Argentina’s Global Responsibility: A Bicentennial Theme

The world is facing an urgent food crisis that threatens almost a billion of its poorest inhabitants. They are unable to pay food costs and risk dying of hunger. Food-producing countries have a global responsibility to 1) coordinate emergency aid and 2) increase production over the long term through sound macro-economic policies. If not for political wrangling , Argentina could be at the forefront of the relief effort. Argentina’s assistance would benefit humanity, fulfill a duty of solidarity and earn the international prestige that the country deserves. A cursory glance at the headlines, attendance at one of the many international forums, participation in seminars on current development problems or a cold look at the facts: All of these things lead to similar conclusions. A new crisis looms on the horizon, another calamity on top of the serious problems we are already facing: a food crisis. This is not a crisis linked to scarcity1 but to values, in both the economic and moral senses of the word.

Globalization has enabled hundreds of millions of people to rise out of poverty. It has enabled numerous important countries, until a short while ago condemned to underdevelopment, to transform themselves into mighty powers, with a voice and weight in global geopolitics. These are undeniable benefits of great historical significance.

But, while it may be that hundreds of millions of people today eat more and better than before, it is also a sad truth that hundreds of millions in other parts of the planet eat less and worse. The latest report from the FAO, Food Perspectives, shows that the total cost of food imports to low-income countries with food deficits may reach $169 billion U.S. dollars in 2008, a 40 percent increase over 2007. The FAO has described the constant increase in spending on food imports among vulnerable countries as a “worrying situation” and has stated that by the end of 2008 annual spending on imported food may be four times higher than in 2000.

As has already happened in the energy sector, an exponential increase in demand for food has lead to a dizzying rise in prices. But the difference between oil and food is a fundamental one: At the subsistence level, which is what matters for the poor, you can live without oil but not without eating. In reality, for those in the lowest income brackets, consumption of oil is insignificant. But the poor survive, even in the frightful conditions facing the people of Haiti, Sudan, the Philippines and so many other countries, by consuming grains. If their meager earnings no longer suffice to buy grains, then they will simply starve. We have reached a perverse global situation, where the fate of someone in China or India – who eats better today than his parents and grandparents did – is intimately bound with the fate of someone in Haiti, who faces the threat of extinction. And, if this is the case, then how can we break this lethal chain? In geopolitical terms, the question is an urgent and global one: How can humanity allow some to advance while others sink quietly into oblivion? As numerous statistics and experts have shown, there are four areas where intervention is urgently needed.

The first area is disarming the demographic time bomb, i.e. using family planning and birth control to slow the demographic growth that is so explosive among the poorest sectors. This will allow us to reduce the “natural” lag between the traditional birthrate and the death rate (which with technological and sanitary improvements has declined much faster than the birthrate) and avoid the cruel ensuing Malthusian “corrections”.

The second area is a global food assistance program (international subsidies to the hungry). Without this emergency operation, another 100 million people will join the 850 million who live with hunger today.

One hundred years ago, Argentina proudly called itself the world’s breadbasket. Today, it is posed to assume that status once more, provided that internal political wrangling and redistributive conflicts do not stand in the way. Let’s take a look at the available reliable data. These figures are from 2004. In the four years that have passed since then, the totals (those that are available) have climbed even higher, with strong increases in almost all areas.

[DOWNLOAD-> food exports.doc] Argentine Food Exports

It is widely known that Argentina is a vast country, with a low population density and enormous natural resources. A third of its territory is dedicated to cutting-edge cultivation, with biogenetic supplies and satellite control. In the country’s wealthiest provinces, Buenos Aires, Santa Fe, Córdoba y Entre Ríos, the fertile plains of the Pampas, sown almost entirely with genetically modified soy, produce the twenty-first century’s “green gold.” Argentine is the world’s third-biggest exporter of the grain. But this year’s anticipated record harvest of 13 billion tons, with a market value of 17 billion euros. Food producing countries like Argentina have a historical obligation to be at the vanguard of global aid initiatives. They must have state policies that stimulate and diversify production. At the same time, they must redesign thei rexport taxation policy, making it more consensual and transparent.

