Inside the ring: Does the U.S. want to take out Argentina?

In the middle of a debt crisis, Argentina’s government is trying to blame the United States for its financial woes. It claims that the U.S., having battered the Gauchos in the past, is now looking for a knockout.

By Carla Ruas with Robert McCulloch

f you happen to take a stroll in downtown Buenos Aires anytime soon, be sure to look out for American flags posted on trees, lamp poles and street walls. A closer look will reveal that they are actually printed posters with big, bold, superimposed letters that read: “Yesterday, Braden vs. Peron. Today, Griesa vs. Cristina”.

To an unsuspecting pedestrian, these signs may seem like an invitation to a boxing match — and for Argentines, the match is nothing short of a heavyweight title bout.

The signs refer to two historical episodes involving Argentina and the United States: The first one took place in the 1940s, when American diplomat Spruille Braden attempted to undermine Juan Domingo Perón’s campaign for the presidency — by accusing him of being a Nazi supporter. The second episode, still unfolding today, was triggered by the decisions of U.S. Federal Judge Thomas Griesa, who has forced Argentina to pay creditors in what has become the country’s second major debt crisis in the 21st century.

To an American visiting the tango capital, the notion that Argentina and the United States are enemies does not make any sense. However, the organization behind the posters, which are closely aligned with the Argentine government, sees the current debt impasse as another chapter in a long-standing brawl between the Gauchos and imperialist forces in the United States.

This discourse has also been a constant during Kirchner’s regularly televised speeches. On a February “Words from the Nation’s President,” an emotional and clearly distraught president compared the relationship between the two countries to that of countries at war. Kirchner stated that forcing Argentina to pay its debt will be “a new genocide of the Argentine people” — an overwrought reference to the widespread poverty of the 1990's.

In other instances, the Argentine government’s message was even more clear. Héctor Timerman, Argentine Minister of Foreign Relations, accused President Obama of acting harmfully with respect to international relations for not intervening to override Griesa’s judicial decision. In August, Timerman said in a press conference that the State Department’s decision to ignore Argentina’s plea at the International Court of Justice went “contrary to the standards of peaceful diplomatic gestures between nations.”

Round 1: Braden vs. Perón

Why do Argentinian’s believe that the United States holds a grudge against their country? Well, in order to answer this question, we need to go back to 1945.

On that year, American diplomat Spruille Braden arrived in Buenos Aires on a personal mission to end the career of Juan Perón, who was then a prominent leader within the Argentinian military government. Since the 1920’s, there had been a growing concern among United States officials regarding the rise of a nationalist ideology in Argentina. Now Braden was reporting to Washington that Perón was not only a nationalist but also a Nazi supporter who had been secretly sheltering German companies on Argentine soil.

The accusations further fueled existing rumors that Germany was planning to occupy Latin America by entering the continent through Argentina. Years later, academics argued that much of the United States’ anxiety about a Nazi-ruled Argentina was paranoia. However, “we now know that when the war was finished Argentina was very benevolent [toward] and even welcoming of many Nazis,” says Dr. Paula Alonso, a professor at George Washington University in Washington, D.C., who specializes in Latin America history and Argentinian affairs. “So maybe there was some foundation for this paranoia after all, since they did facilitate a safety net for many of them.”

In any case, Braden took an even harder stance against Perón when the military leader began a run for the presidency at the end of 1945, publishing accusations on local newspapers. As it turned out, Braden’s efforts quickly soured as Perón received campaign support from several working-class voters. With widespread support, the presidential candidate ultimately made Braden’s accusations work to his own benefit — accusing North America of interfering in Argentine politics and arguing for Argentina’s economic sovereignty.

Soon, Perón was characterizing the upcoming election as a choice between “Braden or Perón.” And the slogan stuck. Not only did Perón win the election for the Labor Party that year, with 52.4% of the votes, but he also went on to become president of Argentina three times and a national hero. In the meantime, his second wife, Evita Perón, became a symbol of Argentina’s resilience and national pride.

Round 2: Griesa vs. Cristina

Given this background, it is not difficult to understand why some Argentinians are convinced that the United States is out to get Argentina again, after 70 years. Anti-U.S. sentiment has been growing in the region since 2001, when the Argentine government blamed the U.S.-controlled International Monetary Fund for the country’s first financial collapse. In the years that followed, president Nestor Kirchner — Cristina’s late husband — continued the blaming game as more than half of the population fell below the poverty line.

Now president Kirchner uses the same rhetoric to explain judge Griesa’s controversial decision. In 2014, the judge prohibited Argentina from paying investors who had accepted restructuring of bond deals made in 2005 and 2010, as long as the country does not pay the American holdout creditors (led by Elliot Management). Griesa based the decision on an interpretation of the so-called pari passu clause in the loan terms, which calls for equal pay to all creditors, without priority.

Therefore, the ruling left the country with only two choices: pay all of its creditors, or pay none of them. And since the former was impossible, the latter was inevitable.

On July 30th, Kirchner’s government missed a payment on the already renegotiated bonds and defaulted for the second time in 13 years. In the days since then, the government has been trying to find an alternative — so far without success — while putting itself at risk of punishment for not following the judge’s orders.

(However, there is the possibility that Kirchner is just trying to buy time. At the end of 2014, the key clause in the bond deals will expire, and Kirchner will no longer be under a legal obligation to pay all of the bond owners — both the holdouts and those who agreed to restructured terms — at the same time.)

The last round has begun

While the crisis unfolds, president Kirchner is trying to summon up nationalistic feelings, much like Perón did in 1945 — by blaming international financial centers and neoliberal recipes. Perón’s goal was simple: he needed to win an election. Cristina’s aim, on the other hand, is twofold.

First, there is an expectation that playing the victim might help the country in renegotiating the terms of the debt by depicting the standoff as an exception, the fault of an exceptionally brutal bully — judge Griesa. According to this line of argument, future investors need not worry, since the problem is not Argentina, but a one-time great injustice.

Second, Kirchner is quite openly trying to save her reputation, and in Argentina, perhaps even more than in other countries, having a pristine reputation is extremely important in politics. In every single speech, the president retells the story of the debt to make it clear that the debt problem did not begin during her term, or during that of her late husband, who was president between 2003 and 2007, and whose memory regularly brings tears to her eyes in front of the cameras.

In addition, there are presidential elections next year, and even though Kirchner is not allowed to run for presidency a third time, “she definitely wants her party in power,” says Dr. Alonso. Therefore, her reassurances to voters that her government is not at fault, but is rather a victim, can be considered as the beginning of the next election cycle.

In fact, Grupo San Martin, which is responsible for the signs posted throughout the city, is a local political think tank whose leader, Julian Dominguez, is competing for the presidency of the lower house of Congress. “Of course he wants to show support for Cristina and replicate a similar discourse to the one that she has been using – that Argentina is again a victim of imperialism,” says Dr. Alonso.

The problem with that version of affairs is that there is a big difference between Braden and Griesa: back then, the confrontation had to do with the relationship between the countries’ governments; now, it is a confrontation between Argentina and the United States’ justice system, along with the individuals who purchased the bonds. “In the U.S. the executive branch and the justice system are independent of each other,” says the expert, “but in this discourse [perpetuated by the Argentine government], this gets confused”.

Without a doubt, the relationship between Argentina and the United States has been bruised for a long time; protests against former President George W. Bush and a disastrous visit by the Bush twins to Buenos Aires come to mind. “Relations have been tense,” says Dr. Alonso. However, the fact is that this time, “it is really not a government-to government-issue.”

Therefore, it may be time to put the gloves down.