Argentina closed the highest inflation levels of the last 30 years.The Argentine government has faced challenges in tackling high levels of poverty and unemployment, and nearly half of the national workforce is thought to be employed in the informal sector.Leftist Fernandez successfully restructured the 65 billion dollar foreign debt.

Inflation is high in the country, peso continues to lose value.

Photo: AP

Argentina’s Central Bank reserves are under $3 billion. The macroeconomic outlook is worrying. 95% of the economy in Argentina is managed with a parallel exchange rate. Whatever you want to buy, from textiles to household goods, from food to technological products, is paid in exchange for the exchange rate. So if you buy a game with a credit card at a tech store, you pay it in pesos for the dollar rate. In Argentina today 1 dollar is around 102.37 pesos.

Social unrest in the country, closed schools, full hospitals, cabinet disputes and there is a deteriorating business environment.

About 70% of intensive care beds are full. While the proportion of people living in poverty was 26% in 2017, it is now 42%. According to the World Bank, although the inflation decreased a little in 2020, it was still above 40%. Argentina is a country that could not complete its political process. Wrong and populist policies brought problems by themselves (As we see examples in almost every period…)

Solutions that did not appeal to the long-term, instability in power gave impetus to this economic collapse. It is necessary to go further back for the beginning of the collapse. After the Second World War, after the successive coups, Juan Peron seized power with another coup. During this period, the country was governed by a process called Peronist Populism . There were frequent military coups during this process.

The real critical period started with the overthrow of Peron. With another coup, the administration changed hands again.

Incoming military junta administration prepared the end of Argentina in this process. An autocratic rule has started in the country. Parliament, political parties, trade unions were closed. It opened incurable wounds in the country and this situation cost the future of the whole country. First, there was a period when 30,000 people disappeared in the country under the rule of the military junta. Many dissidents have been eliminated, there are various strong theories about the death of these people. Some of these theories are; that the corpses of people were thrown into the oceans, thrown from helicopters to the ground from high distances.

The people of Argentina still lament this period. The biggest mistake made by the military junta administration was the struggle against England in 1982: Falklands War

There are many islands near Argentina, all of which are called Falklands . These islands are a strategically important British overseas territory from the British colonial era. In addition to the geopolitical position of the islands, it is very rich in oil and underground mining. Argentina landed on these lands in 1982. When Britain responded with a military action, an official war took place between the two countries for 6 weeks . With the surrender of the Argentine side, the war ended with an absolute British victory. After the war, embargoes were imposed against Argentina from many countries, especially the USA and England. Argentina’s economy collapsed during this period. With the last point of money printing, inflation rates rose to 5,000%.

The military junta administration handed over the administration to civilians again in 1983. Thus, democracy reigned in the country again: Carlos Menem Era

Nicknamed El Turco, of Syrian origin (Middle Eastern origins who immigrated to Latin America as Ottoman subjects at the beginning of the last century are called “El Turco” in this continent) Carlos Menem, in 1989 for 10 years was elected president of Argentina for a period of time. During his tenure, he came to the fore with the claim that he took bribes from global companies many times. Carlos Menem privatized all public institutions of Argentina to show his strength to his people, in order to make improvements in his tenure in a short time. There was even 7% growth in this period. However, although this privatization policy, which is an instant solution, showed benefits in a short time, the Argentine state became unable to generate any income from public institutions in the long run. The Argentine economy , which has no income from public institutions and cannot receive new investments, continued to experience a decline in the economy .

Corruption, wrong policies, global crises are already hot In 2001, Argentina, which was in need of money, had a deep crisis.

The crisis, which also caused widespread protests in the country, caused a bankruptcy in the Argentine economy.

The economic model in which the government tried to be more interventionist remained very limited. In this process, Argentina, which experienced political instability, was dragged into intense poverty with its entire population. A heavy unemployment problem emerged in the country and strikes began in many places. Argentina repeatedly requested loans from the IMF during this period. Foreign debts swept all over the Argentine economy.The poverty experienced by the Argentine people, the records in unemployment, inflation rates, the increase in foreign debts, the inability of the country’s income to meet the expenses have come to a level that can no longer be prevented. Although the IMF implements its policies to the letter, the Argentine economy cannot breathe . Argentina, which has experienced two serious economic crises as recently as 2018, is now close to losing its international image completely. In summary; The state of the Argentine people and the recent political history of Argentina gives a lesson to the world. Argentina is a secular, federal constitutional republic, currently dominated by a presidential system. Due to the coups, embargoes, political conflicts at the time, it still suffers from that period. In 2001, they struggled with a crisis like ours. Last month, the minimum wage in Argentina increased by close to 50%, as in our case, but despite the increase, salaries are decreasing rapidly due to inflation. Again, like us, they will go to the elections in 2023. It can be said that we share a very similar fate. Sources: Independent Turkish, 21. Century Turkey Institute, Wikipedia, Ministry of Foreign Affairs of the Republic of Turkey, BBC, MagazinePark,
Journal of Legislation, ResearchGate, Forbes,
Reuters