The inability of Argentina to develop a credible debt restructuring proposal for the financial community is a further commentary on the country’s political bankruptcy. The Kirchner government is a populist joke. It is incapable of offering credible leadership on issues of either debt or domestic microeconomic policy.
The only solution to the Argentine crisis is to look back to the Newfoundland debt restructuring of 1933. This event was the most dramatic debt solution in world history. A fully self governing dominion of the British Empire, Newfoundland, agreed to give up democracy and independence in return for a debt rescue by his majesty’s government in London.
Under the plan, the Newfoundland parliament voted to abolish itself and turned over all powers of government to a commission of six civil servants, three from the island and three from London. They were empowered to govern the country until its financial health was restored and it could return to responsible self government.
The commission ruled the island until it voted to become a Canadian province in 1949. Argentina should also turn over all powers of government to an international commission of distinguished technocrats. They could administer the country until it is once again capable of responsible self-government.
It is unclear how long it would take for Argentina to return to a credible elected government but as with Chile under Pinochet, twenty years under a highly competent commission government would set an example which even elected politicians would find hard to discredit. Argentina must turn to Newfoundland’s political history to find a solution to its chronic crisis of governance.
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