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- Why Argentina Went from America’s Rival to 9 Defaults: Football, Politics & Corruption explained
Buenos Aires26 minutes ago
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There are only four types of economy in the world, Development, Under Development, Japan and Argentina.
In the 70s, Nobel Prize winner Economist Simon Kuznets said this jokingly, but it became a famous one liner to narrate the situation in Argentina.
Japan also became the top rich country in the world by facing 2 nuclear attacks, while Argentina lagged behind in the race to become a superpower with the US 100 years ago.
Argentina faced such a collapse in the 20th century, which is very difficult to find a second example in history. In the last 100 years, this country has become bankrupt 7 times. There have been 6 coup here.
Argentina is rich in natural resources and is present at the world’s most important geographical location. Even after this, it has been trapped in difficulties with unstable economic policies. What is the contribution of politics, corruption and football, we will know in the story ahead…
Sell grains to Europe became the world’s food store
The vast fertile ground of Argentina is called Pampas. It is one of the most fertile grounds in the world. In the First World War, when the European countries were entangled in the war, farming and business came to a standstill. Argentina took advantage of the condition of Europe.
Wheat, meat, wool were sent to Europe on a large scale from Argentina. Argentina came to be called ‘Granary of the world’ i.e. ‘food store’. Europe companies arrived there when the money came in Argentina. He invested a lot in building rail lines, roads and ports.
Cities like Buenos Aires, Rosario and Curdoba started competing with European cities. During this time millions of migrant from Europe came to Argentina. Seeing Argentina’s progress, many experts started claiming that this country would become the next superpower with America.
Equal to European countries, destroyed by recession
According to research by historians like Angus Madison, Argentina’s GDP had become equal to European countries like Canada, Britain, Spain, Italy in 1925. Argentina had joined the world’s richest countries. But the situation was about to change in no time.
In the year 1929, ‘The Great Depression’ came to the US. This gathering rocked the economy of the world. When Europe and America decreased money, the demand decreased. Argentina started getting less orders. Argentina’s agricultural exports suddenly fell suddenly due to global trade came to a standstill.
Farmers’ income decreased, unemployment increased. The people who have been used to living a good life filled anger for the government. Army Chief General Jose Felix Uriburu took advantage of this. He arrested President Hypolito Jerigoyen and captured Rashtrapati Bhavan. Not a drop of blood in this coup.
However, General Urburu also did not improve Argentina’s condition. In 1931, the General announced the election. A new government was formed in Argentina in 1932. However, the process of coup that started continued even further.
Between 1930 and 1980, military coup in Argentina took place 6 times and governments continued to change. This instability broke the confidence of investors, damaged industry and agriculture and stopped the pace of development.
Argentina isolated herself from the world
After the military coup in 1943, the army -occupied government was formed in Argentina. In 1944, the military government seated Edelmaro Farrell as the presidency. But the real power went into the hand of Juan Peron. Peron separated the country from the world to revive Argentina from recession.
Peron imposed restrictions and high import duty on foreign trade to promote domestic industries. It got the initial benefit. Argentina’s economy accelerated and the standard of living of people improved. But in a few years, inflation and financial crisis started increasing due to decrease in imports and foreign capital.
Increased financial crisis created an atmosphere against Paron in the country. He banned the press to deal with it. Not only this, Paron also took hostility from the church. Peron enacted some laws to reduce the strength of the church and the church also openly criticized Peron. It became a major issue in Catholic Argentina.
President Paron with his wife Eva greeting the public from the balcony of the Government House. The picture is from 1950.
Government printed indiscriminate notes to run expenses
The army was initially with Paron, but as dissatisfaction spread in the country, the army distanced them. In the year 1955, the army attacked. After Peron’s departure, a period of instability in Argentina’s politics began, in which there were coup and democracy for the next two decades.
In the 1970s, governments increased spending to increase social programs, wages and repay debt, but did not increase earnings. Governments started printing unaccounted notes from the Central Bank to run the expenses.
The result of continuous printing of notes emerged in 1989 as hyperprinting, when inflation exceeded 3000%. Prices started changing daily at shops and people used to go to buy bread with bags filled with notes. Argentina’s currency peso’s trust was completely over.
In 1991, Argentina President Carlos Menem decided to connect Peso with a US dollar. The government decided that 1 peso = 1 would be US dollars. Argentina’s currency became very strong by keeping the value of Peso equal to the dollar. Argentina goods became expensive in the world due to strong currency and exports started decreasing.
It became cheaper to get goods from abroad, due to which the people of Argentina started buying a large number of foreign goods. This led to weakening local factories and industries and increased unemployment.
When the country’s dollars started to end and the economy collapsed, the government could not handle it. In 2001, the price of Peso fell rapidly. Banks became like looting and the country failed to repay the debt.
Football contributed to Argentina’s waste
From Juan Paron to later leaders, Argentina leaders used football as a means of national pride and public attention. For example, before the 1978 World Cup, the country was in dictatorship, human rights violations and economic crisis, but the government used the World Cup as a propaganda.
Argentina won the finals and people drowned in joy, while the atrocities of the army continued in the country. For the 1978 World Cup, Argentina spent about $ 700 million (Rs 6000 crore) on the stadium and infrastructure today, while the country was already immersed in debt and inflation.
Governments continued to invest heavy in football to make the public happy, but did not invest necessary improvements or industries. As a result, football gave Argentina leaders political popularity, but the country was economically behind.
Argentina football team captain Daniel Parasela with the trophy after winning the Football World Cup in 1978.
The public was also lost in the thrill of the game, and diverted attention from real problems such as corruption, unemployment. Argentina’s football craze became a powerful ‘distraction’ for leaders. The governments continued to spend unnecessarily to keep the public happy in the name of sports, and avoided the necessary economic decisions, so that Argentina could not get out of the economic crisis for a long time.
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