Enrique Iglesias

"Argentina will not drag down everyone else"

A combination of lax internal fiscal discipline, an abrupt halt to financial capital flows, and a plunge in the prices of raw materials were the determining factors in Argentina's acute financial depression, Enrique Iglesias, President of the Inter-American Development Bank, told Tierramerica.

By Néfer Muñoz

In the last few years, Argentina was one of the countries that most closely embraced the policies of the IMF. What is the lesson of its debacle for Latin America and the world? Should we follow orders or rebel?

I think we need to practice discipline, without a doubt. What happens is that in the practice of discipline, mistakes can be made or other shortcomings can occur that later on can provoke a crisis like the one Argentina is facing. I think there was discipline, but it was not complete, particularly on fiscal issues. The Argentine exchange system required very strict discipline, which was lacking. This partly explains the critical situation in Argentina. On the other hand, the world did not respond to the flows of capital. When there is any unfavorable expectation, a sudden halt to capital flows takes place. That is what happened to Argentina in the year 2000. In addition, the plunge in commodity prices affected the country severely in 2000 and 2001.

In reflection and as self-criticism, what responsibility do you think the international financial institutions had in the Argentine crisis?

The responsibility is generalized. Not only when it comes to Argentina. I think our responsibility is basically to accompany and advise countries. And above all to have anti-cyclical policies. What we can't afford is to be pro-cyclical.

So Argentina was well advised?

We are all generals after the battle. Today, judgements are being made in hindsight. We need to place ourselves in the moment in which the phenomenon took place in order to reach a conclusion.

Why have the lending institutions treated Brazil and Uruguay differently than Argentina?

They are not being treated differently. The treatment is in accordance with the specific problems of each country. The differences are due to the circumstances of each one.

Do you think there might be a domino effect in the rest of Latin America?

No. I think at this point in time, countries and the international community are mature enough to avoid the domino effect.

Even though the president of the United States is not participating in the Summit, the agenda is clearly marked by the dictates of the world's main superpower. What real power does the UN have?

The fundamental objective of this type of conference is to awaken the critical conscience of humanity. And that has been achieved. That does not mean that all of the world's big disagreements would be solved here. A country like the United States, for example, has viewpoints that are very different on some issues. But I think that the fact that this Summit actually took place and there was dialogue is quite an accomplishment for the United Nations. The system never operates with hopes of immediate accomplishments, but by gradually moving towards achievements based on general consensus. Today the world is better than it was 10 or 20 years ago in terms of international accountability. (End)