1 INTRODUCTION
After his retirement, economist Gerald Alter was interviewed about his role as director of three World Bank (WB, Bank) departments which, under different names, were responsible for relations with Latin AmericaFootnote 1. The interviewers were particularly interested in the Bank’s stance on countries which, like Argentina, Brazil, Chile and Peru, experienced political and economic instability during the 1960s and 1970s. Alter responded:
… to be absolutely frank with you, I don’t think the Bank at that period was attaching any great importance to the questions of democracy versus dictatorship, human rights versus oppression, these strictly [were] what we might call ‘political aspects’. We definitely were interested in the economic impact of the political changes that were taking place [in Latin America]. […] One of the lessons I think that we [the WB] learned was that dictatorships were not necessarily any more decisive in resolving difficult economic problems than democracies were. The old saw that it takes a dictatorship to resolve these problems just turned out to be completely falseFootnote 2.
Is Alter historically accurate? Does this quotation depict an actual capacity of the Bank to avoid political issues and work with different types of regimes? Correspondingly, to what extent were the shifting democratic and military regimes in Latin America able and willing to establish financial and technical collaboration with the Bank? As this paper shows, Alter’s answer was only partially accurate. It is true that, at least in the case of Argentina during the 1970s, the WB did not discriminate between democratic and military regimes. It is also true that political crises and human rights violations in Latin America did not play even a marginal role in the WB’s decision-making process. However, it would be misleading to argue that the Bank attached no great importance to «political aspects». Although the Bank did indeed strive to make decisions based purely on economic criteria, these criteria were neither «neutral» nor merely technical. They reflected the monetarist stance prevalent at the time in Washington circles — a stance that was at odds with the structuralist and populist economic models prevalent in Latin America.
Through an analysis of Argentina-WB relations between 1971 and 1976, this article examines how democracies and dictatorships, as well as political and economic constraints did (or did not) impact WB lending activities in Latin America. This periodisation, which at first glance might seem peculiar, is intended to strengthen the notion that WB relations with its borrowing member states are not only the result of specific domestic circumstances or particular WB policies, but are, in fact, the outcome of intricate dynamics between all actors involved. Therefore, rather than focusing on traditional periodisations within the history of Argentina or of the Bank, this article focusses on an overlooked but highly significant chapter of the joint history between the two. I am referring to the period of time from March 1971 until September 1976, when the WB did not grant any new loans to Argentina, thereby generating an unusually long break in WB lending to the country. Moreover, in December 1971, in an exceptional move, the WB suspended disbursements on several loans that had already been approved for costly development projects that were still in progressFootnote 3. This dry period begins in March 1971, when the 1966 coup that had deposed President Arturo Illia and ushered in what the military regime self-proclaimed as the «Argentine Revolution» (1966-1976), was already 5 years old. Its terminus is September 1976, when the WB suddenly resumed lending to the country, at a point several months after the coup that ousted Isabel Perón in March 1976. The article examines the dynamics that led to this significant break in WB lending to Argentina, the pretexts that were used to justify the interruption of disbursements on previously approved agreements, and the multiple negotiations and interactions that took place between the parties even when no loan accord was in place and when changing Argentine officials attempted unsuccessfully to de-freeze WB lending to the country. During this period, as shown below, the WB continuously attempted to convince the various Argentine administrations to implement policy changes in accordance with the monetarist principles prevalent in Washington circles at the time, and they proved to be as unsuccessful in their attempts as their Argentine counterparts were in theirs.
Drawing on previously undisclosed files from the WB Latin American and Caribbean Department (LAC)Footnote 4, documents of WB President Robert McNamara, and primary sources from Argentina and the United States, this article sheds light on the actual mechanisms, criteria, and justification behind the decision to lend or not to lend to Argentina, and to stop or renew disbursements on already approved loans. In doing so, the article offers a new approach to the study of the WB modus operandi in Argentina and Latin America and of the challenges that Latin American countries confront when trying to access the WB development funds they need.
The relationship between Argentina and the WB constitutes a particularly illuminating case. First, during the 1970s Argentina experienced political and economic instability that challenged the WB’s ability to maintain «business as usual» in the country. The period was bookmarked by two dictatorships — the «Argentine Revolution» (1966-1973) and the «National Reorganization Process» (1976-1983) — and in between them was the return of Peronism to power after eighteen years of proscription. In the decade between the coups of 1966 and 1976, Argentina had no fewer than seven presidents. The break in WB lending began during the presidency of General Alejandro Lanusse (1971-1973) and continued in what is known as the Third Peronism, under presidents Héctor Cámpora (May to July 1973), Raúl Lastiri (July to October 1973), Juan Perón (October 1973 to July 1974) and Isabel Perón (July 1974 to March 1976). Second, the memory of Argentina’s exclusion from the WB and the International Monetary Fund (IMF) during the so-called First Peronism of the 1946-1955 period (Kedar Reference Kedar2012), and the fact that the Bank did not lend to the Peronist administrations of the 1970s but granted numerous loans to the dictatorial regime that deposed Isabel in 1976, might create the misleading impression that it was Peronism itself that caused or aggravated the break in WB lending. Reality, however, was more nuanced than these facts seem to indicate. Not only did the WB suspend lending in March 1971, during the same military regime to which it had already granted seven loans, the last two of which were in March 1971, but it resumed disbursements (though not new lending) during Perón’s presidency. In this sense and perhaps only in this sense, Alter was right — the Bank did not discriminate between different types of regimes.
This article advances the notion that WB lending and/or non-lending to Argentina, as well as the conducting of bilateral meetings and negotiations even in the absence of financial activities, were facilitated, to a large extent, by the WB’s self-imposed principle of «neutrality» (Swedberg Reference Swedberg1986; Thacker Reference Thacker1998; Staples Reference Staples2002). According to Article IV Section 10 of the WB Articles of Agreement:
The Bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially.
As argued here, this vaguely defined «neutrality» filled two complementary functions. To begin with, it enabled the WB to continue interacting with regimes of different natures and ideological stands. Hence, during the 1970s, the WB conducted negotiations with Peronist Argentina and socialist Chile, but also with right-wing and U.S.-friendly dictatorships in Argentina, Chile and Uruguay, to name just a few (Kedar Reference Kedar2016). In addition, it was precisely these constant interactions with substantially different regimes that allowed the WB to portray itself as «neutral», thereby securing its reputation and legitimacy among Latin American borrowers. As explained below, at a time when developing countries challenged the international order promoted by Washington, the IMF and the WB, their supposed «neutrality» granted the WB a certain degree of flexibility and some freedom of action. From Argentina’s viewpoint, this «neutrality» allowed both democratic and military regimes to represent controversial and conditional WB loans as legitimate and «neutral» — even when it was clear that this was not the case. Simultaneously, in those instances when the Bank adopted an intransigent and alleged «neutral» stand and refused to grant loans, Argentina accused the Bank of being biased or not-neutral.
