By Patrick Reilly
October 18th, 2016
On October 18th, Argentina’s ambassador to the United States, Martín Lousteau, visited the University of Chicago’s International House to discuss the political and economic challenges facing Argentina. This South American country has struggled to recover from a serious financial crisis in 2001; since taking office in December 2015, President Mauricio Macri has been working to spur growth by implementing free-market reforms. In addition to economic challenges, Argentina’s leaders must continue to deal with the legacy of the brutal dictatorship that ruled the country from 1976 to 1983.
An economist by training, Lousteau has a unique perspective on his country’s politics, having held a number of positions in Argentina’s private sector and government, including as Minister of Economy and Production of Argentina, as a Member of the Argentine Parliament representing the city of Buenos Aires, and, most recently, as a candidate in Buenos Aires’s 2015 mayoral election, in which he received 48.4 percent of the total votes.
Before the event, Lousteau spoke with Global Voices Interviews Editor Patrick Reilly about Argentina’s politics and its relationship with the United States.
Global Voices: When President Obama visited Argentina in March 2016, his visit to a memorial for the victims of the military government drew criticism from the Madres de la Plaza de Mayo and other human rights groups. Did that controversy affect your work as Argentina’s ambassador to the United States?
Ambassador Martín Lousteau: No, actually, I would say that what drew some controversy when President Obama visited Argentina was the issue of the date, because he visited on the occasion of the fortieth anniversary of the military coup d’etat that took place on March 24 in 1976. We perceived—and I think that Argentine society at large perceived this—that President Obama was an heir to Carter’s administration. But Obama’s administration, before the trip to Argentina, decided to declassify documents related to that era in Argentina, and then he paid his visit to the Parque de la Memoria. I was there that day. And I thought it was a very moving moment. And I don’t think that that was misinterpreted at all by Argentine society, and I don’t think it was misinterpreted at all by human rights organizations. I spoke to some of their members, and to people that were the victims of state terrorism—people who are a bit younger than me, who were misappropriated—and they had mixed feelings about that visit. But they thought that the fact that they were visiting the Parque de la Memoria was a very strong signal.
Global Voices: Did these people think that there is anything beyond the declassification and the visit to the memorial that the United States can do to heal its relationship with Argentina?
Lousteau: Some of the human rights organizations, and particularly people who were the victims, they felt—and that was one of the questions that President Obama had faced when he was in the press conference with President Macri—that there should be some kind of mea culpa from the United States regarding the policies of those years.
As for the declassification effort, now it’s going to be taking place in four tranches. We already received the first one when Secretary Kerry was in Argentina. That’s the part that was easiest to declassify, but we are waiting with expectations for the next tranches. We hope that the next declassification takes place before year end, and the next one following that by next year. Of course, Argentina’s struggle for memoría, verdad, y justicia—remembrance, truth, and justice—is a struggle that started when we recovered democracy, and it’s a struggle that continues. We hope that the documents that are going to be declassified can give us further evidence to strengthen the pillars of the human rights policies of Argentina.
Global Voices: The last time that an American president visited Argentina was in 2005. During that visit, President Bush’s proposal for a Free Trade Area of the Americas was denounced by then-Argentine president Néstor Kirchner, Hugo Chavez, and other Latin American leaders. At the time, you were minister of production for the province of Buenos Aires. How did you view Bush’s proposal?
Lousteau: In order to understand some of the views that Argentina has on trade, we have to take into account what happened in 2001. Argentina endured a crisis that was similar to the Great Depression. Argentina endured a depression starting in October 1998 that lasted until May 2002. We experienced deflation first, then we experienced mega-devaluation, with the mega-devaluation a spike in inflation, and we suffered 24 percent unemployment, and over half of the population was in poverty.
Some of that was perceived by the population to be related to Washington Consensus pressure, to openness, particularly financial openness, but openness to the rest of the world. And the 2001 crisis was extremely painful. Remember that we had people being shot, and we had that year alone over twenty people killed. Argentina’s one of the countries with the largest anti-American sentiment, and it’s very hard to understand that unless you put yourself in the position of a society that suffers so much. So I understand—even though because of my training, and because of the way I think about my own country and the role of Argentina in the world, even though I don’t agree with the way that this was shown back then—I understand why the issue of liberalization, of trade and finance, was such a sensitive issue in Argentina back then. I think it still is.
Global Voices: On that topic, President Macri has gained a reputation as a moderate free-market reformer. But a lot of Argentines are opposed to his policies. For instance, when he removed the government’s utility subsidies in July, there were widespread protests. Do you see a way for President Macri to make Argentina more business-friendly while easing the pain that some of these reforms could bring?
Lousteau: First, I think that Argentina is already more market-friendly because many of the things that Argentina was experiencing from an economic policy point of view could be considered pathologies anywhere else. I think that removing and doing away with those pathologies would be an important first step. Then we have to take into account, I would say, two issues that are very important. The first one is that the current administration inherited what I call a Bermuda Triangle: you had misaligned relative prices—that is, a dual exchange rate—plus the tariffs in energy, gas and electricity lagging behind. For twelve years, we experienced inflation, and tariffs were frozen. So that’s one of the vertices of this Bermuda Triangle, the second vertex being that we were at a fiscal deficit of almost 5 percent of GDP. And the third one is that we were experiencing stagflation, so there was no growth in the economy and very high inflation. Any of the three things you wanted to solve would affect the other two. If you do away with a misalignment of relative prices, that would fuel inflation in the short term. That implies that relative wages go down. That’s one part of what I would like to highlight.
The other part is that Argentina experienced lots of crises in the past, but this time, the crisis was averted in time, because we had very timely elections for president in 2015. So Argentina was headed towards a crisis that did not happen. Usually crises imply massive amounts of redistribution of wealth. And the story of Argentina’s inequality increasing in the last forty years is the history of our financial crises. On the other hand, when you’re not faced with a crisis, the will or support for reforms and the necessary measures is much less. So that’s a situation that we are experiencing. So everything that you need to amend is costly, the support for that is less clear, because the evidence on where you are heading is less clear.
But still, President Macri’s current approval ratings are above fifty percent. I would say that by not only Latin American standards, but also by world standards, that’s pretty high, particularly considering the things he is facing and the things he has to do.
Global Voices: The American media has made a lot of comparisons between Juan Perón and Donald Trump. Do you see many similarities between those two figures?
Lousteau: No, I don’t see many similarities between those two figures, and I’m not allowed to comment on United States politics.
Global Voices: Are you allowed to tell us how Argentines are viewing the US presidential election?
Lousteau: I would say the following. First, Argentina is the country furthest away from the US in the whole continent. We don’t share a border with the US, and we don’t have any free-trade agreements with the US. So I see that some of the countries that have these issues are much more concerned than Argentines are. The second reason being that Argentina has work to do on its own. And I would say that the destiny of Argentines and the future of Argentines depends a lot more on Argentines than on what happens in the rest of the world. Having said so, there are, of course, many friends and colleagues and analysts and people who are very concerned about some of the issues that are being talked about in the US electoral process. Not only are they worried about the things that one of the candidates says, but also the turn that the whole election has taken. Because many people who follow these things closely don’t see that there is any substance being discussed.
Ambassador Lousteau visited International House as part of the Diplomatic Encounters Series, co-sponsored by the Global Voices Lecture Series, the Institute of Politics, the University of Chicago Diplomatic Encounters Series, the Center for Middle Eastern Studies, and the Consulate General of Argentina in Chicago.