Argentina after IMF 'reform'
Banks close doors as economy nears collapse
By Andy McInerney
The image splashed across business pages around the world on
Dec. 1 was enough to send a shiver down the backs of big
business financiers. Thousands of Argentineans were lined up at
banks across that South American country to withdraw their
savings.
It was a classic run on the banks--a sign of desperate
weakness in Argentina's financial sector.
One retired textile worker, 67-year-old Ramona Ruiz,
expressed the sentiments of those trying to withdraw their
funds. "That is my money inside that bank, mine! I was being
patriotic by not removing my savings earlier," she told the
Washington Post, as reported in a Dec. 2 article.
While politicians pleaded for calm, the actions they took
showed their alarm. Finance Minister Domingo Cavallo announced
limits on withdrawals, after financial analysts warned of a
complete financial collapse within 10 days.
He also offered to convert bank accounts from the peso, the
Argentinean national currency, to the U.S. dollar. Banks would
no longer be able to make loans in pesos, but only in dollars
based on the banks' supply of the U.S. currency. These moves
together led many to accuse Cavallo of an attempt to
"dollarize" the economy--making the U.S. dollar the national
currency of Argentina, thus giving up all financial controls to
the U.S. treasury.
These desperate signs came the very weekend that officials
from the International Monetary Fund were in Argentina to
discuss a new loan bailout. The IMF has demanded severe
austerity measures from the government of President Fernando de
la Rúa, which the president has been unable to fulfill
so far because of resistance from political opponents and from
the working class.
The financial crisis in Argentina has riveted the attention
of Wall Street sharks thousands of miles away for several
reasons. First, in the words of the Dec. 2 Washington Post,
Argentina's financial system is "dominated by local
subsidiaries" of U.S., French and Spanish banks. So the crisis
in Argentina is not really an "Argentinean" crisis at all--but
rather a crisis for the imperialist banks.
Second, these same U.S. and European banks are the ones
holding the IOUs for Argentina's $130 billion in foreign debt.
Should Argentina's government default, it would send a tremor
through the financial accounts of Citibank, Chase and their
European counterparts.
A crisis of production
Third, "emerging market" stock speculators have additional
billions riding on the fate of Argentina's debt. This is
reflected in the extreme sensitivity of U.S. stock markets to
the events thousands of miles away in Buenos Aires.
Beneath the bank crisis is a far deeper crisis in
Argentina--the fundamental problem, in fact, facing the
capitalist class of bankers and bosses in both Argentina and
the United States. The bank crisis is a reflection of a crisis
in production, both in Argentina and across Latin America.
Argentina's economy has been in a depression for the past
four years. Unemployment is officially running at 18 percent,
although unions charge that half the population is either
unemployed or underemployed.
This is a symptom of the economic crisis that is raging
across Latin America. Brazil suffered a financial meltdown in
1999, and is verging on another. Colombia has been in a
depression for the past two years.
All these countries, acting under the whip of the IMF, have
responded in the same way: cut the public sector, throwing
millions out of work, and imposing austerity measures that cut
any benefits to the very sectors hardest hit by the job
cuts.
In Brazil, Argentina and Colombia--South America's three
largest economies--this has also led to a pauperization of
significant sectors of the middle classes.
Protests continue
The crisis in Argentina has generated passionate protests.
On Nov. 20, for instance, thousands of trade unionists marched
on government offices demanding an end to the austerity
measures. The unions charged that "deficit reduction was being
carried out on the back of struggling Argentineans," according
to an AP report.
"They want to take away the little that Argentineans, that
the people still have," said union leader Hugo Moyano. "We are
not going to accept this."
Moyano threatened that the unions would wage a civil
disobedience campaign to roll back the reforms.
Another new focus of struggle has been the piqueteros,
organized groups of unemployed workers who have been staging
militant road blockades. On Nov. 19, on the eve of the union
protests, thousands of piqueteros blocked major highways across
Argentina.
On Nov. 25, police broke up a protest of families of
disabled people in Buenos Aires, according to Inter Press
Services.
IPS reports that 8,500 people risk losing their pension
benefits if de la Rúa's reforms are passed.
Unions have also called a series of strikes for the week
following Finance Minister Cavallo's announcements on bank
withdrawals.
The task of channeling the rising tide of protests into a
mighty torrent that can challenge the imperialist bankers and
their lackeys is becoming more vital as millions of workers
face losing their jobs, their benefits, and their social gains
in what is already the most severe capitalist crisis in Latin
America since the Great Depression of the 1930s.
Reprinted from the Dec. 13, 2001, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
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