This victory is the third time Argentina has won the world championship in soccer. The country was the champion in 1978 and 1986. In 1978, Argentina defeated the Netherlands 3-1 in the final. The Argentine hero at that time was Mario Kempes. In 1986 in Mexico, Argentina became champions after defeating West Germany 3-2. Their hero at the time was the late Diego Maradona. In addition, Argentina won second place in the world cup championship three times, namely in 1930, 1990 and 2014. In the history of the world cup 18 times, Argentina won 47 out of 88 matches.
Unfortunately, in the economic aspect, Argentina's performance is far different and disappointing. Some may be surprised to know that at the end of the 19th century, Argentina was among the ten wealthiest countries in the world. In fact, at that time, it was more prosperous than France, Italy, Japan and even Germany. Among the industries that contributed to its income was agriculture, particularly the beef sector, wheat and other farm products run by an educated workforce. Most of its exports were to the United States and Europe.
However, Argentina is no longer among the rich countries. It is even well known as one of the very problematic countries from an economic and financial aspect. For example, since Argentina joined the IMF in 1956, Argentina has requested and agreed to receive 22 financial support programs from the organization. The most notable financial incident was during the financial crisis in 2001 when Argentina defaulted on an IMF loan of $21.6 billion and defaulted on $95 billion worth of debt to other creditors.
Argentina's economic collapse began in the 1930s. The reason is because of Argentina's dependence on the American and European markets, which resulted in a severe decline in Argentina's economy when America and Europe experienced an economic crisis called ``The Great Depression'' between 1929 and 1939. Argentina's exports plummeted, and as a result, the government's source of income in the form of export taxes and imports also plunged.
The difficult economic situation resulted in a severe political crisis in Argentina and contributed to a new era where the military actively intervened in the country's administration.
In 1978, when Argentina won the World Cup soccer competition for the first time, the country's inflation problem worsened and increased to 600 per cent. People who were not satisfied with the situation protested. Unfortunately, the military government acted violently against critics, mainly from the left wing, and killed many of the leaders from this circle. Moreover, an estimated 30,000 Argentine citizens "disappeared" without a trace. This phase is known as the "Dirty War".
Argentina again won the World Cup soccer competition in 1986, and soccer star Diego Maradona became the pride of all Argentines. But the economic problems continue to worsen. In 1989, inflation reached a rate of 5000 per cent. The social situation became dire, with demonstrations everywhere. Hungry mobs stormed many supermarkets due to poverty.
In the late 1990s, Argentina faced a severe economic recession with an unemployment rate of nearly 15 per cent. Tax collection by the government decreased as a result of this situation. In addition, Argentina also faced other problems, such as corruption, and this has caused an increase in government spending and debt. In 1998, Argentina's economy contracted by about 28 per cent.
Argentina was also affected by the financial crisis in East Asia in 1997 and the Russian financial crisis in 1998. Capital owners rushed out of Argentina by selling the Peso currency and converting it to American Dollars. Nevertheless, the Argentine authorities wanted to protect its dollar reserves and, at the end of 2001, froze the withdrawal of American dollars from banks. This policy, known as Corralito, angered the people, and severe riots occurred, which resulted in the loss of dozens of lives.
Argentina failed to clear a debt amounting to nearly USD 100 billion, which was the most significant default case in the world at the time. The default was a massive blow to its image. As a result, the world financial market decided to marginalize the country. Riots and looting spread to the Argentine capital. Argentina's economy continued to decline, and its unemployment rate rose above 20 per cent. In addition, the problem of hunger, starvation, and malnutrition was widespread even though it has a lot of wheat and soybean fields.
Argentina's economic contraction of up to 20 per cent caused thousands of young people to migrate to Europe to find a living. Hungry Argentinians felt confused because many farms produced food grains. However, Argentine farmers prefer to export most of the grain.
In 2008, the government increased the export tax on agricultural products from 35 per cent to 44 per cent to increase the government's financial resources. It was also to get the support of the suffering people. However, the farming business owners were furious because the policy hurt them financially. Furthermore, many of these entrepreneurs were in debt to the banking industry and needed to repay the debt through income earned from exports abroad.
Between 2007 and 2015, Cristina Kirchner was the president. Her administration's problem was their propensity to deceive and deny the validity of economic data that showed the country's poor financial performance. To make it worse, she also had a reputation for corruption.
Government policies under President Mauricio Macri, president from 2015 to 2019, also failed to solve economic problems. His policies resulted in increasing the cost of living. In June 2016, the price of goods increased by 4.2 per cent in just one month.
Currently, Argentina is under the leadership of President Alberto Fernández. He is still unable to solve the problem of inflation. It is getting more severe, with a rate approaching 100%. In addition, almost 40% of Argentinians are poor. On the streets of Buenos Aires and other cities, the number of homeless and desperate people trying to make a living by searching trash cans for recycled products has increased drastically in recent years. Alberto Fernández has attempted to stabilize the currency and the economy by restricting or taxing exports of the country's primary commodities - agricultural goods such as soy, meat and wheat - but the problem remains unresolved. Some even think that his measures have only worsened the situation.
Some of the main lessons we can draw from the case of Argentina:
1. A debt-based economic and financial system will create economic problems. The people will be miserable even though the country has a lot of resources.
2. A military coup or any other non-democratic measure will not only not solve the problem but will also open the way for tyranny that makes the people more miserable.
3. Leaders who do not tell the truth, like to cheat, and are corrupt will worsen the situation.
4. Success in the sports arena can make people preoccupied with sports issues. In that situation, it is easier for them to fall victim to the manipulation of corrupt leaders.
* Mohd Nazari Ismail is Honorary Professor at the Faculty of Business and Economics, University of Malaya
** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.
** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.
