Jan. 26, 2014 7:53 p.m. ET
BUENOS AIRES—The leaders of Argentina and Venezuela were set to attend a conference in Cuba to debate Puerto Rican independence on Tuesday, as their countries faced their most acute economic crises in a decade.
Their trips—coming as currencies plummet and uncertainty about burgeoning economic troubles grow—seemed to underscore for many Argentines and Venezuelans the erratic governance that economists say have left both countries struggling.
The government of Argentine President
Cristina Kirchner and her Venezuelan counterpart and ally Nicolás Maduro partly devalued their currencies last week, sending shudders across Latin America, and both administrations have blamed conspiracies for their economic woes. Argentina's peso tumbled the most since the country's 2001 default; basic goods in Venezuela are scarce.
On Saturday, Mrs. Kirchner landed in Havana three days before the start of a gathering of Latin American leaders hosted by Cuban President Raúl Castro.
"Fidel invited me to lunch," she said in a statement issued Sunday soon after her meal with the president's brother and co-founder of the Communist state. "Very good food," she told reporters after the meal.
Mrs. Kirchner and Mr. Maduro have expressed support for the U.S. commonwealth of Puerto Rico's small independence movement. Mr. Maduro said he would propose that the island become the 34th member of the Community of Latin American and Caribbean States, the body of countries meeting in Havana to discuss commercial and diplomatic matters.
"Puerto Rico is not alone in its struggle for identity, for dignity, for independence, for its future," Mr. Maduro, who was expected to arrive in Havana late Sunday night, said in a speech last week.
On the streets of Argentina and Venezuela, many asked what their leaders were doing in Cuba when they were struggling with Latin America's highest rates of inflation and the palpable fear that things could worsen when private investment is veering toward a recovering American economy.
"Cuba?" said Alberto Gómez, an Argentine army retiree. "People are traumatized by the rise of the dollar, but the government isn't talking about this. This is the only government we've had that doesn't listen to people."
Both governments, leaders of a leftist vanguard in Latin America opposed to the Obama administration, still retain a strong base of support.
"My opinion is that several businessmen are trying to weaken the government," said Bruno Pérez, a Buenos Aires sociology student. He was echoing Argentine Economy Minister Axel Kicillof's comments that the vested interests drove the peso down last week.
In Venezuela, the Datanalisis polling firm said in December that Mr. Maduro had just over half of his countrymen's support in a poll that came days after he forced retailers to sell electronics goods at steep discounts to help fight inflation, a popular measure among the poor.
But the same polls showed only 26.5% of respondents believed the government's economic policies were helping the situation (Mr. Maduro blames an "economic war" waged by Washington and Venezuelan capitalists for the troubles).
Mrs. Kirchner, who won a landslide re-election in 2011, has seen her approval rating fall fast in recent weeks, pollsters said. About 75% of those polled by the Buenos Aires pollster Management & Fit just over a week ago thought the economy was headed in the wrong direction, and 66.5% disapproved of her handling of the economy.
Of vital concern, especially to the legions of poor in both countries. is inflation, which was 56.2% in Venezuela and approaching 30% in Argentina, according to economists whose data is used by multilateral lending agencies.
"The president is to blame for what's happening and he's off visiting Fidel," said Jesús Rodriguez, 37, a cabdriver in Venezuela. "We accept the long lines to buy a bag of flour or milk," he said. "We have just stood by as things have gotten worse."
In Argentina, Mrs. Kirchner defended her trip to Cuba amid what she said were rumors that she wouldn't attend for health reasons. In early October, she had undergone surgery to drain a blood clot near her brain. She hasn't elaborated on her health.
"You have to be angry with those who lie, not with those who believe the lies," Mrs. Kirchner said.
Mrs. Kirchner hasn't elaborated over the vague measure her aides announced last week to take pressure off the country's currency: the sale of dollars at the official 8 peso per greenback exchange rate.
