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Argentina: Oil nationalization and currency controls divide a nation

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The divisions have spread beyond Argentina as well, with the International Monetary Fund (IMF) recently debunking Argentina's reported and projected growth, fueling the fire for nationals who believe the government is not respecting democratic processes.

History of financial crises

Argentina has experienced its fair share of financial crises and subsequent political turmoil. In the 1970s there was the mega-devaluation of the peso, known as "el Rodrigazo"; In 1989, the cause was hyperinflation; And in 2001, when former president Fernando De La Rúa fled rioters in a helicopter, it was the unraveling of a decade-long peg of the peso to the dollar.

Since its $100 billion default in early 2002, Argentina has been frozen out of international credit markets and uses central bank reserves to help settle its restructured debt – including a final installment on its $19 billion Boden bond in August.

Kirchner’s administration says the recent dollar restrictions are needed to bolster reserves and stop capital flight estimated at $20 billion in 2011, around 4 percent of GDP.

But restrictions have given rise to a flourishing black market for greenbacks and Marina Dal Poggetto, an economist at Estudio Bein & Asociados, a Buenos Aires consultancy, says the policies are “short-termist.” In the longrun, high inflation cannot be maintained, she insists. What is keeping the economy afloat today could potentially spin Argentina into yet another economic crisis in the future.

‘Not a soccer team’

Growth and inflation data are other points of contention in Argentina. The government reported growth of 3.4 percent this year and 4.4 percent next year, impressive numbers given the global crisis and reduced trade with Brazil, Argentina's biggest export market. 

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