RE: Bad Financial news for Argentina

From: Carlos Gonzalia (
Date: Mon Jul 30 2001 - 21:41:30 MDT

>From: "Lee Corbin" <>
>(by the way, thanks for your very interesting and informative
>posts, Carlos)

My pleasure, it is one of the few things on which I can actually say something
worth posting... ;-)

>What are the prospects, as a first step, in lessening the
>corruption? Are there any positive trends here?

I'm not aware of any specific statistics measuring the evolution of corruption
levels in Argentina. I recall (vaguely) some static measures of it, and there
were very bad (something like one of the 10 most corrupt countries in regards
to level of bribing needed to get things passed through the government office
or such?). As the things to corrput have grown much less, and also the
current administration is less dirty (though probably equally incompetent).
The judiciary is in general a bad thing to deal with, too. There are many
top judges with dirty connections to past and present administrations and
not-very-honest businessmen, and they are too eager to help their friends.
The security forces are another problem, as I mentioned in a previous post
many of them still have an organizational culture going back to the Process
dictatorship. There have been routine involvements of high police officers
and chiefs in drug dealing, "selling protection", contract killing, and
even terrorist attacks. I can't see how any important positive trends are to
be expected in a long while regarding corruption. Sure, Menem and some of his
cronies are in jail or processed, but this is mostly an isolated case,
and I doubt it would have happened were it not for Menem being beyond
the cost-benefit barrier for the oligarchies.

>Yes, they must be somewhat fearful. By the way, how hard is it
>for someone to start a new business in Argentina? (In Germany,
>it is rather difficult. In Russia, I think, almost impossible.
>I don't know about other countries, but would like to learn.)

I'm really not sure about this. My guess, considering the very few
cases in which I've read about new businesses in Argentina (with foreing
investments) is that it could be difficult, particularly if you want to
play it clean. If you are competing for a contract that also attracts
other investors, you must expect investors to play dirty, and the government
officials too. Tax pressure will be quite high, unless again you are willing
to play dirty and get some "special agreement". I think this whole mess is
much cleaner if one tries to enter the sectors not controlled by the
government. There have been quite successful entrances by a few big
supermarket firms, for instance. I'm not sure how one would fare when
trying to set up some industrial company. The problem for this last kind
of investment, as I already mentioned, will be probably the awful
infrastructure on which you would have to work. I can't remember any
exact figures, didn't the CEPAL reports I linked mentioned a drop in
investments and imports?


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