How did the «neutrality» come into practice? As Argentina-WB relations show, LAC staff often reported to the WB management on political pressures and constraints that prevented both military and democratic regimes from implementing measures that the WB considered necessary to solve major economic problems. On the other hand, the WB easily found so-called «neutral» or «purely economic» ground to justify its decision to lend or stop lending to Argentina. Whether the WB was influenced by its reading of Argentina’s politics or not, LAC staff could simply argue that economic and technical considerations shaped its decisions. Such considerations included inflation rates, tariffs and wages, and the earning levels of state-owned enterprises that were receiving WB support.
Obviously, the «neutral» parameters that the WB used to explain its decisions were, in fact, far from neutral. They were, on the contrary, most definitely biased, reflecting monetarist views prevalent at the time in the WB, the IMF and their strongest member state — the United States. These views contrasted with the structuralist models that had been widespread in Latin America since the 1950s as well as with the populist policies promoted, among others, by Argentina’s minister of economy, José Bar Gelbard (May 1973 to October 1974). While monetarists understood inflation as a monetary phenomenon caused by excessive demand and a lack of monetary discipline, structuralists believed that inflation in the region derived from supply bottlenecks arising from sociopolitical tensions, sectorial imbalances and unrealistic expectations generated by the development process (Pinto Reference Pinto1960; Sunkel Reference Sunkel1963; Hira Reference Hira1999). Besides that, WB parameters also included specific expectations from public utility enterprises that were receiving WB financing. The WB expected them to improve their efficiency and earning levels. In reality, Argentina’s inability and/or resistance to follow the rules of the game promoted by the international financial institutions emerged as an Achilles heel for sectors and governments that aspired to access multilateral development funds.
The examination of the Argentina-WB relationship contributes to the scarce literature on the history of the WB in Latin AmericaFootnote 5, and on the foreign relations of late PeronismFootnote 6. It provides evidence to theoretical debates on the impact of regime types on WB lending. Academic literature (produced mainly by social scientists), focusses on the effect of the post-1980s WB programs on democratisation processes (Haggard and Webb Reference Haggard and Webb1993; Brown Reference Brown2009; Birchler et al. Reference Birchler, Limpach and Michaelowa2016; Nelson and Wallace Reference Nelson and Wallace2016). Other works examine the effectiveness of development aid to democratic vs. non-democratic regimes (Stiglitz Reference Stiglitz2003; Easterly Reference Easterly2007; Montinola Reference Montinola2010). A key question is to what extent the borrower’s type of regime influences the chances of receiving multilateral lending and/or loan conditions. Schultz and Weingast (Reference Schultz and Weingast2003) point to a «democratic advantage», claiming that since democracies are more disposed to repay their debts, democratic regimes are granted «better» loans (with lower interest rates). Saiegh (Reference Saiegh2005) maintains that there is a «democratic disadvantage» — because democracies are more likely to renegotiate their debts and default on them; lenders do not grant them «better» loans; rather the contrary. As Argentina’s case indicates, there was neither democratic advantage nor disadvantage. Although authoritarian and democratic regimes prized development aid, the WB had lower expectations from the Peronist administrations than from Lanusse’s regime. Yet, after providing two loans to Lanusse, the WB restored certain financial activities with Juan Perón in power. This had little to do with the type of regime. Actually, Perón was more able than other presidents to take the political risks emanating from seeking controversial loan agreements with the WB and the IMF.
2 THE MAIN ACTORS IN CONTEXT
The late 1960s and early 1970s were a time of political instability, polarisation, and violence in Argentina. The first president of the «Argentine Revolution», General Juan Carlos Onganía (June 1966 to June 1970), signed five loan agreements with the WB. Most of these accords, as well as two stand-by agreements signed with the IMF in May 1967 and April 1968, were negotiated by Adalbert Krieger Vasena. Krieger Vasena was a liberal who served as minister of economy between January 1967 and June 1969, at which point the bloody riots that had erupted in Córdoba in May 1969 forced Onganía to introduce changes in his cabinet. Remarkably, Krieger Vasena’s ties with the international financial community were so close that later, between 1973 and 1978, he served as head of the WB LAC (Kedar Reference Kedar2013, pp. 115-116). At any rate, Onganía was ousted in June 1970. His successor, General Roberto Levingston (June 1970 to March 1971), appointed Carlos Moyano Llerena as minister of economy, who was soon replaced by the structuralist Aldo Ferrer. In March 1971, Lanusse replaced Levingston. Lanusse kept Ferrer, who was highly respected in international circles, as minister of economy until May 1971, when the ministry was dissolved. By then, Lanusse had signed two agreements with the WB – the last ones before the lending-freeze.
Lanusse made significant efforts to stabilise the economy with mixed results. The annual rate of inflation, which by 1967 had decreased to 29.2 per cent, ended up accelerating from 12.5 per cent in June 1970 to 78.8 per cent in May 1973 (Filippini and Olcese Reference Filippini and Olcese1989, pp. 189-212). In addition, Lanusse paved the way for a gradual transition to democracy. He allowed, for example, Evita Perón’s body to be returned to Argentina for burial and in November 1972 gave his permission for Perón to visit the country for the first time since 1955. During this visit, Perón negotiated the return to democracy and founded the Frente Justicialista de Liberación (FREJULI) — composed by Peronists, developmentalists, Christian Democrats, ex-members of the Socialist and Radical parties and several provincial parties (Smith Reference Smith1983, pp. 97-146; Seoane Reference Seoane2002, Ch. 6). Finally, Lanusse called for free and general elections in which, for the first time since 1946, the Peronist Party was allowed to take part. Because Perón was banned from running in the elections of March 1973, Cámpora, a leftwing Peronist, was FREJULI’s presidential candidate (Cantón and Jorrat Reference Cantón and Jorrat1978; Rapoport et al. Reference Rapoport, Madrid, Musacchio and Vicente2000, pp. 664-670).
