Argentina: Imperialism’s financial grip

Fight Racism! Fight Imperialism! 240 August/September 2014

Central to the export of capital by imperialism is the imposition of debt on weaker states. Debt interest payments have to be enforced if the rich are to prosper and a domestic middle class be paid off. After Argentina’s default on its $100bn debt in 2001, including $81bn of international debt, its ruling class has tried to weaken the hold the EU and US’s financial elite have on the country. Default was Argentina’s only option in the face of a 2001 state debt of 160% of GDP, a 10% fall in GDP from 1998, unemployment around 25% and over half the population in poverty. However the ruling class needs access to foreign capital. Some accommodation to its creditors is essential. Alvaro Michaels reports.

 

Read more ...

Argentina and Bolivia: Renationalisations anger imperialists

On 16 April and 1 May respectively Argentina and Bolivia reclaimed ownership of energy companies privatised by Spanish corporations during the neoliberal assault of the 1990s. Sharp reactions from the Spanish state and the European Union underline the conflict of interest between those exploited for their resources and labour, and imperialism, which lives off this plunder.

Bolivia and Argentina have distinct histories, but both have long been trapped in the web of financial dealings woven by the imperialist powers. In their national struggles to throw off these parasitic ties, the clash of nationalisation versus privatisation of the main industries has been key. Nationalisation immediately places the surpluses of these industries at the disposal of the state, but provokes intense hostility from domestic and transnational capital which battle to repossess the property or demand huge compensation.

 

Read more ...

Argentina: turning the screw

FRFI 163 October / November 2001

Capital valued at $8 billion fled Argentina between July and August. The country cannot sustain payments on its $128bn external debts which amounted to 52.8% of the GDP in 2000. Export earnings have fallen, whilst interest payments on foreign debt have tripled since 1992. Treasury bills offer 14% and the state is virtually without credit. Speculators are hoping for devaluation so they can later buy pesos at a cheaper rate, so making a fast buck. International capital fears not only that it will not get its interest and dividends, but for its own safety. The UK has $4bn invested in Argentina. Small wonder British prime minister Tony Blair was keen, during his July visit, to support President de la Rua’s new plans for austerity, not least to prevent a subsequent collapse in the Brazilian economy. Not to be outdone by the Europeans, the deputy secretary of the US Treasury flew in the next day to promise $1.2bn from the IMF for September if the Argentinian government did ‘what was necessary’.

 

Read more ...

Argentina: making the poor poorer

FRFI 164 December 2001 / January 2002

Argentina cannot finance its foreign debts of $132bn, of which government debts amount to $95bn. With recession, the GDP is 6% below its peak three years ago and falling fast; it is clear that this year’s government spending deficit will now run to over $20bn, much higher than the IMF target of $6bn, which was attached to supporting loans. This is despite the harsh anti-working class measures it has undertaken (see FRFI 163). The ‘balanced budget’ plan of the summer has been abandoned. The growing public sector debt is likely to be some 57% of the GDP by the end of the year. The government will thus need to borrow another $12bn to $15bn. This is going to have to come from reductions or deferrals of international debt. The IMF’s decision to give limited backing to Argentina last summer cannot stop the economic rot.

The result of a simple devaluation would be an intense reaction from the workers and from an increasingly proleterianised middle class. Thus the state seems keen to hold onto the link to the dollar and is asking creditors to accept a debt restructuring, a write-down of the debts, which will severely damage Argentina’s relations with the international financial markets. Naturally the foreign lenders (ganged together in the new ‘Emerging Markets Creditors Association’) are pressing Argentina to adopt a different route. Private inward capital flows have ceased already and the imperialist banks’ ‘rating agencies’ are already threatening to declare Argentina in default. Its debts are already rated ‘CC’, below those of Pakistan and Nigeria, much like junk bonds. Some arrangement must be forthcoming or a complete default will occur. Since Argentina’s bonds account for some 23% of all emerging market debts, this money market would be paralysed if Argentina fails. Already in 2000 net private capital fled all emerging markets to the sum of $150bn and this is accelerating. Stock market prices have fallen 46% over the last 12 months.

 

Read more ...

