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In France, they see a crisis; One newspaper reflected the fear of a default in Argentina
La Nacion
August 23, 2008

By Luisa Corradini
Correspondent in France

August 23, 2008

PARIS.- "Many economists are evoking the risk of a new default, if Cristina Kirchner doesn't change economic course," said the French economic daily Les Echos, about Argentina.

In an extensive report from Buenos Aires by correspondent Marine de la Moissonni re, titled "The specter of a new crisis in Argentina returns to view", the newspaper put forth the worry of international markets over the solidity of the economy.

The newspaper emphasized that the financial analysts are disturbed by the eventual consequences of a new chapter in the conflict between the farm sector and the government, and points out that the risk agencies lowered the country's rating: "Moody's reduced from positive to stable the view of Argentine debt, while Standard & Poor's lowered the rating from B+ to B," she wrote.

De la Moissonni re recognized that "Cristina Kirchner has done all that is possible to try to calm the markets and investors down, as they're worried about a new crisis in Argentina."

But, despite her recent statements about the solidity of the fiscal surplus, both "analysts and politicians fear that the country can't respect its financial obligations next year which grow to 20 billion dollars as took place in 2001."

"One month after the parliamentary stumble that forced the president to revoke the rise in export taxes on agricultural commodities, the situation has not evolved," adds the influential French daily.

For Les Echos , if the head of state made some changes, "it was all more form than substance." Among the new moves, the newspaper mentions the first press conference "where, nevertheless, journalists were authorized to each make only one question." It also points out the new nominations in the government team: "But the very controversial Trade Secretary, Guillermo Moreno, remains in this post," it notes.

"The INDEC has lost practically all credibility," it continues. "The absence of numbers worthy of confidence is interpreted in a very negative way by both the markets and by investors," it concludes.

In an interview that accompanied the main article, the Argentine economist Carlos Quenan, based in France, affirmed for his part that Argentina's weakness "is not economic, but political."

"I believe that the short term risk is weak, but it is real if the government doesn't switch its sidearms," Quenan warned. A university professor and advisor to many financial institutions in France, Quenan said that "the flight of capital has begun in Argentina, while it's not seen as the gushing hemorrhage in 2001," which provoked the default by the country.