by Tom Lewis
International Socialist Review, January / February
Workers in Argentina overthrew the government of President
Fernando de la Rua in a mass revolt December 19-20. The protests,
as well as sharp conflicts within the Argentine ruling class,
initially hampered the opposition's effort to create a new government.
Despite the confusion, one certainty jumped to the fore: A week
of popular upheavals, marked by the government's violent but unsuccessful
attempts at repression, had ended the austerity regime of economy
minister Domingo Cavallo and challenged the International Monetary
Fund's stranglehold over Argentine society.
With Argentina's revolt, the fight in Latin America against
neoliberalism and corporate globalization surged forward dramatically.
The events in Argentina represent the most recent in a series
of historic clashes between Latin America's workers and their
governments. In January 2000, rural and urban workers in Ecuador
toppled the neoliberal administration of President Jamil Mahuad.
Three months later, Bolivian workers, peasants, and coca growers
triumphed over government plans to privatize water in the Cochabamba
region. Sustained protests at the national level pressured an
ailing Hugo Banzer to resign the Bolivian presidency in the summer
Peru's social movements have mobilized against reform president
Alejandro Toledo over his unfulfilled promises. Unrest in Ecuador
continues in the face of dollarization and a rapacious neoliberalism.
The populist government of President Hugo Chavez in Venezuela
has come under attack by disaffected workers, as well as by the
country's elites. In Brazil, the past two years have witnessed
a significant increase in struggle, in which labor militancy in
the cities has begun to catch up with the rural activism of Brazil's
powerful Landless Rural Workers Movement. And building opposition
to the U.S. government's military designs-Plan Colombia and the
so-called war on terrorism-has developed into a continent-wide
In this context, the victory over the de la Rua government
heralds a new period in Latin American class struggle. In particular,
Argentinians now stand at a crossroads. Events in coming months
either will lead to a workers' solution to the crisis-a solution
that could also galvanize workers across Latin America into new
revolts-or they will result in a squandered opportunity to seize
the offensive against neoliberalism and imperialism.
Prelude to rebellion
Argentinians have endured four years of recession with no
end in sight. Official unemployment has risen to nearly 20 percent;
another 15 percent of workers are "underemployed."'
One-third of Argentinians live below the poverty line, and 2,000
more fall into poverty every day. Private-sector wages have declined
by 20 percent since the beginning of the recession in 1998, and
last July, the government cut public-sector wages and pensions
by 13 percent as part of a "zero deficit" budget plan.
Adding insult to injury, Cavallo and de la Rua later siphoned
off $3.5 billion from state pension funds to make a payment on
the external debt, resulting in delayed benefits for some 1.4
million retirees and their families.
Not only workers but also the middle class have been hit hard
by the recession. Shopping centers-"altars to middleclass
confidence and consumerism" in Argentina-registered a 22
percent slump in sales for September 2001. The figure is revealing
because Argentina remains "a nation where domestic consumption
accounts for 80 percent of the economy." Yet banners announcing
sales and liquidations have become so commonplace in the windows
of city shops that they have ceased to attract buyers. And fears
of default and devaluation have plagued middle-class consumers,
whose credit card debt and mortgages are mostly held in dollars.
Private lending to small and medium businesses has also plunged
in relation to the early 1990s. Even for the most credit-worthy
borrowers, local interest rates have ballooned to a crippling
35 percent. For large firms, the drying up of domestic sources
of credit has aided international competitors in capturing export
markets previously held by Argentine companies.
Argentina today carries $132 billion in external debt, which
represents about one-seventh of all emerging market debt, and
shoulders another $23 billion in internal public debt. It has
received nine International Monetary Fund (IMF) bailouts since
1983. Argentina's budget deficit for 2001 has been forecast as
$7.8 billion, but it may rise further, since tax receipts decreased
by 17 percent during the first two weeks of December compared
to the same period the previous year. After predicting 2 percent
growth in gross domestic product (GDP) for the current year, the
government now expects the economy to contract by 6 percent or
more. By the end of 2002, the economy may well have shrunk by
as much as 10 percent since the recession began.
The four-year decline in economic activity finally eliminated
the government's ability to service the external debt. Tax income
fell by 9 percent in the third quarter alone as a result of the
drop in output and sales. The IMF and other lenders injected $20
billion of emergency aid into the Argentine economy over the past
year, but even this effort failed to compensate for the recession-based
Over the course of 2001, the economic crisis gave rise to
bitter political disputes among Argentina's ruling class. A major
row over economy ministers took place in March, and a "lack
of national unity" in Congress almost provoked de la Rua
to resign in the summer. In the fall, Cavallo sought to grab money
from the provinces to apply toward the external debt. During the
last week of October, he urged de la Rua to break the national
agreement that has guaranteed the provinces a minimum of 1.3 billion
pesos in tax sharing transfers. Yet the provincial governors,
who remain under intense pressure from protesters to resist federal
austerity measures, walked out of negotiations after Cavallo declared
they should accept payment in federal IOUs instead of cash.
Angry over the deepening crisis and the weakness of the government's
response, Argentine voters delivered a damning blow to de la Rua
and his governing Alianza coalition on October 14. Results gave
the Peronist Partido Justicialista (PJ) control of both the Congress
and the Senate in an unusual campaign in which Alianza incumbents
often found themselves running against members of their own parties,
the center-left Radical Party and the smaller Frepaso. Despite
a mandatory voting law, voter turnout was the lowest since the
end of the military dictatorship in 1983.