Argentina 'globalised': the workers revolt

FRFI 165 February / March 2002

A spontaneous mass revolt by the Argentinean poor against the government on 20 December brought it down within days. On 28 December, continuing huge demonstrations and other direct action forced the choice of the fifth President – Eduardo Duhalde – in two weeks. Almost daily riots have continued throughout Argentina involving both the poor, demanding work and justice, and the middle classes, demanding security and access to their savings. On 10 January anti-government rallies led to still more attacks on banks, stores, government buildings and the police. The $280 billion Argentinean economy will shrink over 7% this year; inflation will jump towards 50% and the peso is bound to sink from parity to over 2.5 per dollar. The continuing question for the Argentinean masses is how to replace the existing state machinery with one of their own design, working in their interests. The Argentinean bourgeoisie and its imperialist paymasters are now having to rethink how they can exploit the economy. As President Duhalde said on television, ‘If we don’t deactivate this time bomb well, it will explode...every night I’m consulting God and the Virgin Mary’. Alvaro Michaels reports.

 

Read more ...

Argentina: Workers organise

FRFI 166 April / May 2002

This year Argentina’s economy will contract at least 5%. Half the population already lives in poverty on less than US$3 per day. If the January inflation rate of 2.3% continues for the rest of the year, 4.3 million more people will be thrown into poverty. Meanwhile the IMF is forcing the Argentinean state to continue cuts in spending and abandon its temporary dual exchange rate, so accelerating the collapse of the economy.

This removes all room for manoeuvre for the Argentinean bourgeoisie as it falls further into the grip of imperialism. At the same time, President Duhalde hypocritically laments the fact that the ‘political class’ does not represent the wishes of the people.

 

Read more ...

Argentina: Starving the workers – only way out for imperialism

FRFI 168 August / September 2002

Argentinean GNP fell 16.3% in the first three months of 2002, following Argentina’s default last December on its foreign debt and the subsequent massive devaluation of the peso. Both domestic and external trade have collapsed, as have tax collection and state spending. Six million workers, 45% of the working population, are now unemployed or underemployed, 1.6 million more than in May 2001. For the 11.3 million with jobs there are shorter hours, massive inflation and a scarcity of goods to buy. With half the population plunged into poverty, Argentineans are now facing starvation. Malnutrition is common throughout the country. In the Pilar district of Buenos Aires there is an 80% increase in infectious illness. Health Minister Garcia has said ‘I’m afraid that we’ll experience something similar to Russia when they lost seven years off the average life expectancy in their last macro-economic crisis’. Spanish, French, US, Brazilian and Venezuelan organisations have given medicine, clothing and food worth £4 million this year but this a drop in the ocean given the needs of the burgeoning numbers of the hungry poor.

 

Read more ...

Argentina on the rack

FRFI 169 October / November 2002

8.4 million of Argentina’s 34 million population are now destitute. Malnutrition is widespread; children eat fried toads, or rats or pigeons. Everywhere desperation stalks the land. Workers in Rosario who haven’t eaten in days seize a crashed cattle truck and eat the load. Violence against property is rising and the shrinking middle class provides a boom market only for security systems, defence courses, guards and armoured vehicles.

 

Read more ...

Argentina: new president, continuing misery

The Argentinean ruling class, led by the International Monetary Fund (IMF) has been on the offensive. It has slashed the living conditions of the population to such an extent that Argentina, through a policy of starvation (see FRFI 169), is actually increasing its foreign currency reserves (now $10.5 billion) and paying back state debts. Exports of wheat, soya, corn and meat increased during 2002, with a current balance of payments surplus of $8.8 billion, whilst hunger ravaged the country. The gross domestic product fell 15% and half a million jobs were lost over the last year. Accordingly, in January, an IMF deal saw $6.6 billion of debt ‘rolled over’ again, with loans covering obligations up to August. The IMF vultures are ‘optimistically’ planning an intense squeeze over two years, whilst 20% of children are already malnourished. Alvaro Michaels reports.

 

Read more ...

Argentina: How the ruling class deals with its debts

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.

 

Read more ...

Cookies make it easier for us to provide you with our services. With the usage of our services you permit us to use cookies.
More information Ok