On 13 July 1973, Cámpora, whose government was only ever intended to be transitory until Perón returned for good, resigned. Lastiri (president of the Chamber of Deputies), became provisional president and called for free elections. In September 1973, FREJULI won 61.9 per cent of the votes. In October 1973, Perón and his vice-president Isabel, Perón’s third wife, took office (Rapoport et al. Reference Rapoport, Madrid, Musacchio and Vicente2000, pp. 664-670). As has been mentioned, it was then that the WB eased its lending-freeze to Argentina.
In July 1974, Péron died and Isabel became president. This created a leadership vacuum that was eventually filled by José López Rega, the controversial cabinet secretary and minister of welfare. In November 1973, López Rega established a paramilitary secret organisation (Triple A), which kidnapped and murdered hundreds of leftist militants. Political violence escalated and the economy worsened.
Certainly, several components of the «Triennial Plan for Reconstruction and National Liberation» for 1974-1977 (which was designed without WB interference) intersected with the Bank’s development agenda and, especially, with the WB’s strategy to eliminate poverty. The plan was aimed at reaching a progressive redistribution of income, penetrating new markets with new exports and deepening industrialisation. Behind closed doors and only after the coup of 1976, the WB criticised the Peronist industrialisation strategy because it emphasised import-substitution at the expense of agricultural development – which LAC considered central to increase Argentina’s exportsFootnote 7. The plan also promoted the construction of large projects in areas such as hydroelectricity and atomic energy, petro-chemicals, housing, transport, potable water and ports (Leyba Reference Leyba2003, pp. 76-86, 119; Rougier and Fiszbein Reference Rougier and Fiszbein2006, pp. 166-168). Although these projects were part of the WB portfolio, access to WB loans remained uncertain. In 1974, seeking to increase the role of the state in the economy, the government established the Corporation of National Enterprises, which LAC staff considered inefficient (Belini and Rougier Reference Belini and Rougier2008, pp. 36-40). Certainly, the statism embedded in this plan was at odds with WB monetarism. Particularly relevant to this article is that most state enterprises showed deficits — especially the railways, the electric company (SEGBA), the Argentine Corporation of Meat Producers and the water company, Agua y Energía (Rougier and Fiszbein Reference Rougier and Fiszbein2006, p. 169). As detailed below, it was ultimately the low earnings and tariffs of the railways and SEGBA that served as justification for the WB to freeze lending to Argentina. These factors, it is worth noting, became a permanent cause of friction between Argentina and the Bank during the whole period here studied (1971-1976) regardless of the president in power.
For the Bank, this was a time of impressive growth. Under the presidency of former U.S. Secretary of Defense Robert McNamara (WB president from 1968 to 1981), the Bank’s staff grew from 760 members in 1968 to 1,654 in 1973 and 2,500 in 1980 (Clark Reference Clark1981). Credits to low-income countries quintupled by 1973 and loans to mid-income countries increased from $847 million in 1968 to $2 billion in 1973 and to $8 billion in 1978 (Bacha and Feinberg Reference Bacha and Feinberg1985). During this same period, however, lending to Latin America declined, largely because McNamara prioritised support to the poorest countries of Asia and Africa, and also shifted from a focus on funding projects to funding programs. Nevertheless, during the early 1970s, the WB confronted serious and interrelated challenges. For example, during this period Latin American nations, determined to avoid the strings attached to WB and IMF conditional lending, signed agreements with other lenders, mainly the Inter-American Development Bank (IDB), the Export-Import Bank and European and U.S. commercial banks (Pastor Reference Pastor1993, pp. 289-313). In addition, developing countries, Argentina among them, strove to create a New International Economic Order (NIEO) that would replace the U.S.-centred Bretton Woods System orchestrated by the IMF and the WB (Cox Reference Cox1979; Lozoya and Estevez Reference Lozoya and Estevez1980, Ch. 2). The NIEO called for increased aid flows, greater control over foreign investment, preferential treatment for developing country exporters in international markets, a stronger role of the state in promoting growth, regulation of multinational corporations and sovereign debt relief. This last call was particularly problematic for the Bank, which, concerned about its own creditworthiness, has always opposed debt relief. Aware that part of the NIEO proposal matched WB goals, its proponents aspired to incorporate many of their demands into the WB agenda, but in vain. McNamara, who viewed the NIEO as political in nature and therefore outside the Bank’s jurisdiction, actually promoted an alternative vision of global economic reform. Striving to co-opt the developing world (the WB’s main clientele), he launched a strategy to eradicate global poverty. This strategy had little in common with the NIEO proposal, as it envisioned a limited role for the state in promoting development (Sharma Reference Sharma2015). McNamara’s view on poverty certainly reflected U.S. policies, at least partially. McNamara, having served under both Johnson and Kennedy, was influenced by the domestic war on poverty that they had launched. His turn towards poverty-focussed issues also echoed shifts in U.S. foreign policy. In 1961, President Kennedy launched the Alliance for Progress aimed at supporting, among other things, improvements in the accessibility of health, education and housing in Latin America. In 1973, the U.S. Congress passed the Foreign Assistance Act, which called for a new approach to development that would focus on bilateral assistance in the areas of food, nutrition, health and education (Stein Reference Stein2008, pp. 14-17). There is thus no doubt that ongoing Argentina-WB interactions in the early 1970s were influenced by McNamara’s efforts to portray the Bank as responsive to the NIEO initiative, even if this was only partially true. With regards to Argentina, the Bank’s efforts could have led to either one of two diametrically opposed scenarios. On the one hand, to increased lending to Argentina thereby conveying a message of approval of the country’s and the region’s development aspirations. Or, on the other hand, and as actually happened, to a decrease or even a complete interruption in lending to Argentina, as granting loans to such a mid-income country was incompatible with the new anti-poverty policies of the WB. In other words, from the perspective of the WB, the break in lending to Argentina was a response to political and economic developments in the country and the Third World more broadly as well as being a response to changes in the WB’s own policy and strategy.
