Can't pay, won't pay!
*Free trade means removing regulations to attract investment. Countries compete against each other: taxes are lowered, profits leave, environment and labour regulations are eroded. Speculative ‘hot money’ can destabilize national economies, bringing unemployment and hardship. Governments must have the right to regulate foreign investment to protect their citizens and to link investment to national development priorities.*
Marta Ocampo de Vásquez was a founder of the Mothers of the Plaza de Mayo – the group of Argentine women who first raised the banner of human rights against the military dictatorship that ruled the country from 1976 to 1983. Two decades later Marta and many of the other ‘mothers’ are again on the streets. Only now they’re demonstrating for the recognition of basic economic and social rights. ‘Look at the economic plan they left us with. And look at the state of the Argentine people. A country with such wealth – the granary of the world – yet people are dying of hunger. Until recently we said that 100 children a day died from malnutrition, but today we’d have to increase that number. It’s incredible,’ says Marta.^1^ In December 2001 Argentina captured the world’s attention with a massive social explosion that produced five different presidents in less than two weeks. The crisis had been building for years. Its foundations lay in the economic model pushed by the International Monetary Fund (IMF) in the early 1990s. The President then was Carlos Menem (1989-99), head of the old Peronist movement or _Justicalista_ Party as it is now called. Menem, along with government and party bureaucrats, grew rich as national companies ranging from oil and airlines to telephone and water utilities were sold off to foreign interests. Even Texas-based Enron got into the fray with the lobbying help of George W Bush, buying into a natural gas pipeline company that enjoyed special tariff and tax concessions. By the mid-1990s Menem had tied the country firmly to the international financial system by pegging the Argentine peso to the US dollar at an exchange rate of one-to-one. A class of financial wheeler-dealers came to dominate as the country’s industrial capacity was gutted. With a fixed exchange rate, Argentine exports became uncompetitive in international markets while cheap imports flooded the country. Even the dynamic agricultural sector went into decline when its once world-class beef industry lost its major export markets. In the wake of the economic and political collapse in late 2001 and early 2002, Argentina became a cauldron of social ferment. Mammoth demonstrations erupted across the country. Protesters chanted: ‘_Que se vayan todos_’ – meaning that the entire political class and its international financial backers should be tossed out. The IMF, along with private banks like the Bank of Boston and Citibank, were denounced for their role in precipitating the country’s crisis. The demonstrators demanded an end to the wealth-draining policies of prior years. In neighbourhoods and municipalities, ‘popular assemblies’ were set up to debate issues and to protect local interests. People helped keep shop owners from being closed for not paying taxes or rent. Some assemblies urged residents not to pay their property taxes and instead to turn the revenue over to neighbourhood hospitals. The assemblies also discussed international issues. According to assembly organizer, Lidia Pertieria: ‘One of the rallying cries coming from our communities is “No more foreign loans”. New loans only mean more swindling and robbery by our government officials.’ The _piquetereos_ are the most persistent and intransigent of the protesters. They spring from an underclass that is suffering the brunt of the country’s 20 per cent unemployment. They pour into the streets, blocking traffic, to demand jobs, government help for their families and land to grow their own food. Many of the _piqueteros_ have been active since the late 1990s protesting the Government’s made-in-Washington economic policy. Today the IMF’s Number Two boss, Anne Krueger, insists that one of the ‘mistakes’ of the Menem era was that the Government didn’t go far enough in following the dictates of the IMF – particularly with regard to the ‘flexibility’ of labour legislation. She argues that with a fixed exchange rate ‘labour flexibility is necessary for the economy to respond to economic shocks’. Translation: workers should bear the brunt of any adjustments imposed by the twists and turns of the global economy. Since the economic collapse more than 200 companies have been taken over by their employees after owners closed their businesses. Along with these worker-run enterprises, co-operatives, alternative currencies, barter exchanges and other self-help institutions have all taken root. Some popular assemblies have even challenged the rights of foreign investors. Near the Pata-gonian community of Esquel, 1,000 kilometres south of Buenos Aires, US-based Meridian Gold planned a 20-kilometre-long open-pit mine. Residents were particularly incensed that cyanide tailings would contaminate the region’s water supply – killing fish and poisoning drinking water. Javier Rodriguez Pardo, a scientist and environmental activist, describes the impact of the project: ‘We discovered that even after 10 years not one peso will stay in the province. All of the minerals will be exported and the Government will subsidize this cost. So what is left for Esquel and Chubut Province? Just 262 jobs, this export cost, the acid rock drainage and a kilometres long cleft in the mountain range. And, of course, they would leave us the environmental contamination.’ The popular assembly of Esquel, which sometimes draws 20 per cent of the town’s 30,000 population to its meetings, called for a plebiscite on the mining project. Before the vote last March the company began handing out money, sausages, soft drinks and wine to residents. People took the money and the food. But an overwhelming 81 per cent of voters rejected the venture. The city passed an ordinance restricting the use of toxic chemicals and Meridian Gold was forced to put the project on hold. The company is now lobbying the national government which has the final say. The lax foreign investment laws introduced under Menem are still in effect and it will be a tough fight. The ultimate decision will be made by Nestor Kirchner, a Peronist who has pursued a surprisingly radical agenda since he took office in May 2003. Kirchner loudly criticized the economic policies of his predecessors in his inaugural speech. He singled out the IMF’s rigid structural adjustment plans for blame and demanded that contracts with the privatized public utilities be renegotiated. He also called for the state to ‘introduce equality where the market excludes and abandons’. One of Kirchner’s first acts was to deal with the human rights violations of the military dictatorship. And he also moved to extend human rights to social and economic issues. At a conference last September – with more than 400 piqueteros in the audience – Raúl Zaffaroni, a Kirchner Supreme Court appointee, asked: ‘What good does it do to sign international treaties on human rights if in reality they are negated? We have to recognize that human rights are not a reality, they are a programme of struggle.’ Kirchner has also taken on big finance. In March 2004 he and Brazil’s President ‘Lula’ da Silva jointly released the _Declaration on Co-operation for Economic Growth with Equality_. The two leaders demanded that international financial institutions act ‘sensibly’ and suggested the global financial architecture ‘requires mechanisms to avoid causing the crises that have afflicted Latin America’. For starters, they said, infrastructure investments should not be counted as government expenditure when the IMF demands budget surpluses to pay off international debts. Kirchner and Lula also called on the other members of the Mercosur trade bloc – Uruguay, Paraguay, Bolivia, Peru and Chile – to support the declaration. Both believe Mercosur should take a central role in negotiations over the Free Trade Area of the Americas and serve as an alternative model to the US-led free trade agenda. The presidents also called for a ‘Community of South American Nations’ as a forum for advancing common economic and political issues. For the past 18 months there has been tension between Kirchner and the IMF over new loans and payments to international debtors. In September 2003 he insisted that no more than three per cent of the budget would be used to pay off the debt. There had to be other priorities, including fighting unemployment and increasing public investment. The IMF reluctantly agreed. Since then the Argentine economy has bounced back – growth was 7.5 per cent in 2003 and 8 per cent in the first half of 2004. Now the Fund wants to increase the country’s debt repayments, citing increased growth as a reason to siphon more money from the economy. More critically, the IMF is trying to get a better deal for private investors in any new accord. Argentina defaulted on nearly half its $180 billion payment in 2002. And after signing the 2003 IMF agreement, the finance minister slashed the nominal value of defaulted bonds by 75 per cent – claiming that most were held by speculative capital that flooded the country during the halcyon days of Carlos Menem. Bondholders in the US, Europe and Japan rejected the offer and are pushing the IMF to force Argentina to pay up. Continued IMF threats have prompted policy analysts and some bureaucrats to support a complete break with the IMF – exploring the possibilities of life outside the ‘neo-liberal’ world. ‘There is more money, but not to pay off the debt,’ Kirchner said last September. ‘We are not going to repeat the history of the past... We don’t want new agreements that will frustrate us and the world... For many years we were on our knees before financial organizations and the speculative funds... We’ve had enough!’ In the end most observers believe the Argentine Government and the IMF will reach an accord. But for now Kirchner is taking a tough stance defending his country’s social and economic rights.
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