After no less than four years of recession, economic crisis in Argentina has caused the whole of that society to reach boiling point. In particular, on 20 December 2001, the masses poured out into the streets to vent their anger, confronting the forces of repression and refusing to be cowed, notwithstanding the deployment of live and rubber bullets, water cannon, tear gas, police horses, and the death of five protesters. The poor and the hungry ransacked supermarkets, in defiance of the police bullets that shot 23 of them dead. Even the middle classes joined in the protests. The net result was that the 'Radical' government of Fernando De La Rua, elected in October 1999, was forced to resign. Such was the political chaos that Argentina went through 5 presidents in a fortnight, and although we now have the 1999 failed Peronist Presidential candidate, Eduardo Duhalde installed as President, nobody is too sure that this will last. Certainly the masses are still taking to the streets protesting that they never elected him.
In order to get into the saddle and to remain there, Duhalde has had to promise to "end an exhausted (economic) model" (a rather vague way of indicating that the way the economy is run has radically to alter - a blindingly obvious conclusion), and has even gone so far as to denounce the whole of Argentina's political leadership:
"Some months ago Mr Duhalde himself joined in the criticism of Argentina's discredited political class. 'The political leadership … is shit and, of course, I include myself in that,' he said in an unusually candid statement" (Thomas Catan, 'New president will abandon free-market orthodoxies', Financial Times, 3 January 2002).
Such statements may or may not endear him to the Argentine electorate, but are slightly worrying US imperialism - in case he means them - bearing in mind that the situation in Argentina has got entirely out of hand, and anybody who hopes to stay in power may well have to do SOMETHING to stem the flow of Argentina's economic lifeblood into the maws of imperialist leeches. For the moment, however, imperialism is standing by hoping that through demagogy Duhalde will be able to bring the situation under control at relatively little cost to imperialism, by putting into effect such reforms as devaluation that will make Argentine exports more competitive in the short term, making a big deal of Argentina defaulting on its $150 billion dollar debt, while actually working to putting the economy back on course to recommence the servicing of that debt at the soonest.
While it is 'economic incompetence' on the part of De La Rua and his predecessor, the Peronist, Carlos Menem, which is being blamed for the crisis, the truth is that it is not incompetence but a straightforward sellout of the Argentine economy to imperialist interests that has made the crisis as bad as it is. Pegging the Argentine peso to the dollar certainly attracted foreign imperialist investment in Argentina's privatized public industries. But of course the need to maximize profit meant that jobs were lost and wages held down. The Argentine Party of Liberation calculates that Argentinians who regularly go hungry now number 14 million. The mass impoverishment unleashed by opening Argentina to unbridled imperialist profiteering also severely attacked Argentina's middle class, who, according to Thomas Catan and Mark Mulligan in the Financial Times of 31 December 2001 ('Government learns about people power') are estimated to be "disappearing into the ranks of the poor" at the rate of 2,000 a day.
To maintain services the government had to borrow heavily - at increasingly high rates of interest as its position became more desperate - while tax revenues were falling as unemployment soared to 18% of the population. The IMF demanded "structural adjustment", i.e., big cuts in public spending - that would exacerbate unemployment and, of course, substantially reduce services. Unless the cuts were made the IMF threatened not to release to the Argentine government the money it had promised to lend, leaving the latter unable to pay the salaries of public employees. De La Rua, like Menem before him, tried to impose the cuts demanded by the IMF, ordering a 13% cut in public sector wages and pensions and slashing the funding of public health and social security to the point of collapse.
The rest is history.
"The final chapter of Mr De La Rua's sorry presidency began three weeks ago. On November 30, the trickle of bank withdrawals turned into a flood, as crisis-wary Argentines queued to withdraw their savings. To avert a banking collapse, Mr Cavallo [the economy minister] limited cash withdrawals to $1,000 a month…
"The IMF then turned up the pressure by holding back a $1.3 bn payment due in mid-December, pushing the country to the edge of default.
"In a last-ditch bid to keep IMF support, Mr Cavallo unveiled plans to raise taxes and slash spending by $9.2bn next year - nearly a fifth of the entire budget.
"At the same time, the sudden shortage of cash caused by the bank controls hammered the informal economy - in which most of the nation's poor work.
"The combination proved fatal.
"Last weekend, people began looting supermarkets for food. By Wednesday night thousands stood on their balconies or walked out into the streets, banging pots and pans to call for the resignation of the government …
"With the situation rapidly slipping out of control, the government declared a state or emergency, and riot police moved to clear the Plaza de Mayo on Thursday morning. Many refused to be moved, and by late afternoon, the centre of Buenos Aires degenerated into a pitched battleground between masked young men from the poorest parts of the city and riot police…
"Mr De La Rua's fate was sealed." (Thomas Catan and Richard Lapper, Financial Times, 21 December 2001, 'President who stumbled form failure to disaster').
Clearly there can be no solution to Argentina's problems which does not involve unhitching the Argentine economy from the imperialist juggernaut of death. This, however, is not something that imperialism is going to sit back and allow to happen. Conflict is inevitable. If no government can be found to defuse the anger of the Argentine people and render them governable, then there will no doubt be an attempt to have recourse once again to that old faithful of South American politics, the army coup. The last one cost the lives of at least 30,000 progressive young people, rounded up and murdered. There cannot be the slightest doubt that contingency plans are being drawn up along these lines at this very moment. We have no doubt that the people of Argentina will be ready this time to hit back hard against fascist violence.
In the meantime all that can be said with certainty about the future is that it is uncertain. The Duhalde family has announced they will not be moving into the presidential residence. Time will show the reason for their caution.
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