Argentina, the Church, and the Debt

Article excerpt

By the mid-1990s, Argentina appeared to have overcome decades of stagnation and inflation. It did this through a series of dazzling economic reforms under the guidance of the International Monetary Fund (IMF) that were held up by many as the gold standard by which reforms in emerging-market economies were to be judged. President Carlos Menem was invited to address the annual meeting of the IMF and the World Bank in October 1998, an honor accorded him by these institutions out of admiration for reforms put in place during his administration. Argentina privatized state enterprises, liberalized international trade, put its banking system on sound footing, vanquished endemic inflation, attracted back Argentine capital formerly shipped abroad, stimulated the creation of domestic credit markets, and created a sense of optimism in the investing public that had been all but forgotten for most of the twentieth century. Gains were also made in most social indicators, showing that growth and the reduction in inflation had generated broadly shared benefits. The number of urban Argentines living below the poverty line declined from 40 percent of the population in 1990 to 22 percent in 1994 before rising again to 29 percent by 1998, the year that gross domestic product (GDP) peaked. (1) Infant mortality declined. Primary school attendance reached 100 percent. (2) In short, in the 1990s the country was the "poster child" of the Washington Consensus and its free-market-oriented policies.

The 1998 celebrations, however, were premature. The debt crisis of 2002 and its chaotic aftermath transformed Argentina from the "darling of emerging-market finance to the world's leading deadbeat." (3) The social impact of the crisis was brutal. After several years of a grinding recession, the Argentine economy plunged by 11 percent in 2002 and unemployment doubled to almost 30 percent of the workforce, a figure comparable to unemployment levels reached in the United States during the Great Depression in the 1930s. The cumulative fall in GDP in Argentina was on the order of 20 percent from its peak in 1998, greater than output declines in Russia or in any of the Asian economies except Indonesia during similar financial crises in the late 1990s. More than one-half of the population (58 percent) were thrust below the poverty line and many of these fell into indigence. (4) In an atmosphere of political turmoil and social resistance, five different Argentine presidents held office in one brief interval of a few months. (5)

This essay evaluates the Argentine crisis within the moral framework of Catholic social teaching on the debt problems of poor countries. The rationale for examining Catholic social teaching is, first, the fact that Argentina is (nominally) a predominantly Catholic country in which the Church has intervened in political affairs. The Argentine Church has had a long history of antagonism toward the Peronist party, and some members of the Church hierarchy were openly favorable to the brutal military regime that ruled Argentina from 1976 to the early 1980s. (6) Nevertheless, during the period of the recession and the debt crisis in 2001-2002, opinion polls consistently ranked the Church as the most credible of institutions in Argentina. (7) Indeed, Church leaders increasingly expressed their views as the crisis deepened and, I will argue, those views were heard. Second, Rome and the broader hierarchy of the Church, dating back to the 1980s, wrote extensively on moral and ethical aspects of Latin America's debt crises during the infamous "lost decade of the 1980s." While the framework they developed at that time reflected the issues of the day, the Church's teaching was intended as a permanent guide to moral and ethical behavior for all participants (creditors and debtors, governments and private citizens) for use in future crises, and it was specifically worked out in the case of Latin America.

Thus, the essay seeks to bring together and interpret the Church's teaching in the light of the particular economic and social circumstances of Argentina in the early 2000s. …