ARGENTINA began the 20th century as one of the world's 10 richest countries. It ended it as a byword for economic meltdown, with two-thirds of its population living in poverty. The country remains the most developed in Latin America according to the UN, but has seen the standard of living of the majority of the population drop since the late 1990s - and dramatically so since 2001. Poverty has gone hand in hand with unemployment, which in 2002 reached over 20 per cent despite historically never having surpassed 5 per cent.

How did such a devastating regression in development come about? The answer lies in the extreme form of neoliberal policies implemented in the 1990s, which at that point made Argentina the darling of investors and the IMF. After two decades of inflation and insecurity, Argentineans were willing to pay for stability, and drastic neoliberal measures were proposed by then President Carlos Menem as the solution to hyperinflation. But people did not know just how steep the costs would be. Everything of value was privatized, including the state oil company; privatization deals were corrupt and opaque, with little or inactive regulation. The overvalued currency made imports so cheap that national industries collapsed. The prosperity of the early 1990s was built on ever-increasing debt and benefited the very rich most; the middle classes made the most of credit to consume ostentatiously and enjoyed the psychological boost of having a peso worth the same as a dollar.

But increasing numbers of people were falling by the wayside. The thousands collecting cardboard on the streets of Buenos Aires are a new sight - these cartoneros had jobs and social security only a decade ago, and now can barely feed themselves.

Up to the 1970s Argentina had experienced 40 years of prosperity and social inclusion based on import substitution and industrialization. A strong labour movement ensured that workers shared in the wealth of the country and upward social mobility was taken for granted. Poor Italian immigrants could count on their grandchildren attending good quality state education all the way up to university and becoming professionals.

The dictatorship that began in 1976 and murdered or disappeared up to 30,000 people had explicit economic aims: to reduce the power of the working class and reinstate agricultural exports and financial markets as the 'motors' of the economy. The result was the vertiginous growth of inequality. A lasting legacy of the dictatorship was debt, contracted by private business in the main, and taken on by the state. Debt has kept the country dependent on IMF loans and refinancing, made economic instability worse and served as an excuse to reduce social spending.

The terror of the dirty war spurred the creation of a strong human rights movement, and other sectors of civil society have also mushroomed. Many new citizens' organizations were created in the 1990s, including an independent trade union confederation, a new Left political party and scores of charities and campaigning NGOs. The renewed vigour of society and the rejection of politics-as-usual was evident in a popular uprising in December 2001, in protest against economic measures and state repression. Since then Argentina has become more alive to the possibility of social change, particularly as the economic situation improves very slowly for the poor majority seeking work.

Although President Kirchner has said the era of neoliberalism is over, it is not clear what is supposed to be taking its place. Argentina has entered the new millennium with a lot of ground lost in human development, but with a society more assertive in demanding its rights and a more responsive political system.

Marcela López Levy

Subscribe   Ethical Shop