Argentina and Bolivia: Renationalisations anger imperialists / FRFI 227 June/July 2012

Fight Racism! Fight Imperialism! 227 June/July 2012

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.

Argentina and Bolivia have dramatically different histories, populations and standards of living. Argentina has the second highest average GDP per capita in purchasing power terms in Latin America after Chile, yet at $14,700 it has fallen from near the top of global rankings in the 1930s to 51st in the world today. Bolivia has an average per capita income of only $4,789, and lies in 120th place. Two thirds of Bolivians live in poverty. Argentina is highly urbanised and predominantly populated by peoples of European origin, Bolivia has a majority of indigenous peoples. Argentina depends on agricultural products in its trade, Bolivia on minerals extracted. Bolivia has an external debt of $6,164bn, and is currently assessing the lawfulness of its foreign debt. Argentina defaulted on its $95bn debt in 2001, forcing new agreements on all but $6bn worth of creditors.

At the turn of the century the democratic movements of the Latin American poor and indigenous people, dramatically turned the tide against the ‘neoliberal’ assault of the 1990s. The determination of Hugo Chavez in Venezuela to base political and economic development on the needs of the masses was central to this change.

Argentina

In April the government announced renationalisation of a majority of Repsol’s shares in the YPF oil and gas company, first privatised in 1993. Repsol bought its 57.4% stake in 1999, leaving the government with no control over its energy resources. Repsol repatriated profits to overseas shareholders. Despite incentives to promote oil and gas exploration and production, between 1999 and 2011, its oil reserves contracted 40.5% and its gas reserves 47.1%. Its oil production dropped 38.3% and its gas production 25.4 %. Its net exploration wells fell to record-low levels. Its net investment was only $3.6bn. Consequently Argentina spent $9.4bn on fuel imports last year. In December 2011 Repsol defensively announced a find of one billion barrels of shale oil. Argentina consequently ranks third in the world in terms of potentially recoverable resources behind China and the US. Central government will now take 51% of YPF shares, leaving Repsol with 6%.

The Argentinian government renationalised Aerolíneas Argentinas in 2008. These policies are pushed by La Cámpora, a ‘social democratic/Keynesian’ group within the ruling Justicialista Party. The struggle for power inside the Justicialista Party is between open pro-imperialists and Kirchner’s bourgeois nationalists.

Bolivia

Bolivia’s first indigenous President, Morales, won the 2005 elections campaigning for the nationalisation of the gas and oil industries ‘with the cooperation of foreign investors’. On 1 May 2006 it renationalised Yacimientos Petroliferos Fiscales Bolivianos (YPFB) hydrocarbons (entirely privatised by 1997), followed by the renationalisation of electricity in 2006, Entel telecommunications in 2007, and the smelter Vinto (among others) in 2007. In 2007 the government announced its intention to renationalise the National Railway Company (LENF) privatised in 1996, and created Boliviana de Aviación (BoA) to replace Lloyd Aéreo Boliviano as its flag carrier.

Now TDE (Transportadora de Electricidad), the electricity transmitter privatised in 2002, has been recovered. It had been bought by the Spanish state transmissions monopoly Red Electrica of Spain: 20% Spanish government-owned. Now the Bolivian state controls most of the country’s electricity supply chain, and will obtain profits for the state budget.

These nationalisations are national reforms within a state dominated by imperialism. They weaken the multinationals involved. They are aimed at stimulating local business and local markets. Any consequent amelioration of the miserable poverty under which the mass of the population live, and so any reduction in the political threat this represents, is a bonus for the national bourgeoisie. These reforms cannot alone create the conditions for a firm step toward socialism without a political programme that presents an alternative economic and social plan for the democratic development of the country. Communists support the nationalisations because they obstruct the capacity of imperialism to dominate such countries, but we demand a complete change to the purposes and management of the operations of these companies.

Reactionary forces in the east of Bolivia control agriculture and so food supplies, while private capital dominates other mineral extraction. Lacking funds, YPFB, the state energy company, has been unable to increase its shareholdings to 51% in the industry’s principal exploration and production units. These stay with Brazil’s Petrobras, the sector’s biggest investor, and Spain’s Repsol YPF. The Bolivian government is encouraging Bolivian business to participate in mining, as well as manufacturing, construction, agriculture and housing. It also seeks alternative international sources of development. Private corporations such as the US Franklin Mining and Russia’s Gazprom are involved, seeking to impose their own agenda. Splits are provoked between the government and its indigenous support base by international commercial interests, for example the conflict over the proposed construction of the Villa Tunari to San Ignacio de Moxos highway, which would have cut through the Isiboro Sécure National Park.

Threats by imperialism

Repsol is now suing Argentina in the US for $10.5bn, and has cancelled a contract to provide liquefied natural gas. Argentina imports natural gas to meet 20-30% of its consumption. It will now take gas from Bolivia and YPF will produce more.

In Latin America the poor have intensified their protests, pushing aside the most slavish of servants of imperialism, giving room to a new breed of pragmatic politicians sympathetic to the poor, or compelled to respond to popular demands. However, the national bourgeoisie are anxious to seize new markets and capital resources elsewhere, such as in Asia, for themselves. In this changing scenario the working class and poor peasantry must impose their will. New and uncompromising political programmes are essential for the working classes internationally. In Bolivia the indigenous majority and urban poor are defending the natural environment and demanding policies to deal with global pollution and to meet their social and economic needs in opposition to big business. In Argentina the highly-organised Unemployed Workers Movement has won successes in basic social security conditions. These movements require our support. All power and resources to the people!

Alvaro Michaels

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’.

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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.

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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.

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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.

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