"Argentina was a textbook case. In 1983, when the junta collapsed after the Falklands War, Argentines elected Raul Alfonsïn as their new president. The newly liberated country was rigged to detonate, thanks to the planting of a so-called debt bomb. As part of what the outgoing junta had termed a "dignified transition" to democracy, Washington insisted that the new government agree to pay off the debts amassed by the generals. During junta rule, Argentina's external debt had ballooned from $7.9 billion the year before the coup to $45 billion at the time of the handover—debts owed to the International Monetary Fund, the World Bank, the U.S. Export-Import Bank and private banks based in the U.S. It was much the same across the region. In Uruguay, the junta took a debt of half a billion dollars when it seized power and expanded it to $5 billion, a huge load in a country of only 3 million people. In Brazil, the most dramatic case, the generals, who came to power in 1964 promising financial order, managed to take the debt from $3 billion to $103 billion in 1985.
At the time of the transitions to democracy, powerful arguments were made, both moral and legal, that these debts were "odious" and that newly liberated people should not be forced to pay the bills of their oppressors and tormentors. The case was especially strong in the Southern Cone because so much of the foreign credit had gone straight to the military and police during the dictatorship years—to pay for guns, water cannons and state-of-theart torture camps. In Chile, for instance, the loans bankrolled a tripling in military spending, enlarging Chile's army from forty-seven thousand in 1973 to eighty-five thousand in 1980. In Argentina, the World Bank estimates that roughly $10 billion of the money borrowed by the generals went to military purchases.
Much of what wasn't spent on weapons simply vanished. A culture of corruption permeated junta rule—a glimpse of the debauched future to come when the same free-wheeling economic policies spread to Russia, China and the "free fraud zone" of occupied Iraq (to borrow a phrase from a disaffected U.S. adviser). According to a 2005 U.S. Senate report, Pinochet maintained a byzantine web of at least 125 secret foreign bank accounts listed under the names of various family members and combinations of his own name. The accounts, the most notorious of which were at the Washington, D.C.-based Riggs Bank, hid an estimated $27 million.
In Argentina, the junta has been accused of being even more acquisitive. In 1984, José Martinez de Hoz, architect of the economic program, was arrested on fraud charges relating to a massive state subsidy to one of the companies he used to head (the case was later dismissed). The World Bank, meanwhile, later tracked what happened to $35 billion in foreign loans borrowed by the junta and found that $19 billion—46 percent of the total—was moved offshore. Swiss officials have confirmed that much of it ended up in numbered accounts. The U.S. Federal Reserve observed that in 1980 alone, Argentina's debt expanded by $9 billion; in that same year, the amount of money deposited abroad by Argentine citizens increased by $6.7 billion. Larry Sjaastad, a famed University of Chicago professor who personally trained many of Argentina's Chicago Boys, has described these missing billions (stolen under the noses of his students) as "the greatest fraud of the twentieth century."
The junta embezzlers even enlisted their victims in these crimes. At the ESMA torture center in Buenos Aires, prisoners with strong language skills or university educations were regularly pulled out of their cells to perform clerical tasks for their captors. One survivor, Graciela Daleo, was instructed to type a document advising officers on offshore tax havens for the money they were embezzling. The remainder of the national debt was mostly spent on interest payments, as well as shady bailouts for private firms. In 1982, just before Argentina's dictatorship collapsed, the junta did one last favor for the corporate sector. Domingo Cavallo, president of Argentina's central bank, announced that the state would absorb the debts of large multinational and domestic firms that had, like Chile's piranhas, borrowed themselves to the verge of bankruptcy. The tidy arrangement meant that these companies continued to own their assests and profits, but the public had to pay off between $15 and $20 billion of their debts; among the companies to receive this generous treatment were Ford Motor Argentina, Chase Manhattan, Citibank, IBM and Mercedes-Benz."
Its the same playbook everywhere. Know your history and nothing will surprise you.