Though a loosening of the currency regime, the plan carries major obstacles for Argentines: There will be a stiff 20% surcharge, and businesses are banned from buying.
Carlos Pertierra, 70, a history teacher, said the measures are unlikely to alter Argentina's economic course, mainly because the weaker currency may stoke inflation further.
"I don't see what is they are trying to do," he said. "What I see is that they take aim and point over here, and then they take aim and point over there. The government is like an unpredictable child."
Javier Corrales, an Amherst College professor who writes frequently about Latin America, said that it is possible that, like Mr. Maduro in Venezuela, Mrs. Kirchner sees strengthening ties as beneficial to her cause.
"By choosing to go to Cuba perhaps Argentina is showing precisely how serious they think the crisis is, how much she needs external advice," Mr. Corrales said. "And how much she wants that advice to stay secret."
— Ezequiel Minaya and Kejal Vyas contributed reporting from Caracas.
More than a decade after it defaulted on its foreign debts, Argentina is again facing a financial crisis caused largely by misguided government policies. The administration of President Cristina Fernández de Kirchner recently devalued the peso and relaxed some capital controls in an effort to preserve the country’s dwindling foreign reserves. The government is hoping that these steps will ease some of the pressure on the currency, which does not float freely against the dollar. But Argentina needs to do a lot more to address inflation and other underlying economic problems that have led investors and ordinary citizens to bet against the peso.
In the years after its painful default in 2002, which wiped out the savings of millions of people, Argentina enjoyed a fast growing economy thanks in part to the booming world demand for soybeans and other commodities the country exports. But Mrs. Kirchner squandered the recovery in recent years by increasing spending on wasteful subsidies and financing the government partly by printing pesos. As a result, inflation has shot up; independent economists estimate that consumer prices jumped 28 percent last year.
Mrs. Kirchner has also hurt the economy by picking fights with private businesses and investors. In recent years, she nationalized an oil company, an airline and pension funds. In 2011, Argentina implemented controls on how many pesos its citizens could convert into dollars, which helped create a black market for currency transactions and undermined confidence in the government’s economic policies. A recent poll showed that three-quarters of the country said the economy was headed in the wrong direction.
Government officials have begun taking some steps to correct past mistakes. The economy minister, Axel Kicillof, has been negotiating compensation for the oil company, YPF, that the government seized in 2012. And Argentina will put out a new inflation index next month to convince the International Monetary Fund to accept its official data again. While those are good first steps, Mrs. Kirchner and her aides will have to take much bolder steps to repair the damage that they have done to the economy in recent years.
A large screen shows Cuba’s President Raul Castro speaking at the opening ceremony of the CELAC Summit in Havana, Cuba on January 28, 2014.
Cuban President Raul Castro has urged cooperation between Latin American and Caribbean nations without the involvement of the United States.
“We should establish a new regional and international cooperation paradigm,” Castro said in Havana on Tuesday in his keynote speech as the head of the host nation for the summit of the Community of Latin American and Caribbean States, CELAC.
CELAC was created on December 3, 2011 in Venezuela’s capital Caracas by the country’s late leader Hugo Chavez to fight US influence in the region.
CELAC consists of 33 countries in the Americas and represents nearly 600 million people. It was believed to be an alternative to the Washington-based Organization of American States (OAS), founded in 1948, which had allegedly served Washington’s interests rather than those of the region.
The summit is centered on fighting poverty, inequality and hunger. According to the data released by the UN’s Economic Commission for Latin America and the Caribbean, 28.2 percent of the region’s residents live in poverty and 11.3 percent in extreme poverty.
“In the context of CELAC, we have the possibility to create a model of our own making, adapted to our realities, based on the principles of mutual benefit,” Castro said.
He also censured US economic policies in the region.
“The so-called centers of power do not resign themselves to having lost control over this rich region, nor will they ever renounce attempts to change the course of history in our countries in order to recover the influence they have lost and benefit from their resources,” Castro stated.
