Latin American Report-- Chavez Targets Argentina

Tiana Perez, NewsMax.com June 2003 Editor's note: Tiana Perez, NewsMax's Venezuelan correspondent, will offer dispatches on the turmoil in this crucial and often-overlooked part of the world. See her previous articles.

Chavez Targets Argentina

June 4: Hugo Chavez's international agenda rekindled a few weeks ago with the meetings held with Lula on Brazilian-Venezuelan business cooperation and Colombian President Uribe on easing of relations between the two countries due to guerrilla control of the border.

The Venezuelan president’s latest visit was to Nestor Kirchner, recently elected president of Argentina. Kirchner, of Swiss and Croatian ascent, skipped the second round after Menem, who on April 24 surpassed Kirchner in the first round of presidential elections by 2 percent, retired from the race with 24 percent.

Chavez attended the inaugural ceremony and praised the president-elect’s aim of improving Argentines’ living standard through economic and not social policies.

Kirchner, veteran of the Peronist Party's (Partido Justicialista) center-left wing, announced in his inauguration speech that he would work to combat poverty and hunger.

Kirchner keeps close ties with Brazilian President Inacio “Lula” da Silva, who has also promised to make the fight against hunger his priority.

Argentina and Brazil are partners in the Free Trade Area of the Americas (FTAA) talks and have promised to enforce regional cooperation and negotiate trade tariffs as a regional block, Mercosur, to counter the U.S. on the elimination of agricultural subsidies.

Chavez, the only president opposing free trade in Latin American, has sided politically with Lula and now with Kirchner based on their stated goal of combating hunger. His revolutionary plan being in full swing, he does not give up his attempt to spread the bad seeds around Latin America.

The Wall Street Journal, in an article published the day after Chavez had extended his support to Kirchner, told of a Chavez-led underground movement in Argentina that follows communist ideals.

Chavez came accompanied by a cabinet member who represents the indigenes of Venezuela, in a move possibly meant to symbolize his support for Argentina’s population whose deposits have not yet been given back by the banks. Ecuadoran President Lucio Gutierrez named a representative of the indigenes movement as head of the deposit payback entity to assure his indigene support base that, if worse comes to worse, it would be one of their speakers who will take charge of sensitive measures.

Foreseeing the crossroad of Argentina, which had partially liberalized frozen deposits through a Supreme Court order in March but has not yet established the payback method, the Venezuelan president practically warned that his voice was going to be heard if the Argentine government did not do the right thing.

Neither banks nor the state own enough foreign currency in Argentina to pay back deposits at the rate at which they were acquired before the devaluation of the peso. The currency devalued 70 percent since former President Duhalde ended the peg to the dollar in 2002.

It is possible that five- to 10-year dollar-denominated bonds are issued by the state to ease banks facing the public’s demands. Unfortunately, the decreased credibility in Argentina might prove the bond issue expensive and risky. Argentina still holds a US$141 billion public debt, significantly above its estimated $100 billion GDP. The country strongly depends on the deals that it will be able to reach with the IMF, which allowed Duhalde to put payments on hold, and international investors.

Kirchner’s lack of support by the majority of Argentina’s population will possibly urge him to satisfy depositors’ demands as local elections could otherwise turn to the advantage of populist governors who oppose his proposed austerity measures and commitment to reforms.