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24 The Americas The Economist April 25th 2020

2 2 looks like double jeopardy,” says a presi- Buenos Aires and in other cities. The pre-existing recession makes the
dential adviser. The consequences of de- Mr Fernández is trying to shield poor trade-off between public health and eco-
fault would be grisly. Output, squeezed by Argentines from the consequences of the nomic growth even more painful than it is
the lockdown, would shrink by far more lockdown, in part by taxing richer ones. for most countries. Under pressure from
than the 5.7% forecast by the imf for this The government has given bonus pay- trade unions and business, Mr Fernández
year. The peso would plunge, pushing in- ments to welfare recipients, informal has allowed organisations in 11 sectors, in-
flation even higher. Unemployment and workers and people who work in health cluding export industries and refuges for
poverty would soar. Despite a history of de- care, policing and supermarkets. It has im- victims of domestic violence, to reopen.
fault, “even we may not recognise what’s posed new freezes on prices of food and But he is likely to rule out a quick return to
coming: economic meltdown and social medical supplies. Congress may reconvene normality like that advocated by Brazil’s
unrest, alongside a pandemic,” warns Ser- to levy a tax on Argentines’ worldwide as- president, Jair Bolsonaro, who makes light
gio Berensztein, a political analyst. sets. The “patriotic” tax will “kill the chick- of covid-19. Mr Fernández knows that the
The government wants to wring the en that lays the eggs for future recovery”, pandemic is more merciless than Argenti-
maximum relief it can from bondholders warns Aldo Abram, an economist. na’s creditors. 7
without triggering that disaster. Mr Guz-
mán is seeking a modest “haircut” of 5.4%
on the principal (which would save the Bolivian wine
government $3.6bn) and a dramatic 62%
cut in interest payments. These payments High varietals
would start low, at just 0.5%, and late, be-
ginning in 2023, when an election is due.
They would peak in 2029 at less than 5%.
Under this plan, the government would
save $37.9bn on its interest bill.
LA PAZ
The absence of even a token payment
until May 2023 will stiffen creditors’ resis- Another intoxicating export from the Andes
tance. With no prospect of money coming n 2010 the Netherlands’ Centre for the est, at 2,000 metres (6,500 feet) above sea
in, they could spend the next three years IPromotion of Imports from developing level. Intense sunshine gives grapes’ skins
lobbying and litigating for a better deal. countries, which is financed by the govern- more tannin and wide daily temperature
They complain that the government has ment, sent Cees van Casteren to Bolivia. swings increase the acidity of their juice.
been slow to disclose its strategy for servic- His mission was to help Bolivia’s vintners That makes tannats, malbecs and cabernet
ing the debt that would remain. The plans break into Europe. It was a tough assign- sauvignons “fresh”, and “spicier” than low-
it has released so far do not take into ac- ment. Back then, Bolivia’s main winemak- er-altitude wines, says Mr van Casteren,
count the effects of covid-19. “If you’re a ers—Kohlberg, Campos de Solana and one of 394 “masters of wine”.
creditor, told to wait three years, you need Aranjuez, all family-owned—competed But putting them on European tables
to hear the plan,” says a source close to both fiercely to sell cheap wine to a tiny protect- has not been easy. The first step was to
investors and the government. ed domestic market. The intoxicating ex- bring the feuding families together to agree
There is little time to resolve the tussle. port for which Bolivia is famous is cocaine. on how to spend the Dutch aid and to come
The Fernández team put a 20-day limit on The idea that Bolivia might aspire to up with a shared brand for Bolivian wines.
negotiations. But the real deadline is May bottle something better is not silly. Spanish “They wouldn’t even sit together at the
22nd, the end of the 30-day grace period for priests made wines there in the 16th cen- same table,” says Mr van Casteren. No one
a missed $500m payment. “There is recog- tury. The modern industry started in the showed up to the first meeting he called.
nition that default is much more likely 1960s, when the Kohlbergs brought vines Eventually, they forged friendships on
than not,” says the presidential adviser. from Europe to make wine to relieve a fam- tours of European vineyards.
Veterans of past renegotiations hold out ily member’s heart condition. Bolivian vintners cannot compete
hope of an agreement. Argentina’s offer Bolivia’s vineyards in the Andean re- against Argentines and Chileans as mass
preserves much of the face value of the gion of Tarija are among the world’s high- producers for a global market. The cost of 1
debt. There may be wriggle-room in the
schedule for repayment. The price of Ar-
gentina’s existing bonds rose after it made
its proposal, a sign that the offer is more
appealing than investors were expecting.
Government negotiators are “pushing it to
the cliff-edge, as they must, to remind all
that default is a disaster for all”, says a for-
mer finance minister.
Mr Fernández is using brinkmanship,
too, in his battle with the pandemic. “Quar-
antine, social distancing, will extend be-
yond April,” said Pedro Cahn, a govern-
ment epidemiologist. Even then, “we have
to expect many more cases and many more
deaths.” Workers in private hospitals say
that the government’s low numbers for co-
vid-19 cases and fatalities reflect a lack of
testing. They fear “dramatic loss of life”
when the virus peaks, probably in early
June, in poor neighbourhoods that ring Grape expectations