It is also certain that McNamara was also guided by the Bank’s need to secure the vital support of its wealthiest member states, primarily the United States. Although McNamara strove to augment the WB’s autonomy, during the 1970s Washington remained critical of the Bank. Since only part of WB funds came (and continue to come) from differential quotas paid by its member states, the Bank was highly dependent on voluntary contributions by the United States and on selling bonds in capital markets (mainly Wall Street). At the time, the United States stand towards the Bank was somewhat inconsistent. On the one hand, in the wake of the 1971-dollar crisis and the subsequent collapse of the Bretton Woods System, a domestic recession, the Watergate scandal, the oil crisis of 1971-1973, and escalating opposition to the Vietnam War, Washington became increasingly reluctant to support the WB (Gwin Reference Gwin1987, pp. 201-211; Sharma Reference Sharma2013, p. 582). On the other hand, in the shadow of the Cold War, the U.S. government, particularly Secretary of State Henry Kissinger, saw the WB as a means to blunt southern demands (Sharma Reference Sharma2015). In the mid-1970s, U.S. policymakers, who traditionally viewed Latin America as separate from other parts of the Third World, came to realise that it was an integral part of it. With the NEIO in mind thus, the U.S. government, at least in theory and not for long, took Latin America’s concerns regarding development and economic growth more seriously (Harmer Reference Harmer2017). For Latin America, 1965-1975 was perceived as an opportunity to challenge Washington’s regional dominance and to pursue a more assertive foreign policy by using the NIEO initiative, for instance, which targeted US-influenced institutions such as the WB and the IMF (Brands Reference Brands2008). Despite the fact that the Peronist regime, like most countries in the region, believed that U.S. power was in decline, Perón himself lacked a clear anti-U.S. agenda. The result was a United States-Argentina relationship that was somewhat ambivalent and at times tense (Veigel Reference Veigel2003; Sheinin Reference Sheinin2013). Nevertheless, and despite several sensitive problems such as the kidnapping of U.S. businessmen in Argentina between 1970 and 1975, both countries strove to expand scientific, technological and drug control cooperation in conjunction with larger U.S. Cold War objectives in Latin America (Sheinin Reference Sheinin2013). Under these circumstances, it is somewhat surprising that WB files do not reveal overt attempts by Washington to influence the Bank’s decisions regarding Argentina during the early 1970s.
3 LANUSSE’S FLUCTUATING TIES WITH THE WB
Argentina received its first WB loans in 1961-1962, during Arturo Frondizi’s presidency. Between 1967 and 1969, under Onganía, Argentina received five WB loans for supporting livestock, roads and energy projects. The next two loans, whose defective execution was partly responsible for the break in WB lending, were signed in March to April 1971 by Lanusse. One of these loans, totalling $67.5 million, was aimed at backing a highway projectFootnote 8. The other, worth $84 million, was intended to support a 5-year modernisation plan of Ferrocarriles Argentinos (Argentine Railways)Footnote 9. These two last loans were of particular importance for the WB, not only because of the magnitude and high cost of the projects, but also because both Argentina and the Bank considered the expansion of its road and railways systems fundamental to the country’s economic development. As never previously consulted documents from the WB Executive Board (EB) reveal, if the board had any doubt about approving these loans it was not because it wanted to refrain from working with a dictatorship, but due to concerns regarding Argentina’s capacity to maintain economic stabilityFootnote 10.
Disagreements emerged shortly after the last loan’s approval. In May 1971, Alter, Head of LAC, sent to Minister Ferrer an ambivalent report on ArgentinaFootnote 11. In June 1971, a LAC mission landed in Argentina to collect information on the functioning of the Central Bank’s regulatory powers and to evaluate problems in the balance of paymentsFootnote 12. Certainly, these were not mere «neutral» issues. The same month, following the dissolution of the Ministry of Economy, Ferrer found himself out of his post. LAC lamented Ferrer’s departure and expressed concern over what it perceived as Argentina’s weakening technical capacityFootnote 13. At the same time inflation increased, with an expected 40 per cent annual rate by December 1971Footnote 14.
In September 1971, LAC reported that Argentina had implemented measures that violated the 1971 agreements, including a 16.7 per cent wage increase and a 60-day freeze on all prices and tariffs (including SEGBA and the railways)Footnote 15. Between November 1969 and January 1971, inflation and social unrest had led to the enforcement of governmental decrees dictating four wage increases which, combined, surpassed 30 per cent. In April and May 1971, the unions obtained a similar increaseFootnote 16. In a by no means neutral report, LAC explained that Lanusse adopted expansionary policies (which the WB strongly disapproved) because his government was «in a poor position to make hard economic decisions», as it was «in the midst of a difficult transition from military to civilian rule»Footnote 17. Striving to avoid political considerations, at least overtly, in October 1971, a technical WB mission arrived in Argentina to discuss potential projectsFootnote 18. A railways and an LAC economic mission also visited Argentina. LAC’s staff claimed that Brigadier Ezequiel Martinez, the new secretary of planning, «lacke[d] experience and knowledge of economic issues»Footnote 19.
In light of Argentina’s worsening economy and the poor performance in areas that were receiving WB financing, in December 1971, LAC staff recommended postponing the first disbursement of the railways loan which had been approved in April 1971 and the suspension of disbursements on the SEGBA loan of 1969Footnote 20. When McNamara met Carlos Muñiz, the Argentine ambassador to Washington, he stated that Argentina’s non-compliance was blocking WB lending to the countryFootnote 21. On 20 December 1971, a WB inter-departmental forum decided that Lanusse’s government, the railways and SEGBA would be advised not to present withdrawal applications under their already approved loans. It was also agreed that the Bank would not approve any further loans until the tariff and wage issues were resolvedFootnote 22. Remarkably, the managers of the state-owned companies criticised Martinez’s plan on similar grounds. They claimed that after months of price-freezing had impeded them from establishing tariffs that could generate reasonable earnings, the unrealistic maximum prices mandated by the new tariff policy would not solve the problem. Unlike LAC staff, they openly claimed the obvious — that decisions on tariffs were based on political considerationsFootnote 23. This problem was not new. As Nuñez Miñana and Porto (Reference Nuñez Miñana and Porto1982) argued, Argentina had been suffering for decades from a continuous deterioration of real public utility rates. When inflation rates increased, the real prices and tariffs of products and services provided by public companies fell. Since public utility rates tended to be directly and/or indirectly determined by the state, their prices turned into tools of economic and social policy. In other words, despite the fact that prices and tariffs were policy issues, LAC staff focused only on their purely economic aspects while negotiating with Argentina. In this way, by seemingly pretending that the tariff issue was simply a neutral, technical issue, LAC was able to put pressure on the military regime without causing an open crisis with it.
In January 1972, when disbursements were at risk, IMF and WB missions arrived in ArgentinaFootnote 24. Although Lanusse did not seek a loan agreement with the IMF, he hoped that good relations with it could help him obtain loans from U.S. and European commercial banksFootnote 25. Gunter Wiese, the mission head, insisted that Lanusse’s economic plan would not solve the budget deficit, the escalating inflation, and the reserve losses that had reached a monthly rate of $65 million. The mission criticised Lanusse’s lack of response with regards to problems in SEGBA and the railways. Minister Licciardo plainly stated that «it was politically impracticable to raise electricity tariffs so soon after the January 1, 1972 tariff increase». Although Weise doubted that SEGBA could recruit qualified executives at the reduced salaries stipulated in the WB loan, he requested that the company embark on a deep reorganisation and augment tariffs immediately by at least 25 per centFootnote 26. Once again then, LAC representatives remained «neutral».
