Economy

In Argentina, Where Saving In Dollars Is No Longer OK

Analysis: Argentina has a new system to restrict citizens' ability to purchase dollars. Is this an attempt to stabilize the Argentinian pesos or crack down on tax evaders?

In Corrientes, what's good as gold? (Adam Jones, PhD)
In Corrientes, what's good as gold? (Adam Jones, PhD)
Gustavo Bazzan

BUENOS AIRES - The Argentine taxation agency, (AFIP) which controls foreign currency purchases, has erased the option from their on-line authorization system to purchase dollars for "Savings." That means that Argentines will only be able to obtain dollars for trips abroad, to purchase real estate or other large items like agricultural machinery or medical equipment.

Last November, the Argentine government instituted a new program for purchasing dollars. So-called "automatic" methods for buying dollars, including via telephone banking, were outlawed. Under the new system, Argentines wanting to buy dollars had to go to a bank, show identification and declare what they would use the dollars for. The banker would enter the customer's information into the AFIP website. The AFIP then cross-referenced the person's tax information, their reason for buying the dollars and the amount they would like to buy, and then either approved or declined the operation.

Several days ago, the agency's head announced that the option "to buy dollars for saving" would disappear. And now it has. It is the tax agency's contribution to the government's "cultural battle" against the widely-held idea in Argentina that one should buy dollars whenever one believes that the local currency is losing buying power because of the perceived "bogeyman" of inflation (for the government, it seems, inflation does not exist).

The web page's renovation comes just days after the AFIP managed to block an injunction from a taxpayer who had managed to get $125,000 for a real estate deal without prior approval by the AFIP.

Some have noted that by simply deleting the option from the authorization page, without issuing a resolution prohibiting the purchase of dollars for savings, the AFIP is protected from legal challenges. But that is incorrect - legal action against this latest restriction can proceed, even without official statements forbidding the purchase of dollars simply for personal savings.

In addition to having erased the option, the AFIP has essentially blocked all operations over the past month involving the purchase of dollars, except those meant to be used for travel outside of Argentina.

Up until now, courts have allowed the AFIP to block all of the complaints that have been filed in relation to the restrictions on the purchase of dollars, but is not clear if that will continue to be the case if the number of cases increases.

A recent decision by the federal judge in Neuquén, in western Argentina, found that there were "inconsistencies' in what most applicants to purchase dollars are told. And cases where they are allowed to buy the dollars but a fiscal investigation is triggered to make sure that their taxes are in order are "arbitrary and unreasonable."

Read the original article in Spanish

Photo - Adam Jones PhD

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Geopolitics

Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3

-Analysis-

LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.


Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

commons.wikimedia.org

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

If nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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