Greek economist Costas Lapavitsas, who is an advisor to the Syriza party and professor at the University of London, told an Argentine audience on July 18 that he and his collaborators had looked carefully at Argentina’s 2005 debt restructuring, in which creditors took a 75% haircut, as a key “reference point” for them, given the similarities between Argentina’s 2001 debt crisis and conditions in Greece today.
Lapavitsas was speaking at the seminar held at the state-owned Banco de la Nacion, entitled “International Crisis: It’s Deployment in Europe and Potential Impact in Latin America,” at which Italian economist Genaro Zezza also spoke. Zezza said that Italy would have to exit the euro to avoid default.
During his visit to Argentina, Lapavitsas also met with Finance Minister Hernan Lorenzino, who is acquainted with EIR’s program to bring about an economic miracle in Southern Europe—”There is Life After the Euro”—a copy of which he received personally from EIR in Washington. One chapter in that report is entitled “What Europe Can Learn From Argentina,” which includes President Cristina Fernandez’s repeated warnings against the insanity of imposing brutal austerity on Europe.
Lapavitsas told his audience that Greece would default in the next 6 to 12 months and leave the euro, which would finish off that currency. Documenting the horrific collapse of the Greek economy, he said that what Europe needs now is a Marshall Plan. He compared the debt swap imposed on Greece last February to the usurious $40 bn. “mega-swap” imposed on Argentina in early 2001 by then Finance Minister Domingo Cavallo and his henchman, former Deputy Treasury Secretary and Credit-Suisse executive David Mulford. That outrageous package only benefitted financial predators, while accelerating Argentina’s collapse.
The “debacle” the IMF created in Argentina in 2001 is like the Greek crisis today, Lapavitsas said, reporting that in 2010, Greece’s rulers warned that swallowing the IMF bailout and its conditionalities were necessary so as not to fall into a situation “like Argentina (in 2001).” But, he added, “we said just the opposite. If we accept this, we will become like Argentina (of 2001).” The Greek case, he underscored, is more like Cavallo’s 2001 mega-swap than President Nestor Kirchner’s 2005 debt restructuring, as it hasn’t resolved Greece’s debt crisis at all. “There is life after the IMF,” Kirchner was fond of repeating.
Lapavitsas told Argentina’s state news agency Telam that once Greece exits the euro, it will have a chance to put into place “anti-liberal policies to remove it from an unviable situation,” and that these could include the nationalization of some banks, exchange controls, and some control of the exchange rate. These, he said, were “some of the policies that Argentina and Latin America have implemented in recent years.”