Five years ago, Argentina emerged from the worst crisis in its history courtesy of a well-designed emergency program. In one sense, the 2001-2002 crisis left the agricultural and industrial sectors with a formidable latent capacity already in place. The devaluation at the beginning of 2002 made the countryside (which had benefitted from significant investment during the previous decade) competitive once again, after years of an unsustainable currency board. The economic program also simultaneously promoted the industrial sector, thanks to the protection that a new exchange rate offered in a revived internal market. With prudent management, the country began to grow at a spectacular “Chinese” rate of 9 percent annually. There was no conflict between country and city or between industry and agriculture.

Then the country reached the crossroads where it still stands today. Two options were available. One option was to extend, in a balanced way, the existing bonanza by introducing what had been missing: an intense flow of new domestic and foreign investment to reinforce the capacity created the decade before and generate not merely short-term growth over several years but true development with a less-astounding but more sustainable rate of expansion. The other option was to use the commodities bonanza for another kind of project, placing the economy at the service of politics and not the other way around. Sadly, this second path was the one chosen: a path that has lead to social conflict and economic backsliding. But there is still time to correct the course.

Considering that the current administration calls itself “justicialista,”1 it is worth noting that in an earlier time the first government of Juan Domingo Perón sent considerable aid in the form of grain to the populations of Spain and Italy, then in a painful postwar period.2 An initiative of this kind, which today would need to be multilateral and generalized, would have several merits. It would help mitigate world hunger; it would give Argentina the voice and international prestige that it deserves and currently sorely lacks; it would give dignity to export taxation; and, finally, it would harmonize a stimulus to producers with international solidarity. It would be a significant move and a “win-win” situation.

Third, it is necessary to get rid of the protectionism and subsidies that have “anesthetized” production for so many years and interfered with trade. This applies to both industrialized countries and agro-exporters that have been wealthy in the past and may become rich once more. Here it is necessary to avoid false remedies, including rigid export limits and the promotion of biofuels.

Last, it is necessary to guarantee long-term increases in food supplies by financing research in agriculture and for agriculture, casting aside the old “agriculture” versus “industry” dichotomies as well as prejudices against genetic and computerized farming.

In the case of Argentina, nearly all economists have offered the same prescription of sound policies. All recommendations boil down to the same ideas. Control fiscal waste (above all on large cross subsidies), attract investment by increasing supply, and reduce demand on the existing supply while that process moves forward. Demand in excess of supply represents a distortion of the economy that is sadly familiar in Argentina and brings with it the specter of high inflation. This also occurs when there is insufficient investment. These are old and proven principles from economics textbooks, not treatises on rocket science or books on alchemy. The signs of an economic detour are already in sight. When the magazine The Economist set out to measure the state of inflation in the emerging markets, Argentina lead the pack with an estimated 23 percent increase in consumer prices.

With an honest assessment and cleansing of its macroeconomic policy, Argentina would be in good shape to take the lead in a unified international effort to address the food crisis facing poor nations. Its image would change from night to day: now perceived as a mediocre country that has wasted a historic opportunity and wavered in the international posture, paralyzing its own productive capacity with infighting, Argentina could move on to become the model of sustained growth, serious and generous at the same time.

In respect to the other planetary problems, including global warming, the energy situation and the financial markets, there is already broad acknowledgement that solutions need to be coordinated and global, with common ground rules to ensure legitimate intervention. These issues are not the exclusive domain of governments: They are issues of global governance. And to these issues we need to add food security. In today’s world, Argentine justicialismo must both mature and adapt itself to the new century: it cannot remain merely national and narrowly focused if it wants to stay relevant. To avoid becoming a quaint relic, it would be wise to establish an international moral and economic platform, where Argentina has the duty and opportunity to take the lead. National traditions and names matter far less than a unified will to act: instead of tearing itself apart with unnecessary internal squabbling, Argentina should be leading a campaign for Global Food Governance. This is my proposal for the central theme of the 2010 bicentennial. I think it is fitting to conclude with a paraphrase of John F. Kennedy: “Ask not what the world can do for your country; ask what your country can do for the world.”

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