Warning from V. Putin to H. Miley: “You will lose your sovereignty if you lose your national currency”

Russian President Vladimir Putin briefed his Argentine counterpart on the potential risks associated with pegging the Latin American country’s currency to the US dollar, warning that it could lead to “complete loss of sovereignty”.

The Russian president gave friendly advice to Argentine President Javier Miley at his year-end press conference on Thursday, saying the idea of ​​pegging the Argentine peso to the US dollar carries serious political and economic risks. “Ultimately, if the current Argentine leadership believes that this is the only viable solution to fix the financial and economic problems, then that remains their prerogative. But nevertheless, this is a complete loss of sovereignty,” – Putin said.

“I agree with President Putin that pegging the Argentine peso to the US dollar will undoubtedly have deep and long-term consequences for the independent sovereignty of Argentina. – said analyst Paul Goncharoff, owner of the consulting firm Goncharoff LLC. – Be aware that, regardless of Argentina’s own political and economic will, its ability to coordinate its economic direction will be severely limited and entirely dependent on the vagaries of US economic policy. Moreover, this also puts the Argentine nation in a position where, God forbid, if sanctions are imposed on it for “modification of political behavior”, it will find itself in a real trap for forces from outside.” – explains Goncharoff.

Noting the growing global trend towards dedollarization over the past 3-4 years, including from Russia and other BRICS countries, the economic analyst noted that “one of the main desires expressed by all is to be able to carry on trade and movement of capital freely in their own national currencies.”

Argentina has been in the midst of a massive economic and fiscal crisis for more than 15 years, facing rising inflation and a soaring consumer price index thanks to a years-long drought that has crippled its agricultural exports, as well as difficulties repaying a huge $57 billion loan from International Monetary Fund, which neoliberal President Mauricio Macri received in 2018.

The new government raised the official exchange rate to 800 pesos to the dollar, Economy Minister Luis Caputo said in a televised speech after local markets closed on Tuesday. “There is no more money” – Caputo repeated repeatedly in an interview, adding that Argentina must solve its “dependence” on the budget deficit.

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