Yesterday, Argentina resoundingly rejected Macri's neoliberal austerity program at the polls, in yet another blow to the IMF and Latin America's billionaire class. Alberto Fernández is no radical, but recent declarations about the “receding” Pink Tide were clearly very premature.
My sense is that, with the exception of the financial press, the int'l media are underestimating the depth of the Argentine crisis. The IMF disbursed its biggest-ever bailout loan to the country just 1.5 years ago. Now the entire program is coming undone. ft.com/content/5cfe7c…
It's now clear to all involved that there will have to be a far-reaching restructuring of Argentina's debt—but as a senior creditor the IMF refuses to write down its own holdings. So will Argentina once again force private investors to take a big cut? This would be a big deal.
Especially if you consider that the international environment is very different today than it was when Kirchner first restructured the debt in 2005. The world economy is slowing down, demand for commodities falling. It looks like Fernández may have been handed a poisoned chalice.
If anything, his predicament reveals the limits of the Pink Tide experience: Latin America's left-wing governments successfully redistributed the spoils of their commodity exports, but failed to move away from (and often even doubled down on) an extractivist economic model.
Now that the so-called commodity super-cycle has drawn to a close, this redistributive extractivism will no longer work the same miracles. So the Latin American left will need to develop a new and transformative economic model to break out of its dependence on commodity exports.
