Roberto Lavagna: Argentina’s Clean Slate?

Argentina is South America’s melting pot. The country prominently boasts people of Arab origin — such as former president Carlos Saul Menem — and from many other nationalities.

Yet, Argentina was literally swamped with Italian immigrants in its past — with a million of them disembarking in Buenos Aires between 1882 and 1920 alone. In fact, it is often remarked that Argentines are merely Spanish-speaking Italians.

Roberto Lavagna, like so many Argentines, is of Italian origin. His last name, in fact, means “blackboard” in Italian.

Mr. Lavagna has had a distinguished career in the public sector, including negotiating the South American trade bloc (the “Mercosur”) and serving as Argentina’s ambassador to the European Union and the World Trade Organization.

He is also an academically-trained economist. He attended the University of Brussels and Harvard and has taught economics at the University of Buenos Aires.

Mr. Lavagna’s teaching experience may be an important asset at his new post. He will have to use a metaphorical “blackboard” to teach his countrymen a few lessons — including the value of savings and the need to live within their means.

Early in the 20th century, Argentina was one of the richest countries in the world — and an outright magnet for European immigrants.

However, the nation proved incapable of parlaying its considerable natural resources and world-class agriculture into genuine wealth. For instance, you’ll find few Italians willing to trade their own wealthy country for Argentina today.

To be sure, Argentines have long had a penchant for living well. Stores in Buenos Aires have always been filled with European luxury items — and its residents love to dress elegantly. The overvalued currency, which for a decade was hitched to the U.S. dollar, helped draw all those imports to Argentina.

As a result, Argentina appeared for a while to be quite wealthy, with a per capita income of $10,000 in 2000.

Yet, this apparent wealth was bought at the expense of some $140 billion in debt — which works out to around $4,000 for every man, woman and child in Argentina. Reckless international creditors were willing to lend the money, and reckless Argentines were happy to take it.

Now, the reckoning has come. Even if Argentina’s social fabric withstands its current crisis, the path back to financial health will be long and painful. The Argentines will have to live within their means, and it certainly won’t be pretty or elegant.

Of course, the Argentines would like Mr. Lavagna to trade his blackboard for a different kind of board — the tabula rasa. Many people in Argentina are still hoping that the debts could somehow be forgiven and that their country could start fresh, with a clean slate.