In light of Argentina’s inability to assure that SEGBA and the railways would fulfill their obligations, Alter recommended suspending disbursements on ongoing loansFootnote 27. Suspension of disbursements is a highly uncommon practice. For example, at the same time, the WB and Salvador Allende’s regime in Chile were conducting high-ranking but unproductive negotiations. In that instance, notwithstanding ideological disagreement and Chile’s refusal to adopt WB recommendations, LAC never even mentioned the possibility of stopping disbursements on loans that had been approved before Allende’s inauguration (Kedar Reference Kedar2016). Thus, trying to avoid an almost inevitable and certainly harmful freeze in WB lending and disbursements, in March 1972, Carlos Brignone, Argentina’s Central Bank president and Ambassador Muñiz, met McNamara, Alter and Burke Knapp (WB vice president and chair of the Loan Committee). Despite this effort, the Bank remained immovableFootnote 28.
At first, the WB avoided making an official announcement regarding the suspension of disbursements. Instead, it waited for the final version of the economic program that Lanusse was discussing with the IMF, and gave Argentina time to conclude negotiations with U.S. and European banksFootnote 29. In March 1972, Brignone began to negotiate a loan with the IMF — the first since 1968. However, doubting Argentina’s ability to improve its economy, the IMF stopped negotiations (Kedar Reference Kedar2013, pp. 115-116). It was then clear that the freeze in WB disbursements was inevitable.
In July 1972, the WB formally announced that it had decided to suspend disbursements. It also conditioned the resumption of disbursements to improvements in SEGBA’s income level. While the SEGBA loan determined that revenues should at least cover labour costs, only 70 per cent of such costs were covered during 1972. Lanusse justified this incompliance by arguing that any tariff increase would increase inflationFootnote 30. From this point and until the elections in March 1973, Argentina-WB interactions significantly decreased.
In sum, during Lanusse’s regime, the WB initiated an exceptional freeze not only of new lending but also of disbursements on ongoing loans. To what extent was this uncommon freeze «neutral»? On the one hand, LAC staff closely followed political developments in Argentina. It recognised that Lanusse was politically and technically unable to implement the measures requested to curb inflation, including the tariff adjustments and wage freezes detailed in the WB loan accords. On the other hand, Argentina’s deteriorating economy, especially the poor performance of SEGBA and the railways, provided the Bank with sufficient technical justification to freeze financial activities with Argentina. The Bank’s refusal to grant new loans and renew disbursements until Argentina’s economy improved should not have surprised anyone. The Bank adopted the same strategy in the 1960s, during the presidency of José María Guido (García Heras Reference García Heras2008, pp. 109-110). It is clear, therefore, that although the Bank was not blind to Argentina’s politics, it was happy to let Argentina’s non-compliance with loan conditions be the reason that enabled the WB to present its punitive decision as neutral. Now, it was Perón’s turn to rebuild ties with the Bank.
4 PERONISM AND THE WB: BETWEEN NEUTRALITY AND PRAGMATISM
Cámpora, Perón and Isabel sought to reactivate financial relations with the Bank. However, it seems that for LAC, the transition to democracy did not propel any significant change in its working strategy in Argentina. Following Cámpora’s election, all that Wiese expected was that «the new Government will retain Argentina’s membership in the IMF and the Bank»Footnote 31. LAC staff intended to make it clear that in order to reestablish WB financing, Cámpora would have to augment railway and electricity tariffs. Shortly before Cámpora’s inauguration, a WB mission visited Argentina to monitor the evolution of the railways project. While discussing the company’s levels of earnings with the railway management, the Argentines promised to implement two tariff adjustments by December 1973Footnote 32. Meanwhile, the economy deteriorated. During the first quarter of 1973 prices increased by 90 per cent and inflation reached an annual rate of 77 per centFootnote 33.
During Cámpora’s brief term, which ended in July 1973, interactions with the Bank were cordial but fruitless. Cámpora appointed two old Perón allies to key economic positions: Gómez Morales as Central Bank president and minister of economic affairs, and Gelbard as minister of economy (in charge of the Ministries of Finance, Industry, Commerce, Agriculture, and Public Works and the Planning Office). Gómez Morales openly criticised the IMF but avoided complaining about the WB, whose funds he had always aspired to accessFootnote 34.
Gelbard, who was previously associated with the Communist Party, remained in office under Cámpora, Lastiri, Péron and Isabel (Brennan Reference Brennan1998, pp. 79-123). His plan stressed short-term goals, more equal income distribution and lower inflation (Kiguel Reference Kiguel2015, pp. 91-95). It opened with a rigid price freeze and a real wage increase of about 10 per cent (Di Tella Reference Di Tella1989, pp. 217-218). In June 1973, Gelbard promoted a nationalistic Foreign Investment Law. He strove to strengthen national industry and state-owned enterprises and reverse the privatisations carried out in previous years (Rougier and Fiszbein Reference Rougier and Fiszbein2006, pp. 64-65; Brennan Reference Brennan2007). Curiously, an intra-organisational WB report described Cámpora’s policies as «less populist than expected»Footnote 35. This inaccurate judgment can have several complementary interpretations. One, that with the aim of making Argentina comply with previous commitments (and repay its debts to the WB), the WB was determined to facilitate Argentina’s return to the negotiation table. Second, that the WB, which under McNamara put the fight against poverty at the top of its agenda, did not perceive Peronist policies as an insurmountable obstacle to agreement. Third, that relations with Peronist Argentina could help the Bank present itself as apolitical thereby improving its image and deepening its intervention in Latin America. Difficulties, however, abounded.
According to standard WB procedures, LAC intended to send a mission to establish initial contacts with Cámpora and Gelbard. However, Gelbard, who had publically criticised the WB «for letting political considerations influence its lending strategy vis-à-vis Argentina», asked for a postponement until the government had defined its economic policyFootnote 36. The mission arrived in June 1973. Its report was mixed — while railway prices had been increased by 20-25 per cent, the company’s financial ratios for 1973 would be lower than expected. As became customary, the mission criticised Argentina’s reluctance to reduce railway staff and to close unprofitable linesFootnote 37.
