Argentina bank robbery?

Mary Anastasia O'Grady:

Argentine President Cristina Kirchner's firing of the country's central bank president last Wednesday has provoked a constitutional crisis, not unlike the one that rocked Honduras last summer. As with then-Honduran President Manuel Zelaya, Mrs. Kirchner has tried to run roughshod over her nation's laws. She blithely ignored legal protections of bank independence.

Not surprisingly, central banker Martín Redrado refused to go and challenged her reason for sacking him: his refusal to hand over to her $6.6 billion in bank reserves.

In response, Mrs. Kirchner issued a decree to amend the bank's charter so that she could push Mr. Redrado out "legally." A federal judge then issued an injunction in favor of Mr. Redrado, and on Friday he returned to his bank post. The same judge froze the bank's reserves so Mrs. Kirchner couldn't take them. The constitutional battle lines were drawn.

Mrs. Kirchner's insistence that the central bank's assets should be at her disposal is noteworthy. It reflects a primitive view, not unknown even in the U.S., that the role of a central bank is to print money for the government's use. Yet it is nonetheless surprising that even after the nation has suffered so much inflationary agony, it is still possible for an Argentine politician to pursue this line of reasoning without risk of being tarred and feathered.

...

The president might have a case against Mr. Redrado if her complaint were the country's 17% inflation rate last year. But her government has been rapidly increasing expenditures by borrowing from the state-owned banks. It has also been spending the country's $2.7 billion "special drawing rights" windfall from the International Monetary Fund. Both actions are inflationary.

It is true that the central bank could have used monetary policy to contain the inflationary effects of the government's profligacy, but it is also well known that Mrs. Kirchner was demanding that easy money. She would be hard pressed to lay responsibility for debasing the currency solely on Mr. Redrado. Instead she says he has to go because he has refused to fork over bank reserves.

...

The June removal of Mr. Zelaya by the Honduran Congress for violating the constitution should worry Mrs. Kirchner. Honduras proved that the 2001 Inter-American Democratic Charter of the Organization of American States does not protect a "democratically elected" president from being removed from office for violations of the rule of law. It also showed that the U.S. and the OAS are paper tigers against such a sovereign decision. What may be unfolding on the larger stage that Argentina represents is yet another test of republican values in the region.

Kirchner has already had to back down to the farmers when she imposed a ridiculous export tax on their goods. She still has a high handed bent. I don't think Chavez can bail her out in the next election.

She has been a disastrous leader for Argentina. Hopefully the people can do better in the next election.