Cuts in social security, assaults on labor rights, police crackdown on grassroots movements and trade unions, and judicial targeting of left-leaning politicians – all these are part of the new normal in Argentina since the right wing government of Mauricio Macri came to power in 2015.
These trends are intensifying further after the government, which proved unable to control inflation, borrowed $50 billion from the IMF, which imposed structural adjustment policies on the Argentinian economy.
In exchange for the loan, the government promised to cut spending on health, education, job creation, pension and provision of subsidies to essential services. The government’s agenda was of not only entirely eliminating deficit in the budget by next year, but also generating a surplus of 1% of the GDP, to the satisfaction of IMF.
In protest against this elimination of hard-won social security programs, there has been a sharp spike in the number of large demonstrations in the country, including the fourth general strike since 2016 that was held in September this year. A number of trade unions are now coming together over a common platform.
A dossier by The Tricontinental: Institute for Social Research published last week, Argentina Goes Back to the IMF, Neo-liberalism, Crisis and Protest, details the nature of the critical juncture Argentina is at the moment, as well as the resistance mounted by popular and social movements, and trade unions.
Among these movements are the mobilizations of teachers, doctors and students, who are protesting the cutting of funds to the education and health sectors.
The government has resorted to force to crack down on these protests. The police have been given a free hand to target the activists, who are being portrayed as lawless criminals. Attempts are also being made to amend the laws to allow for the military to use force against civilian, unarmed demonstrations. This development is of enormous significance in a country that has seen the full brutality of a military dictatorship.
The left wing leaders of the country who could provide an alternative under which the various mobilizations, often fragmented, can unite, are being attacked through the judiciary under the pretext of fighting corruption. On the other hand, graft cases against right wing leaders are largely being ignored. Taking a cue from Brazil – where Lula da Silva was arrested to prevent him from running in an election which he was almost certain to win – attempts are also being made to detain the former Argentinian left-wing Peronist president, Cristina Fernández de Kirchner, prior to her trial.
Unsavory beginnings
In the mid-1950s, the “military coup that brought down Juan Perón’s government signalled the start of Argentina’s relationship with the IMF, when Argentina joined the IMF as a member,” wrote Hernan Neyra from University of Buenos Aires, and Andrés Ferrari from the Federal University of Rio Grande do Norte.
“But the relationship really [soared] after the 1976 military coup, which represents Argentina’s darkest period. Killings, torture, missing persons, and general repression became part and parcel of daily life. Economically and socially, the coup hit hard. Stalwart neo-liberalism took over. A new Stand-by Agreement was signed with the IMF, but this time it left, an enormous external debt that would loom over the economy until [Nestor] Kirchner paid it off.”
It was only in January 2007, after decades of spiraling debt which piled interest payments year after year, inciting large protests and demonstrations that the loan Argentina owed to the IMF was paid off under President Néstor Kirchner’s administration. This was with $1.5 billion of aid from Venezuelan president Hugo Chavez, who was committed to building an anti-imperialist bloc in Latin America.
Ahead of the settling of the debt, Kirschner had noted how the indebtedness of Argentina was used by the IMF as “a constant vehicle for meddling, because it is subject to periodic reviews and was the source of requirements that contradicted each other and were opposed to the objective of sustainable development.” Getting rid of the debt, he had said, “will allow us to build a more just future, with greater flexibility in the design and implementation of economic policies.”
After bidding the IMF a ‘good-bye and good riddance‘, a variety of welfare policies were instituted by the government. Many labor rights were reinforced, and increased public spending on health and education had an impact on the population.
However, by the end of 2015, “The welfare policies of Kirchner’s government began to flounder as commodity prices collapsed and as vulture capital began to dig past the protections set up by the government. It helped that Latin America was in the midst of a rightward turn. The multimedia houses intensified their use of their monopoly over television and radio as well as their innovative use of social media networks.. to go after Kirchner in a most hostile way,” Tricontinental’s dossier states.
Attacking the pro-people policies of Kirchner for the economic downturn, Mauricio Macri – promising to make Argentina the ‘supermarket of the world’ on his 2015 election platform where his campaign was run with the help of Cambridge Analytica – came to power.
“He said that foreign investment would flood the country, while Argentinian goods would be found everywhere. None of this occurred. Liberalisation and deregulation led to an increase in imports rather than in exports, to a decrease in the profits of foreign businesses and to capital flight – producing one of the largest private-sector deficits in the country’s history. Argentina found itself more and more suffocated by outside forces in these first two years of Macri’s government. Macri’s policies trapped him, preventing him from using tools – such as capital controls – that would have given Argentina some independence.”
By 2017, the external debt of the country had reached 53% of its GDP. Flight of capital, which had already been ongoing, was further intensified when, in April this year, the US Federal Reserve Bank raised interest rates, attracting dollars from middle-income countries like Argentina. Having committed itself to the neo-liberal diktat, the Argentine Central Bank could not control the situation by imposing capital controls.
The following month, Argentina had to capitulate before the IMF. In June this year, the IMF agreed to lend $50 billion to Argentina over a span of 36 months, in exchange for the government’s commitment to reduce the primary deficit (the difference between fiscal deficit and interest payments) to zero by 2020.
Barely three months into this agreement, the value of Argentina’s currency – peso – dropped by 15%, while the interest-rate soared to 60%. The government turned to the IMF for help again. With elections scheduled only for next year, the IMF, which did not want to lose a government in which it had high stakes, agreed to speed up the release of the loan amount, so that the entire money would be available to the Macri government before the completion of his term.
In return, the government has promised to speed up the rate at which it will it will reduce the deficit. As per its latest commitment, not only primary deficit, but the fiscal deficit itself will be erased entirely, not by 2020, but by 2019. In order to meet this commitment, Argentina has to sharply reduce public spending, adversely affecting healthcare, education, employment creation and pensions.
“But the crisis was not the result of an ‘external storm’, as Macri’s government said. The rise of US interest rates spurred the crisis. But it was Argentina’s government – under Macri – that had put the country in a position of dependency to the US currency, whose rise was merely the trigger for an explosive situation already shaped by Macri’s policies and by the structural problems of the world capitalist system,” the dossier states.
Major challenges for unions
In protest, university professors led demonstrations demanding increase in their wages and the budgets allocated to the universities. Joining them were various student unions which occupied over ten universities. Doctors and other healthcare workers held a nation-wide march to defend the right to healthcare, which was being undermined by sharp cuts in budget allocations. Workers in public administration protested against the lay-offs resulting from cuts. Trade unions representing formal workers have formed alliances with those representing informal workers, and have taken to the streets together in demonstrations and strikes.
These struggles “won major victories, including an increase in social wages and a renewed discussion about the importance of recycling (an activity conducted largely by excluded workers). The most important victory, however, was not economic but political”, because they re-triggered public debates about neo-liberal economic policies and the role of unions in resisting them,” the dossier notes.
Notwithstanding these protests however, Macri government did pass its budget, in line with its commitment to IMF, on the floor of the Chamber of Deputies, which at the time was surrounded by protesters.
Outlining the challenges that remain before the progressive movements in the country despite their victories, the dossier states that what has not emerged from these massive mobilizations.
“is a unified force that represents a clear opposition to the neo-liberal policies that are hollowing out Argentina. Nor is there a clear electoral strategy that has the capacity to challenge the government at the polls. These are limitations that need to be closely followed in the next few months.”
