JANUARY 21, 2002
INTERNATIONAL BUSINESS/Online Extra
Carlos Escudé is no newcomer to controversy. As an adviser to
ex-President Carlos Menem in the early 1990s, the Yale-trained
political scientist was the intellectual force behind Argentina's
end to 50 years of nonstop confrontation with the U.S. and the
start of an era of automatic alignment. The foreign policy coup
was as dramatic as it was at first unpopular to the normally proud
Argentines, who even coined a phrase to describe their newfound
love affair with the yankis: carnal relations.
Q&A: "On the Edge of a Total
Influential Argentine intellectual Carlos
Escudé says the country's new leader faces a "no-win situation"
However, new President Eduardo Duhalde placed the future of carnal
relations in doubt with the adoption of a populist economic program
designed to disarm a ticking time bomb of social tensions. In
a conversation with Buenos Aires-based Argentina Correspondent
Joshua Goodman, the always outspoken Escudé shares his polemical
views on the future of Argentine-U.S. relations and the competing
domestic and international pressures facing Duhalde. Following
are edited excerpts of their conversation:
Q: In light of the protectionist measures announced by Duhalde,
what shape will relations between the U.S. and Argentina take
in the near future?
A: You're asking me to look into a crystal ball. Unfortunately
we don't know how relations will evolve. A lot depends on the
U.S.'s reaction to Duhalde's announcements and the President's
counterreaction. Were the U.S. to more vocally defend its legitimate
economic interests, then it's very likely Duhalde would choose
to confront the U.S. rather than risk angering the Argentine public.
But history has shown that this will put us on a collision course
to financial isolation, something disastrous for any economy today.
So this is really a no-win situation. Either he caves into foreign
pressure and backtracks on his promises, with the huge risks of
social chaos and anarchy that this implies, or he appeases the
U.S. and faces the certainty of financial isolation. At the best
we're threatened with instability for some time.
Q: Can anything be done to avoid the breaking point?
A: If Duhalde is extremely careful and foreign reaction is
moderate, then this balancing act could go a long way. It won't
be good for Argentina in the long term, but in the short term
it can stabilize the country socially and politically. But if
foreign pressure is greatly felt, than I'm afraid we're headed
for a nightmare.
Q: How much of a populist really is President Duhalde?
A: It's a big misconception to call Duhalde a populist. Ideology
has nothing do with it. If anything, he's a pragmatist because
he knows the country is on the edge of a total breakdown and that
his own survival until elections in December, 2003, is far from
assured. If we're isolated economically and financially, then
the consequences will be felt a lot sooner
Q: What sort of consequences?
A: We would be deprived of everything from foreign medicines
to essential imports needed to maintain our telephone systems.
The Argentine middle class is very much part of the 21st century
technologically. But they could be thrown out of it very rapidly.
Personally, I will have to get a credit card from a bank based
in the U.S.. Otherwise I wouldn't be able to make any purchases
on Amazon. Imagine that: It would be a complete tragedy for the
Q: Isn't there a chance that he could end up like Menem, who
was elected on a populist ticket only to reverse course once in
A: If that were true, then what you're essentially saying
is that Duhalde is a liar. And that's the last thing society will
tolerate right now from its politicians. It's too late to disregard
what the public wants. Plus, whatever similarities he may have
to Menem, it's worth remembering that Menem's first economic policies
were in convergence with U.S. foreign policy, while Duhalde's
are completely opposed.
Q: Do you then consider Argentina's collapse a huge failure
for U.S. foreign policy?
A: It most definitely is. But that doesn't take away Argentina's
responsibility for getting itself in the mess in the first place.
Q: What will be the consequences for U.S. foreign policy in
A: It's still too early to say for sure. But the Free Trade
of the Americas initiative is for now dead. And if Duhalde is
skillful to get away with this delicate balancing act long enough,
then it will definitely increase the temptation for Brazilians
to elect left-leaning presidential candidate Luis "Lula" Inacio
It will also give an excuse for undemocratic voices in Latin America,
like Venezuelan President Hugo Chavez or guerrilla groups in Colombia,
to further their agenda. If you engage in some exercise of political
fiction, then there's no limit to the fallout. If things really
run afoul here, then the Bush Administration could be credited
with losing South America for the free world.
Q: Will the rupture of relations with the U.S. automatically
push Argentina further into bed with Brazil via the Mercosur trade
A: Definitely yes. By itself, Argentina is insignificant on
the world stage. And since they have to be a satellite of someone,
then Argentines would much rather be a satellite of the world's
most powerful nation. But the truth is, the U.S. isn't interested
in making Argentina by itself an integral part of its economic
strategy, so we have to accept Brazil.
Q: Politically, how difficult will it be for the government
to refrain from printing money and control inflation?
A: I'm very skeptical they'll execute any restraint at all.
For pragmatic reasons, these people will rely on organized labor
for political support. And as soon as labor leaders start demanding
raises [to counter] inflation, the government will turn on the
Argentina is famous for its corruption, but people forget that
printing money is historically the shape corruption has taken
here. At least in times of monetary responsibility, the amount
of money you can make from corruption is severely reduced.
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