Problems also affected pre-1971 loans. This was the case, for instance, of a $27.5 million WB highways loan approved in June 1969. Vialidad (the governmental company in charge of roads and highways) requested WB authorisation to use $6 million of a remaining balance of $7.3 million to finance two other road projects instead of the original one. Partially due to LAC’s discontent with Vialidad’s inefficiency, the WB rejected its request and refused to open negotiations on yet another highway loanFootnote 38. The case of the $4.1 million undisbursed balance out of the $60 million loan to SEGBA approved in October 1969 was different. Since SEGBA began to increase tariffs bimonthly by 15 per cent, the WB authorised the remaining disbursements of this loan. Importantly, this project was completed in 1973 (with Perón in power), and not in 1972 as was originally scheduledFootnote 39. The WB’s positive stance towards SEGBA and its negative position towards the railways and Vialidad seem to reflect LAC’s efforts to appear as an institution able to stick to economic criteria. The WB was ready to deviate disbursements and evaluate future projects in areas where Argentina met the loans’ conditions. However, when borrowers (dictatorial or democratic) did not do so, the WB made no concessions.
Following Cámpora’s resignation, interactions with the WB continued as usual. LAC began to organise a mission to Argentina for November 1973 with the goal of elaborating a tentative lending schedule for 1974-1975Footnote 40. On 1 August 1973, Gómez Morales met McNamara, Knapp and Wiese. Gómez Morales described the efforts to curb inflation and explained that the government and the labour unions had reached agreement on wage controls. He stated that one of the most serious problems affecting Argentina’s economy was the prospect of a severe energy shortage. He stressed Argentina’s need to import petrol and revealed that the government was considering using natural gas, which would demand more pipelines and auxiliary facilitiesFootnote 41. He insisted that Argentina must expand its hydroelectric facilities and underlined that development in all these areas would require WB assistance. McNamara, rather than referring to Argentina’s development needs, asked whether the government intended to raise tariffs. Gómez Morales answered that SEGBA and all other public enterprises would have to augment their efficiency. Finally, «McNamara emphasized that [the WB] st[ood] ready to engage in detailed discussions as soon as the Government is ready, and to assist the Government in its development efforts»Footnote 42. Undoubtedly, from McNamara’s perspective, Argentina would be ready as soon as it followed WB «neutral» prescriptions regarding prices, tariffs, and the management and earnings of public enterprises. Even while the WB remained skeptical about Argentina’s capacity to meet these requirements, bilateral meetings continued to take place. It appears that, as on previous occasions, the WB had significant reasons for trying to avoid creating a crisis with Argentina. First, the Bank wanted to make sure that Argentina would repay its WB debts. The more hopes Argentina had of being granted WB loans, the more efforts it would make to augment its creditworthiness. Second, LAC was interested in monitoring Bank-supported projects that were still in progress. A third reason was the discontent that developing states continued to express towards the IMF and the WB, among others, through the NIEO initiative and the Conference of Non-Aligned Nations held in September 1973 (Sharma Reference Sharma2015). Argentina, represented by Gelbard and Gómez Morales, played a key role in that conferenceFootnote 43. WB relations with Peronist Argentina were thus influenced not only by changing domestic circumstances, but also by the WB’s need to appease widespread criticism among developing nations.
5 PERÓN IN POWER: A SECOND CHANCE FOR A FIRST IMPRESSION?
On 12 October 1973, when Perón took power, Argentina’s economic performance was improving. Although inflation remained relatively high, prices were stable. However, the industrial sector asked the «National Commission of Prices, Wages and Living Standards» to allow an immediate price adjustment of around 20-35 per cent, as costs of raw materials and imports continued to riseFootnote 44. In December 1973, Perón launched the Triennial Plan, which, as already mentioned, consisted of a two-year stabilisation program based on a price-wage freeze, rapid economic expansion, and redistribution of income towards the popular sectors. Initial results were positive. Although the government pursued an expansionary monetary policy and ran a large budget deficit, in early 1974 inflation fell to historic lows. However, following Perón’s death in July 1974, the situation began to deteriorate once again (Veigel Reference Veigel2003).
Following Perón’s inauguration, a WB technical mission visited ArgentinaFootnote 45. Nonetheless, LAC staff doubted Perón’s readiness to adopt the Bank’s policy recommendations. Wiese told McNamara that because Argentina joined the Bank only after Perón had been overthrown back in 1955, LAC requested from Perón’s team that it clearly confirm its willingness to work closely with the Bank. He added, «should we receive such confirmation, we are prepared to send a small economic and operational mission […]. We would then also consider whether we should appraise the Fourth SEGBA Power Project»Footnote 46. This unusual and by no means «neutral» request cannot but be related to the WB’s simplistic assumptions about Perón, which attributed to him an (unsubstantiated) anti-IMF and anti-WB stand (Kedar Reference Kedar2012). To the Bank’s surprise, in December 1973, Alejandro Orfila, the new ambassador to Washington, assured McNamara «that ‘the new Perón’ was very interested in establishing good working relationships with the international financial institutions»Footnote 47. Orfila, a representative of the agro and industrial sector who had served as economic attaché in Washington under Frondizi, was the right person to transmit this reconciliatory message. Remarkably, Perón’s administration backed Orfila’s declarations with new promises (but not necessarily with concrete policy changes). The local press reported that Argentina’s Central Bank assured the WB that it would repay $13 million to the Bank (of a $283 million debt) that was due in September to December 1973. This assurance seems to indicate that the Peronist administration was fully aware of the great importance that the WB attributed to debt repayments (which were crucial for the WB’s own creditworthiness). Argentina’s strategy yielded results. Promises were sufficient to please the WB. In November 1973, thus, the WB started disbursements on the railway and highway loans signed in 1971Footnote 48. These disbursements were even more surprising if we take into account that, as already mentioned, the Bank’s usual stance was that agreement with the IMF was a pre-condition for development loans. Interestingly, arguing that in previous years the IMF had interfered in Argentina’s internal affairs, the Peronist regime did not allow Fund missions to conduct standard and mandatory annual reviews of its economy or what is known as Article IV Consultations (Kedar Reference Kedar2013, pp. 121-134).
In January 1974, Orfila met McNamara for a second time. Orfila stated: «speaking for President Perón, Minister Gelbard, and the whole economic team, he wished to convey their very strong interest in working closely with the World Bank»Footnote 49. Following this meeting, several ministries prepared proposals for future railway and SEGBA projectsFootnote 50. Unfortunately, Perón died on 1 July 1974, before he was able to make good on his second chance to establish full financial and technical collaboration with the Bank.
