WASHINGTON – President Bush warned on Wednesday that Argentina will face a "bleak and stagnant future" unless it embraces international trade and other free-market economic policies amid a devastating recession.
He reiterated that U.S. aid through global lending institutions will come only after Argentina assembles a long-term economic plan.
Bush also said he will propose an increase of almost $50 million in the American contribution to World Bank programs that help the poorest countries. On hemispheric matters, Bush said he will press for free-trade pacts with Central American countries, which could pave the way for the Free Trade Area of the Americas that Bush seeks.
Argentine President Eduardo Duhalde also has expressed interest in pursuing that hemispherewide free-trade zone, he said.
Bush had sharp words for Duhalde, a fierce critic of Argentina's last decade of free-market reforms that brought growth but often failed to close the gap between the few rich and the legions of poor. Bush answered that "free markets and open trade are the best weapons against poverty, disease and tyranny"
Some analysts say Argentina is drifting toward greater protectionist policies and away from engagement in the global marketplace. Argentina's bankruptcy could force trade barriers to protect domestic industries, they say.
"Those who promise painless protectionism or security through statism assure a bleak and stagnant future for their people," Bush said in a speech at the Organization of American States near the White House.
"Some wonder whether free-market reforms are too painful to continue," Bush's prepared speech said. "Some question the fairness of free and open trade, holding out the false promise of protectionism." He cautioned against "an even greater danger — that some may come to doubt democracy itself."
"Argentina, and nations throughout our hemisphere, need to strengthen our commitment to market-based reform, not weaken it," Bush said. "Half-measures will not halve the pain, only prolong it."
Bush did not specify what "half-measures" concerned him. But he offered a litany of steps he said lead to "success in the global marketplace": free trade, privatizing inefficient state firms, fiscal discipline.
He pledged unspecified help through institutions such as the International Monetary Fund once Argentina has committed to a "sound and sustainable economic plan." The United States is the largest shareholder in the IMF and has great sway on its financial decisions.
Bush administration officials have all but ruled out direct aid like a $20 billion bailout the United States gave Mexico in 1995 to help its southern neighbor weather an economic crisis. That means new aid to Argentina will come from the IMF.
The fund closed off the spigot of bailout money to Argentina last month. That left the country to default and devalue the peso, which for almost 11 years was pegged one-to-one with the U.S. dollar. On Wednesday, the fund granted Argentina a one-year reprieve on repayment of a $933 million IMF loan that was coming due Thursday.
Asked what specific steps the administration plans, White House spokesman Fleischer said only that the United States will work closely with Argentina as it assembles a program.
Bush said his budget proposal coming out next month will include nearly $50 million more than the previous year for World Bank programs that help the poorest countries. If the bank shows "measurable results" and advances certain Bush proposals, he said, he will seek increases of more than $100 million in the following two budgets.
The administration is seeking to shift World Bank loans to grants, a step some European countries oppose, and the new money Bush is promising reflects the conversion he wants.
Violent protests have rocked recent gatherings of such organizations as the IMF and World Bank, with protesters charging that policies that require citizens of poor countries to pay for health care, housing and other basic needs undermine the survival of millions. They also allege that lending policies benefit multinational corporations intent upon exploiting the poor in underdeveloped nations.