1. Martín Redrado is indeed a neoliberal economist. However, *he was appointed by former president Néstor Kirchner*. Furhtermore, Kirchner´s preferred candidate to replace Redrado was Mario Bleger, a long-time IMF bureaucrat and former CB president under the transitional post-crisis Duhalde admninistration. Nobody doubts Bleger´s neoliberal pedigree.

Bleger was also the preferred candidate for CB president of the current Economy Minister, Amado Boudou. Boudou, by the way, is another orthodox economist who received his graduate degree from the ultra neoliberal CEMA, where he eventually also taught. Furthermore, Bleger is also an advisor to Boudou.

All of this is to say that the battle over the Central Bank is not a battle against neoliberalism, which is alive and well in Argentina, it is a political power struggle.

2. The main issue with how the President fired the CB president is that she did it by decree when the current Argentine legal framework says that it is the Congress´s prerogative to do so. In other words, the president completely disregarded the legal framework. As with the conflict over export taxes mentioned by Kevin, the President could have avoided a major political embarassment had she chosen to act in a more politcally savvy way and respecting the institutions. Te be sure, institutional disrespect has a very long history in Argentina, but the Kirchner´s have done nothing to undo that.

3. There is much debate in Argentina surrounding what is the actual level of CB international reserves. While 48 billion is the number generally used, the actual number depends on what is included in the reserve count. Actual reserves could be a lot lower than 48 billion.

This is relevant because the amount assigned to the “Bicentennary Fund” (more on the name later) is based on a calculation derived from the total amount of reserves (which is subject to debate). The calculation essentially says that CB reserves must be enough to back up the monetary base (at the current exchange rate), and anything beyond that is to “freely disposed of”. The amount to be freely disposed of is unkown if the actual level is unkown. (Aditionally, potential exchange rate fluctuations could have an impact on this number, yet no provision is made for that).

Incidentally, this “concept” was introduced in the last reform of the CB charter, in order to be able to pay off the IMF, another “progressive” measure of the Kirchner administration: reward the IMF with full payment three years in advance, who undoubtedly shares a substantial part of the blame for the colossal failure of the convertibility regime. Remember that private creditors who entered the 2005 debt swap experienced a 50% “haircut”.

4. The stated objective of this fund was that it was to be used to pay Argentina´s public debt. This was supposed to “send a signal” to international financial markets so that Argentina could re-gain access to international markets in order to meet debt service payments this year and next.

This is problematic for several reasons. First, it shows that the government´s main priority, just like the neoliberal governments before it, is to pay the debt. Rather than using excess reserves (once their true level has been ascertained) for development purposes, or for eliminating hunger, the goverment prioritizes paying the debt. Second, it also shows that the sustainability of the current debt load is once again becoming an issue. In other words, Argentina appears to not have overcome its debt problems, so characteristic of the neoliberal era inaugurated with the military dictatorship of 1976.

This is what makes the name of the fund so scandalous. It is named in honour of Argentina´s bicentennary, and yet its purpose is to continue Argentina´s enslavement to international financial markets and the neoliberal logic that it entails.

In sum, while official rhetoric may have changed from that of the 1990s, the economic model still operated largely under the neoliberal logic.

When (the then) Minister Lavagna negotiated the default in 2004 some 30%+ of bond holders held out against the offer. Since then pressure groups (some formed by ex-Clinton economic team executives) fronting for Vulture capital firms (who bought out hold-out bonds) have taken the country to court in the World bank ICSID court. These lobbying firm which claims to represent Italian pension funds is called Task Force Argentina and operates in both the US and Italy. You can read about the suit in my investigative article on same in Americas Policy (.org).

Someone has convinced the government that it is a good idea to settle with the hold-outs. Could this be an unfortunate down-side of G-20 membership? President Fernandez de Kirchner is not as yet willing to consider the alternative of facing off to the markets by launching an audit on Argentine public external debt as did Ecuador much of which is by definition illegitimate.

Argentina’s president finds herself caught between the rock and a hard place. It should have been evident that vastly spiking loan repayment costs would lead to this kind of drastic measure but long term planning and politics often drag policies in different directions.

It will be an interesting few months here.