With Perón’s death, Argentina’s political and economic situation deteriorated, and Gelbard’s economic team lost the backing needed to pursue its plan. Following Gelbard’s resignation on 21 October 1974, Isabel appointed Gómez Morales as minister of economy. One of his first steps was to seek an IMF loan, partially as a means of accessing WB funds. In the meantime, prices rose 3-4 per cent per month, forcing the government to augment wages by 12 per cent. In early 1975, the situation worsened; prices rose by more than 6 per cent monthly, public tariff rates were raised in February and wages in March. The terms of trade deteriorated and a sharp 33 per cent devaluation in March left the market vulnerable to speculation (Di Tella Reference Di Tella1989, pp. 221-223). In addition, in mid-July European markets closed their doors to Argentina’s beef, thereby putting at risk Argentina’s balance of payments. From July 1974 onwards, Argentina’s external position was highly imbalanced (Rougier and Fiszbein Reference Rougier and Fiszbein2006, pp. 81-82, 88-89).
LAC followed Argentina’s political and economic deterioration closely. Alter recognised that «the re-imposition of military rule remain[ed] a possibility»Footnote 51. On 17 January 1975, Gómez Morales and Orfila met McNamara and Knapp. Gómez Morales, aware that tariff adjustment was a precondition for WB lending, stated that «the increase in the tariffs charged by SEGBA would soon be effected», and promised to «soon send a letter to the Bank spelling out the details of the rate increase»Footnote 52. This time, promises were not enough. Yet, as a sign of good will, in early 1975 the WB EB approved a $100 million line of credit for a 4-year lending program to Argentina, although the projects in question were only planned for 1975-1976. LAC vaguely told the Argentines that it would submit to the WB board, at an undefined future date, new highways and SEGBA loansFootnote 53. In fact, LAC refrained from making any firm commitments but let Argentina understand that there were chances of reaching agreement.
Gómez Morales and Orfila strove to attract foreign investments and credit, including from the IDB and the WBFootnote 54. This was understandable as this type of loan could at least partially compensate for the decrease in public investment and export incomes, and the decreasing reserves of the Central Bank (Rougier and Fiszbein Reference Rougier and Fiszbein2006, pp. 90-91). During 1975, initiating a rapprochement with the international financial community, Argentina signed accords with private U.S. banks and multinationals, including General Motors Corporation, Ford Motor Company and Chrysler CorporationFootnote 55. In June 1975, trapped between irreconcilable pressures from opposing Peronist factions, Gómez Morales resigned. His short term actually represented a transition between Gelbard’s nationalistic and interventionist approach and the «shock policy» advanced by Celestino Rodrigo, minister of economy between 5 June and 17 July 1975 (Muchnik Reference Muchnik1998, pp. 82-91; Kiguel Reference Kiguel2015, pp. 91-101;).
When Rodrigo took office, Argentina was expected to repay $2 billion in debts to commercial U.S. and European banks, the WB and the IDB. Determined to avoid default, Rodrigo opened negotiations with the IMFFootnote 56. Argentina, however, was in the midst of an inflationary escalation. By June 1975, inflation reached 110 per cent and was expected to exceed an annual rate of 200 per centFootnote 57. Under these circumstances, Rodrigo implemented a «shock plan» (the «Rodrigazo»), which included a 160 per cent devaluation, a doubling in public utility rates, a 50 per cent limit on wage increases, and a strict public spending austerity policy. When Rodrigo deregulated the prices of most products of basic consumption, the unions responded with a general strike. The government thus ended up permitting 60-200 per cent wage increases. The furious reactions to Rodrigo’s plan led to his resignation. Although the plan had the potential of expediting a de-freezing of WB-lending, its short-term implementation was not enough to facilitate this objective. Rodrigo’s successor, Pedro José Bonani, was in office for less than a month. On 14 August, he was replaced by Antonio Cafiero, an old-school Peronist who in the 1940s had opposed joining the IMF and the WB (Marongiu Reference Marongiu2006; Brennan and Rougier Reference Brennan and Rougier2009, pp. 168-169).
In December 1975, with the Treasury deficit amounting to about 13 per cent of GNP, the IMF, after a 7-year hiatus in lending to Argentina, approved a drawing of $126 million under the Compensatory Financial Facility — a credit with no binding conditions that the IMF approves almost automatically as emergency assistance to countries that experience a sudden shortfall in export earnings or an increase in the price of imports due to fluctuating global commodity pricesFootnote 58. Certainly, this partial renewal of IMF lending could have potentially paved the road to the signing of a stand-by arrangement and, therefore, to WB lending — but it did not. Argentina’s creditworthiness remained low. Cafiero, constrained by contradictory pressures from within Peronism, resigned on 3 February 1976.
The new minister, Emilio Mondelli, was a liberal economist with no formal political affiliation. On 25 February, he submitted his so-called «National Emergency Plan» to Isabel and to the commanders of the Navy, Air Force and ground forces, an indication of the immense pressure exerted by the military at the timeFootnote 59. Mondelli’s plan comprised new tariffs for public services, maximum prices for basic products, wage increases and other actions that contradicted WB expectations.
Even when rumors about an imminent coup became widespread, LAC continued monitoring Argentina’s situation. LAC staff believed that one of the most acute problems was wage increases, which monetarists defined as a major cause of inflation. The government granted an 18 per cent wage increase to private sector workers effective on 1 January 1976. Public employees were paid the remainder of a 160 per cent increase that had been approved in June and received another 40 per cent increase. Since price rises averaged 10 per cent per month, demands for wage increases were constantFootnote 60. To make things worse, adverse climatic conditions damaged crops, reducing exports and aggravating problems with the balance of payments. Argentina, once again, opened negotiations to access IMF fundsFootnote 61. On 24 March 1976, however, a military coup deposed Isabel.
Less than 2 weeks after the coup, IMF and WB missions arrived in Argentina to negotiate new loansFootnote 62. In June 1976, in a by no means neutral report that contrasted with the allegedly technical tone of the previous 5 years, Wiese informed McNamara: «It is difficult to overestimate the degree of damage suffered by the Argentine economy during the final months of the Peronist era. During the Presidency of Isabel Perón the country was virtually leaderless. […] The Congress was in total disarray […]. With unbridled, irresponsible unions. Encouraged by demagogic leaders, and highly protected, oligopolistic industry engaged in a struggle over wages and prices, with total lack of monetary control and fiscal discipline»Footnote 63.
