- Created: Wednesday, 06 May 2009 12:09
- Written by Alvaro Michaels
FRFI 178 April / May 2004
Having reduced the country to mass poverty by a decade of plunder and privatisation primed with dollars from the global banks, the ruling class now struggles to save its own skin. On the one hand it cannot attack the working class any more provocatively, on the other it cannot absolutely repudiate its debts to the banks. Finally, it has to keep on seducing the middle classes. Thus President Kirchner is now playing the patriot by keeping the IMF at bay whilst praying that a 70% currency devaluation and starvation wages will boost growth and exports, and so attract new investments from abroad.
During 2003 the gross domestic product rose 7% (beyond IMF hopes of 4%). This ‘economic’ recuperation is based on hunger and unemployment. The balance of payments has moved in to surplus. This ‘bonanza’ has reawakened the appetites of private creditors who, scenting money, want to renegotiate their debt repayments. They want the state to increase payments because of the increased state budget surplus resulting from its spending cuts. The government won’t adjust this ‘3%’ surplus because it would ‘compromise social and political stability’. The IMF is trapped, because 15% of its loans are to Argentina, and so it has to play the good policeman, pressing on behalf of private creditors.
The debtors’ crisis arose in December 2001 after the collapse of the public accounts. Argentina unilaterally suspended repayments on bonds until now. In September 2003 Argentina announced a plan with the IMF. However, the new offer removed 75% of the nominal value of the old securities and was unanimously rejected by the creditors. Some demanded money or government property owned overseas. Others organised themselves into groups, demanding 65%, so spoiling the apparent IMF agreement with the Argentinean government. $87.05bn (of the total $178.74bn debt) is now up for re-negotiation.
Eventually, on 22 March, Argentina repaid the IMF more than $3bn, clearing the way for a fresh $3.1bn loan. The government pledged to meet directly with the Argentinean bondholders and to let utilities raise rates as much as 35%.
The pickets movement
By 2002 up to half of Argentina’s population actively participated in new movements ranging from factory occupations to democratic Neighbourhood Assemblies. Many formed alliances called piqueteros, after the poorest and most militant campaigners from the shantytowns. More than 25% of Argentineans are now unemployed, and remaining jobs are in poorly-paid service industries or the ‘informal sector’ (unregulated and ruthlessly exploitative).
The national pickets’ movement resulted in drip-fed concessions from the government and middle class activists with their own agendas jumped upon it. Nevertheless, the election victory of the President Kirchner has forced the radical opposition to work for a more coherent strategy. Kirchner has reduced by 252,000 the number of individuals receiving social support ($51 a month for a worker with two dependants). On 16 March the 2,000 supporters of the Independent Movement of Retired and Unemployed (MIJD), demonstrated outside the Ministry of Labour, with 20 on hunger-strike. The workers had occupied the entrance to the Ministry in mid-February.
In February thousands of piqueteros from the MIJD arrived at Mar del Plata to participate in the Eleventh National Pickets’ Assembly to create a common front against the government. The MIJD is one of the most determined groups. The mayor of the town sent 150 police to ‘keep the peace’. Delegates from pickets’ movements in all 23 provinces attended. It is this sort of pressure that makes it impossible for the government to repay the debts and slows down the vampire-like extortion of the international creditors.