Argentina says: Never again IMF!

In the late 90s, IMF intervention in the Argentine economy led to a massive crisis and provoked a major social mobilization against the organization and the government. As president Mauricio Macri seeks to repeat history, the people are preparing for another huge round of protests

July 26, 2018 by Zoe Alexandra
No to IMF. Hateful debt. Photo Credit: Emergentes

On May 8, Mauricio Macri, the president of Argentina, announced that his government would initiate negotiations with the International Monetary Fund (IMF) for a $30 billion loan to tide over the country’s financial crisis. A month later, on June 7, Macri and IMF managing director Christine Lagarde agreed on a US $50 billion loan. The people of Argentina have overwhelmingly rejected the deal as the impact of the financial crisis of 2001 is still fresh in their memories, and for many, there is no question that it was the same IMF that was responsible for the crisis then. On July 21, Lagarde travelled to Buenos Aires to participate in the G20 Economic Ministers meeting. On the same day, thousands of Argentines took to the streets against the hunger, poverty and public sector cuts that the IMF represents. On July 23, Macri released a presidential decree which enables the Argentine armed forces to act in matters of internal security.

Peoples Dispatch spoke to Gonzalo Armúa of Movimiento Popular Patria Grande (People’s Movement Great Homeland) and the Operative Secretary of Social Movements of ALBA to understand the history behind the overwhelming rejection of the IMF in Argentina and elements of the current political, social and economic context in the country.

Peoples Dispatch: Why in Argentina do they say “Never again IMF”?

Gonzalo Armúa: We say “Never again IMF” because Argentina has already suffered the politics of economic interference, as well as interference in governance from this institution. It is important to remember that the IMF is an institution created by the United States to manipulate the international economic order to meet their demands. Argentina suffered greatly at the end of the 1990s with the government of Fernando de la Rua because of the interventions of the IMF in economic and public policies. It caused political and economic institutional crises. This led to a process of popular insurrection against that government which by that time was merely obeying the line laid down by the IMF.

The direct consequence of this debt to the IMF was a series of adjustment policies. But even that was not enough to pay the debt and a crisis of stability arose in the state. This was aggravated by a cyclical crisis of the Argentine economy, an economy that depends heavily on the exporting sectors which are very commercial with little interest in the national situation of the Argentine people, and who make a profit out of speculation and the devaluation of the Argentine peso.

This parasitic exporting bourgeoisie was supported by the massive loan (read: debt) offered by the IMF, and at that moment, the IMF was not subsidizing any infrastructure projects, or hospitals or schools but instead supported and fed these same sectors that speculated on the exchange rate of the peso with the dollar, thus increasing the debt.

The growing economic instability led to the increasing impoverishment of the Argentine people and they took to the streets to demand the exit of the government in December 2001. In these mobilizations, the discontent of the population exploded. The end of the year had come and people did not have enough money to even put food on the table. The people had enough of the weak and fragile government that was completely dependent on the IMF.

This is why we now say “Never again IMF” because we know that these negotiations mean a loss of political sovereignty over the economy, over the management of the currency, over the policies in defense of the people, over the internal market, and over the possibility of having some kind of sovereign development.

PD: What will be the principal impact of the new agreement with the IMF?

GA: The IMF has returned hand-in-hand with the current government of Mauricio Macri, a government that can be characterized as openly neoliberal even as across the world, the perils of neoliberal globalization are being hotly discussed. However, this government, with a completely ideology-based perspective, continues to believe in the same recipes that lead to the crisis at the end of the 1990s that generated the social explosion I mentioned before.

In this context, the agreement with the IMF serves to support this government that is taking the wealth of our people. Mauricio Macri has been putting the country in debt since the beginning of his government. It is important to point out that Argentina, when Macri first came to power, had become economically stable. It did not have significant external debt. However, in the years Macri has been in power, Argentina has generated almost $70 billion dollars in debt through bonds which have further enriched the ‘vulture’ capitalists  by paying these international speculating sectors. This also has benefited ministers and friends of the government who have become wealthy at the cost of the people through financial speculation.