In April 1976, Martínez de Hoz launched a stabilisation plan which he elaborated without IMF or WB intervention (García Heras Reference García Heras2018). The WB, which was eager to move on with projects that had been in the pipeline for years, approved its first loan to the dictatorship in September 1976. The loan, for a power project, totalled $115 million — the highest loan ever granted to Argentina until then. A second loan of $105 million for a highway project was granted in March 1977. An industrial credit project for the National Development Bank (BANADE), totalling $100 million, was approved in June 1977Footnote 64. Between 1978 and 1983 the WB granted another eleven loans to Argentina’s dictatorship. Research on the WB’s relations with General Jorge Rafael Videla (March 1976 to March 1981) has yet to be carried out. The fact that after the coup, despite the worsening economic situation, the WB provided generous support to the dictatorship raises serious questions about the WB’s alleged neutrality. Even the 1981-1983 economic crisis did not convince the Bank to stop supporting Argentina’s dictatorship (Biglaiser Reference Biglaiser2002, pp. 34-46). In any event, it seems that Martínez de Hoz’s readiness to follow WB recommendations that actually matched his own views (such as the commitment to make significant changes in the management of the railways and SEGBA) considerably increased the chances of signing loan agreements. Nevertheless, one cannot but wonder how the WB found neither «neutral» nor moral impediment to providing support to such a brutal dictatorship.
6 CONCLUSIONS
Between 1971 and 1976, in contrast to earlier and later periods, the WB did not grant any new loans to Argentina, thereby creating a long and unique break in Bank lending to the country. The WB stopped new lending as well as disbursements on several already approved loans to Argentina in 1971 under Lanusse’s military rule. It resumed disbursements in 1973, with Juan Perón in power, and reinitiated lending, on an unprecedented scale, soon after the 1976 coup. As this paper shows, the lack of lending activities in no way hindered Argentina-WB bilateral interactions. By conducting often fruitless meetings with Argentina and other Latin American member states, the Bank hoped to portray itself as neutral thereby moderating potential or actual criticism and hostility. At the same time, and not less important for the Bank, it also increased the chances that its borrowers would repay their debts.
Regardless of the different economic plans adopted, the Peronist administrations and the military regimes that preceded and succeeded them, were equally eager to access WB development financing. Nevertheless, not all administrations were equally able to comply with the WB pre-conditions for lending — pre-conditions that often carried a high social price tag. Besides the crucial importance of launching development projects, Bank loans have always been significant because the WB approves them taking into account not only the merit of the projects themselves, but also the borrower’s creditworthiness. Hence, Bank loans have always been perceived as a clear seal of political and economic approval.
As argued here, all regimes expected the WB to be «neutral», or, namely, that it would provide them with loans without questioning their economic policies — policies which, in most cases, had little in common with the monetarism prevalent in Washington at the time. In order to help the WB remain «neutral», the Argentine representatives who met with the LAC staff and the WB management on a fairly regular basis, adopted several strategies. For instance, Ambassador Orfila and Minister Gómez Morales, systematically avoided commenting on Argentina’s political situation. Instead, they focussed on economic issues and referred to a pragmatic «new Perón» who was keen to establish a fertile collaboration with the WB. Gelbard, in contrast, publically declared that the WB’s decisions were politically biased. Actually, this criticism seems to have forced the Bank into a defensive stance and caused it to make certain concessions — such as sending missions to evaluate tentative future projects. Curiously, representatives of the military regime were the only ones who, in a final attempt to avoid the imminent interruption of disbursements, asked the Bank to take Lanusse’s fragile political situation into account. As already mentioned, in January 1972, Minister Licciardo explained to LAC staff that «it was politically impracticable» to raise tariffs and comply with the conditions stipulated in the last WB loan agreements. For its part, and regardless of Argentina’s strategy, the WB explained its decision to stop or, alternatively, to renew financial activities on «neutral» grounds. Even while LAC staff followed political developments in Argentina, it always justified its decisions on «pure» economic grounds, mainly rampant inflation, problems with the balance of payments, low tariffs, poor earnings of state-owned public utility companies and wage increases.
For obvious reasons, however, it is hard to establish a clear distinction between economic or «neutral» considerations and political and ideological criteria. The issue of the earning levels of state-owned public utility companies which received WB support is a good example. First of all, there is no doubt that the decision to run deficits on such companies is by no means technical. It reflects an ideological stand regarding central issues such as the role of the state in the economy, fiscal deficit, inflation and unemployment. In addition, it is clear that LAC staff identified the political and social pressures that led different administrations to freeze or reduce tariffs, thereby bringing the companies’ earnings well below the levels agreed upon with the Bank. However, when interrupting disbursements in 1971, LAC referred only to the «pure» economic aspects of this incompliance. Hence, «neutrality» served as a working tool which allowed the Bank to make tough decisions and to explain them as merely technical, when, in fact, the issues in question (be it inflation, tariffs or wages) were, really, far from being neutral. Likewise, when in late 1973 Argentina’s economy improved and Peronism promised to repay loans owed to the Bank, LAC immediately resumed disbursements. Negotiations between Allende and the WB support this argument. While the WB claimed that negotiations with a socialist regime demonstrated its «neutrality», it ultimately refused loans to Allende. The «neutral» justification was Allende’s refusal to pay compensations to U.S.-expropriated companies. Needless to say, expropriations and compensations are by no means apolitical issues. The same applies to WB relations with the Peruvian dictator Juan Velasco Alvarado (1968-1975). After expropriating the American International Petroleum Company in 1968, the WB stopped lending to Peru. It was only the devastating earthquake of May 1970 that led to the renewal of WB lending to Peru in September 1970 (Brands Reference Brands2010). In this case, humanitarian considerations served as «neutral» justification for lending.
In conclusion, the examination of the hitherto understudied interactions between Argentina and the WB in the early 1970s compels us to reconsider not only the nature of the WB’s involvement in Latin America, but also the borrower’s ability to transform the WB into an institution which, neutral or not, better served the region’s interests.
ACKNOWLEDGEMENT
The author would like to acknowledge the editor Sandra Kuntz-Ficker and the three anonymous readers provided by the Revista de Historia Económica – Journal of Iberian and Latin American Economic History for their thoughtful insights and recommendations. Many thanks are also due to the staff of the World Bank Group Archives and most especially to Shiri Alon. The author would like to extend my gratitude to friends and colleagues who commented on different versions of this article, especially to Arie Kacowicz, Alexandre (Sandy) Kedar and Fray Hochstein. This research was supported by the ISRAEL SCIENCE FOUNDATION (Grant No. 273/14).
