Washington-based experts on Latin America are deeply pessimistic about the political and economic situation in Argentina, but they are less pessimistic about Brazil.
John Williamson of the Institute for International Economics said the economic crisis is so deep in Argentina that until the Argentines develop their own way forward there is nothing more the outside world can do to help. Argentina slid into financial crisis at the end of the year after successive big loans from the International Monetary Fund failed to stem an erosion of investor confidence.
But Peter Hakim, the president of the Inter-American Dialogue, said the outside world must become more engaged precisely because the Argentines seem to be incapable of getting out of this political and economic crisis.
"My sense is that the current government barely knows how to manage the situation. In other words it is not as if they have a plan that is somehow politically difficult to manage. I think they're really sort of out to sea in many respects on where they are headed," Mr. Hakim said.
Mr. Hakim has little hope that the presidential election in March will resolve anything. The Argentine crisis, he said, is as severe as the one in Venezuela. He believes the Organization of American States should get involved.
Panelists debated whether Brazil will default on its debt and they pondered the consequences of default. Mr. Williamson of the Institute for International Economics believes Brazil has been pursuing appropriate economic and financial policies and thus warrants significant and decisive support from international lenders. He said the loss of confidence in Brazil results from fear that a leftist may win the October presidential election. He has advice for the new government that will emerge from that election.
"But relatively early on (after the election), if (the new government) it makes some reassuring appointments (on economic policy) and indicated its concern and then followed up by being willing to commit itself to pursuing a sensible macro-economic program. Then in my view there would be a good case for putting in a lot of money," Mr. Williamson said.
Mr. Hakim said the Bush administration's initial warm embrace of Latin America cooled after September 11 when U.S. attention was diverted to the war on terrorism. But, the White House appears to have made an effort to reassure their commitment to the region. U.S. Treasury Secretary Paul O'Neill is in Latin America this week and said the U.S. is committed to helping Argentina stabilize its economy. But he has stopped short of promising an emergency loan or bailout.