Following
a year in Madrid, one can really appreciate the order, the food, the relative
cost and its size; it is a marvellous place which aesthetically resembles the
Argentina’s, Buenos Aires. There’s no
doubting that more similarities exist, but following my immediate arrival in
the Argentine Capital from Madrid, the differences seem far more apparent.
One
has to appreciate the order which being part of the European Union (and the
Euro) provides, although the currency Union is looking more fragile than ever
before, as Spain is a marvellous country which I will return to, albeit for
three hours following my return to Dublin from Buenos Aires, but certainly again
in the future. The reason why I
highlight the stability provided by the Euro is for the simple reason that from
my first moment in Buenos Aires the difficulty in making a rudimentary payment
of rent is hindered by the landlord’s unwillingness to accept payment in
anything but dollars. I was acutely aware
of the government imposed difficulties – which attempt to reduce the dependence
on the dollar – prior to my arrival however; I could not have envisaged the
scale of such problems and paranoia throughout the Capital.
I read
an article in the economist
highlighting Argentina’s protectionist policies which required the high-demand
mobile phone the Blackberry to be produced in Tierra del Fuego, in the very
south of the country. I recall thinking
at the time that the effects for Argentine consumers would be the inflation of prices
for a luxury good (could this transcend across the economy as a whole), an
economy which is continuously trying to become more independent (almost
autarkic measures being imposed) and an unstable economy run by an ineffective
government.
The
last point was confirmed this year as Argentina’s populist Peronist party (lead
by Cristina Fernandez) attempts to reduce the use of dollars as the reserve
currency making it illegal for Argentines to get dollars, meaning an
ever-increasing black market. This
policy might be seen as effective for increasing the use of Argentine Pesos,
but when the prices of renting and purchasing property, for example, are quoted
in dollars, life becomes that bit more complicated. I performed a check on the RE/MAX (real
estate agency/realtors) website and from what I have seen the majority of
properties for rent/sale were quoted in dollars, creating great difficulties
for the purchase of property by an Argentine national. A recent conversation with some friends, (a
couple; one Argentine, the other American) gave me a clear idea of the
predicament facing locals. There exists
a considerable nexus between the treatment of nationals by nationals and the
treatment of those from the United States or ‘Gringos’. Whilst looking for an apartment, the
Argentine rang numerous agencies repeatedly, to be fobbed off…repeatedly. Eventually, the American attempted and as he
described it, he ‘rang the same agency using his crudest Span-Americano accent
and he was treated like a King’.
Latin
America has oft been referred to as the United States’ backyard. John
Pilger has produced many documentaries on the treatment of Latin American
countries by the hegemonic power that is the United States. However, the attitude portrayed by Argentine
nationals towards other nationals leads me to consider the self-perpetuity of
the United States rise through different invasionary policies over the years,
as demonstrated in this documentary with John Perkins and his take
on Globalization. Equality within a
State is no bad thing, but prioritization of non-nationals over national’s goes
against what Kirchner is attempting to do.
Her policies have now put a premium on anybody who has direct
access to dollars or foreign currency for that matter, as confidence in the
Argentine Peso diminishes.
Recently
walking down Florida a popular tourist street in the Centro of Buenos Aires, I
was quoted 5.7 pesos per dollar; the actual exchange rate is 4.5. This is the black market, and men ranging
from suited to street gear offer generous exchange rates. Although appealing, one should be careful as stories
about robberies are well known, while there appears to be a police present
within ten metres of each person offering an exchange. As tempting as an inflated exchange rate may
appear, the risks are far too great.
One
has to be concerned for the Argentines as their access to the widely accepted
reserve currency becomes more difficult; foreigners (not only those from the
US) have greater opportunities within the South American State. Baffling as it may seem, it’s true. There is widespread anger in Argentina as
inflation is soaring once again.
According to tradingeconomics.com, Argentina had an inflation rate of
9.9 per cent in May 2012, as Clarin a daily estimates that overall inflation
for 2012 could reach 30%. In a recent
conversation with a Peronist (a pro-Christina Kirchner) in response to the high
predicted rate of inflation, he stated that “¿qué economía ha crecido sin
inflacción? / What economy has grown without inflation?” A valid point, but such levels of inflation
are unsustainable at best, at worst the economy will once again come grinding
to an ever so tragic halt. The rise in
prices has been moderately reflected with rises in wages, but it is nowhere
near sufficient for the rate to remain sustainable.
Argentina
is embarking upon unstable economic policies once again, creating uncertainty
and difficulty throughout the Republic. Since
my arrival I have been shocked by the price of normal goods, which in a many
cases surpass those of Madrid. It is
evident that the monetary policy is creating problems for business owners; for many
the crisis of 2001 is still fresh in the memory. Prices are on an upward trend and looking at the
price of one good: coffee, for example, prices are twice, if not three times
those of a similar coffee shop in Madrid, surpassing those of Ireland also. Considering
the proximity to the crop it is a clear demonstration of the crippling tariffs
imposed upon imports.
What
I have listed above is a brief outline of some perceived problems faced by
Argentines and the economy but there is something else that I have noticed
since my arrival in the tango capital and that is paranoia…
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