USA, IMF and economic crisis in Argentina (2001 - 2004)

This paper analyses the position of G.W. Bush administration regarding the international financial aid for Argentina during the regional economic recession of 2001 - 2004. At this time the Republican administration was trying to maintain a new stricter approach to the lending mechanism of the International Monetary Fund. According to this pragmatic concept, the IMF should have decreased both the amount and the size of loans, which could be approved only for those countries that had already begun to take necessary economic measures. After intensive negotiations, the USA approved an IMF loan for Argentina in August 2001, but the inadequate nature of this loan, which was too small and neglected one of the key problems of the Argentine economy, evidenced that the Bush team was not seriously concerned about the possible regional dissemination of the crisis. In light of the 9/11 terror attack and the following preparations for the war in Afghanistan, the USA adopted a ''wait-and-see'' attitude and were not willing to authorize a large-scale aid package for Argentina. After the Argentine debt default in December 2001, the Bush administration faced criticism from both Latin American countries, which blamed it for the disregard of the regional welfare and stability, and the US Congress that called for a more consecutive and moderate policy concerning IMF loans. From 2003 to 2004 the main disagreement point between the IMF and Argentina was the problem of interest compensations to private investors. The Bush administration became a mediator in these negotiations. Moreover, it changed the traditional American strategy and supported not the international investors, but the left-wing Argentine government, whose priority was performing its social commitments. This change can be explained by some factors. First of all, the USA tried to bring Argentina on their side in the context of the changed political landscape in Latin America, as well as the raise of anti-Americanism and hard talks on the Free Trade Area of the Americas and the Doha Round (WTO). The enhanced regional partnership became especially important for the Bush administration due to the global war on terrorism and the preparations started for the Iraqi war. Besides, the Bush neoliberal economic team was eager to reinforce the new approach to financial crises prevention, when investors would bear full responsibility for their risks. Thus, the Bush administration had to balance between an attempt to demonstrate the new conception for IMF lending and the need to maintain the loyalty of Latin American countries to the US policy in unfavourable regional and global circumstances.

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