The debt generated by the government of Macri is in order to serve its own interests and pay prior debts made by itself. At the same time, it seeks to sustain the deficit of the currency that is also due to the livestock sector that speculates on the increase of the price of the dollar with the national currency in order to export and have greater profits. This is a government that has reduced the taxes by more than 10% for the exporting sector and that has a plan to continue decreasing them over a 5-year period. What happens is that the exporters hold on to their commodities and wait for the peso to lose its value because their transactions are in dollars.  All this drives the government into a situation where it has to come to another agreement with the IMF. One can also say that this was obvious from the beginning as the only solution that this neoliberal economic logic based in financial speculation has to offer is another deal with the IMF.

The return of the IMF to Argentina will also lead to the further deregulation of the market. This includes deregulation of fuel prices, taxes and the internal market, but also deregulation of those sectors of the economy that need to compete with foreign production. This is a problem considering the fact that large sections of the industry at still at a budding stage in Argentina.

Even as the IMF is demanding higher levels of deregulation of the economy, the State is making budget cuts that will affect health, education and social welfare. Obviously, these cuts are in those areas that affect the people because the government does not want to increase taxes on the wealthier sectors. Instead, it raises taxes on electricity, water, gas, and other services. Meanwhile, the fuel prices have been raised again due to the deregularization of the sector, and this increase is transferred to all the expenses, including that of food.

All this generates higher levels of social conflict, opening the door to greater levels of repression to maintain the order that we are living in.

PD: What do you think about Macri’s decision to deploy the armed forces in matters of internal security? How do you see this in the context of the IMF agreement?

GA: First of all, it is important to note that Macri’s announcement is a decree rather than a law that will be discussed in Congress. This is strongly linked to the anti-people policies that the government has been pursuing and that are now getting worse with the IMF deal. The government has realized that these policies will generate greater levels of tension and thus, seeks to have greater repressive capacity in case a social explosion similar to 2001 takes place.  

Photo Credit: Emergentes

So what is Macri doing? He is revisiting a fundamental consensus that emerged in the aftermath of the military dictatorship and the emergence of Argentine democracy. After the bloody military dictatorship that lasted from 1976 to 1983, and the return of a democratic government, all the social sectors, people’s organizations and various political parties agreed that the armed forces would not exercise any authority as far as internal problems in the country were concerned. The role of the armed forces is limited to only the defense of the country. They do not have the right to intervene in internal issues or unleash repression. This was done to avoid empowering the military that during the 20th century, kept intervening in national politics by repressing the poor and the working class, and ruling through dictatorships. We can say that during the 20th century, Argentina had more military dictatorships than democratic governments.

What Macri has done now is to break this consensus that emerged after the last dictatorship. He is clearly attempting to use the armed forces as a repressive internal arm in the face of a social and economic crisis caused by his own policies and his neoliberal vision of society.

PD: What is the significance of the G20 Summit that will take place in Buenos Aires later this year?

GA: At the end of November and the beginning of December, Argentina will host the meeting of the 20 principal countries of the world and for Mauricio Macri, this represents a chance to celebrate and legitimize his government. For Macri, with his alienated and totally colonized view, the role of Argentina in the world is best expressed through showing off as a good host during this meet even while following a policy of total subordination to the dominant powers. By bringing to the country the leaders of the principal economies of the world, he seeks to convince the people that Argentina is now a big league player and his government has relationships with these important people.

However, Macri will not find it that easy to pull it off. Every December, there is a climate of tension and conflict in Argentina and in the context of the current economic decline, these trends will be further strengthened. We must also remember that this year has seen mobilizations and protests almost every week. So December will see the perfect blend of ingredients for a major mobilization, which will reflect the discontent of the population.

Without a doubt, Macri will put on the ‘badge of honor’ of the best ‘homeland-sellout’ of Latin America and try to show that Argentina is a great market that all can prey on. Of course, this strategy is not exactly working well because of the state of the international economy but still, the government will continue expressing this completely colonized view and wait for a pat on the back by the United States.