By Carlos Alberto Montaner
I saw in Madrid an extraordinary Argentine film, “The Odyssey of the Giles” (“giles” in Argentina means stupid, silly people.) Starring Ricardo Darín, the film focuses on the “corralito” (the informal name of the economic measures taken in Argentina in 2001 to stop a bank run) and tells how the State deprived a good number of citizens of their money, with the aggravating fact that the well-informed proceeded to pluck the “giles” who knew nothing. The film tells the story of a small number of “giles” who didn’t accept the situation and counterattacked. I won’t tell you more about the movie in case you decide to see it.
Two years earlier, a couple of decades ago, Ecuadorians dollarized their economy. Venezuelan economist José Cordeiro has just reminded of that detail. They banished the national currency as an in extreme solution to the constant devaluations. Anguished, Jamil Mahuad ruled back then. Two weeks later he left power after a rebellion of the indigenous leaders (barely 7% of the national census). In fact, he was defeated by the rampant economic crisis in the country.
A few months before I remember going to Ecuador to defend the dollarization, called by a businesswoman, Joyce Ginatta. There was no other way to restore confidence in Ecuador to investors, savings accounts holders and every sensible individual, as this unique woman preached tirelessly, to whom Ecuadorians owe the original impulse for the measure.
As time went by, in 2007, Rafael Correa, an accomplished populist, began to rule as president in Ecuador. He was a friend of Chávez and Maduro, and he was not able to do more damage to the economy because he was limited by the dollarization straitjacket. (Correa, by the way, is currently a fugitive from Ecuadorian justice.)
This added a fourth characteristic to the money in circulation —w hen the little machine to print bills is not in the hands of irresponsible rulers, the amount of follies within the reach of people who do not understand that public spending must be tied to production, productivity and the ability to raise money without destroying the private sector is limited.
The other three characteristics of money are those contained in the economy manuals — it serves to exchange things; it is a deposit of value to conserve savings and property; and it is a ‘unit of account’ to assign prices.
In the Middle Ages, the Majorcans, when they had kings, forced them to swear “to defend the value of the currency.” That seems to me a sign of respect toward the efforts of others. The corralitos, the devaluations, or applauding in Congress the breach of obligations seem terrible to me, either when the Argentine deputies did it, or when President Trump threatened to “renegotiate” the debt contracted by his country (something that, fortunately, he didn’t do.) That is not typical of serious statesmen.
Naturally, it would be ideal to have your own currency that adjusts to the changing international situation. Switzerland has it, despite being a relatively small economy, given its population and territory, but in almost all of Latin America and in some European nations it is preferable to have a currency separated from the government.
It happened to Spain. I have known the dollar exchange rate at 50 pesetas and 200. That means that the Spaniards sleep more peacefully now thanks to the euro. They know that their properties, their savings or their pensions will not be suddenly devalued. They know that, as long as the European Union exists and the euro circulates in 19 countries, including Germany, France and the Netherlands (plus Montenegro and Kosovo), the currency will maintain great strength.
Andrés Oppenheimer, one of the great analysts of Latin America, viewed favorably the dollarization of the region. There are already three dollarized countries (Panama, El Salvador and Ecuador). Perhaps it would suit Venezuela, Cuba and, to a lesser extent, Argentina, although the two Caribbean countries would have to give up their crazy economic models.
In Venezuela, where there was a 1,400,000% inflation last year, something will have to be done. In Cuba, they fail to eliminate the two currencies with which they cheat the nation blatantly. One, in which the regime pays, which does not serve to acquire almost nothing; while in the other it charges and exchanges for dollars or euros. Urgent advice: either those countries adopt a strong currency or the “giles” are going to revolt as in the movie I just saw. Carlos Alberto Montaner is a journalist and writer. Born in 1943 in Cuba and exiled, Montaner is known for his more than 25 books and thousands of articles. PODER magazine estimates that more than six million readers have access to his weekly columns throughout Latin America. He is also a political analyst for CNN en Espanol. In 2012, Foreign Policy magazine named Montaner as one of the fifty most influential intellectuals in the Ibero-American world. His latest novel is A Time for Scoundrels. His latest essay is "The President: A Handbook for Voters and the Elected." His latest book is a review of Las raíces torcidas de América Latina (The Twisted Roots of Latin America), published by Planeta and available in Amazon, in printed or digital version.