In Buenos Aires, the number of deliberately spoiled ballots
surpassed the number of votes for any one candidate. Several polling
stations noticed a number of votes cast for the cartoon character
"Clemente." And 50 ballot envelopes contained an unknown
The temperature of militant struggle began to heat up last
March, when demonstrators protesting drastic cuts in education
and social services got rid of two economy ministers in the space
of two weeks and put the newest one, Domingo Cavallo, on notice.
An April protest in Buenos Aires against the hemisphere's economy
ministers-who had come to town to discuss the Free Trade Area
of the Americas (FTAA)-contributed momentum.
Continuous roadblocks by unemployed workers in and around
the major cities and industrial areas, as well as several protest
marches each week by workers in Buenos Aires, brought the country
to the boiling point over the summer (winter in Argentina).'3
The Senate's approval on July 30 of Cavallo's 13 percent across-the-board
cuts in state spending set off an especially powerful reaction.
Hundreds of thousands of urban workers took to the streets in
early August, while masses of unemployed blockaded highways and
shut down facilities all over the country. Smaller-scale but nonetheless
significant demonstrations persisted throughout September.
From mid-October on, a sense of inevitability surrounded the
prospect of an Argentine default. Cavallo's attempt on October
16-17 to exchange high-interest debt for new loans at much lower
rates led Standard and Poor's to declare Argentina already in
default. Argentina's country risk soared to 3,000 in mid-November,
and the government twice found it necessary to delay payments
to domestic and "minority" bondholders. A run on the
banks forced Cavallo, on December 1, to limit Argentinians to
withdrawals of no more than $250 per week from their accounts.
Argentine banks paid out $1.3 billion on November 30 alone in
response to depositors' fears of a currency devaluation.
The weekly limit on withdrawals hurt workers and the bulk
of the middle class more than it did the upper middle class and
the rich. Amounts on credit card transactions were not restricted,
and large sums of money could still be withdrawn for purposes
open only to Argentina's elite, such as stock purchases. This
explains, for example, the surprising rally on the Argentine stock
market during the first week of December. But for workers in general,
as well as for small businesspeople in a heavily cash-dependent
economy, the government's limitation on withdrawals imposed real
The last planned action prior to outright revolt occurred
on Thursday, December 13. Argentina's three largest trade unions-the
General Confederation of Workers (CGT), the dissident wing of
the CGT (CGT-d), and the Argentine Workers Central (CTA)-called
a general strike in order to protest the bank restrictions and
to demand Cavallo's resignation. Sporadic violence broke out on
December 12, both in greater Buenos Aires and as far away as Patagonia.
The December 13 strike became the eighth general strike since
de la Rua took office in 1999.
The strike drew more support than any of the previous seven
and successfully paralyzed the nation due to the participation
of the majority of transportation workers. Although violence occurred
in several towns, including Neuquen and Cordoba, protesters peacefully
occupied the government's pension headquarters in Buenos Aires.
Groups of piqueteros, picketers, also blocked streets and railways
in the capital, while some 200 demonstrators hurled objects of
various kinds at the Cavallo family residence. The most immediate
result of the strike was the resignation of Cavallo's No. 2 man
at the economy ministry, Daniel Marx.
The December 13 strike had a decidedly antigovernment character,
but it failed to achieve its most important demands. In part,
the unwillingness of the leaderships of the CGT, CGT-d, and CTA
to extend the strike into a 48-hour action explains this weakness.
Of course, the leaders of the middleclass organizations, representing
professionals and small businesspeople, proved even more passive.
The official strike thus lacked an explicitly anticapitalist focus.
Labor and middle-class leaders alike stood behind economic and
political alternatives proposed by sectors of the ruling class
other than that of de la Rua and Cavallo. Those proposed by the
left wing of the Peronist PJ held most appeal.
Not surprisingly, the strike enjoyed its greatest success
in those areas that had recently experienced the bitterest class
struggles and in which working-class consciousness was highest.
In Neuquen, for example, workers angrily demonstrated against
a wave of industrial lockouts. And workers in the railway and
telecommunications industries, along with unemployed workers everywhere,
showed themselves ready for a direct confrontation with the government.
A spontaneous revolt
The revolt of December 19-20 developed spontaneously. By refusing
to call for a continuation of the general strike, the trade union
officials abdicated any leadership role they might have exercised
and effectively sought to give the government a respite. This
had been the pattern of struggle throughout the recession, where
one general strike after another succeeded, only to be rolled
back, leaving the government in power. In the provinces, however,
protesters themselves-comprised mainly of unemployed workers-extended
the December 13 strike by seizing food from supermarkets throughout
the day on Friday, December 14. The looting of stores and markets
actually began late Thursday in Guaymallen (Mendoza), where riots
also broke out in 1989, leading to the downfall of former president
By Sunday, December 16, "poor people [had] massed around
supermarkets in the cities of Rosario, Concordia, and Mendoza,
demanding handouts and sometimes breaking down doors to loot."
Hunger impelled the protests across greater Buenos Aires and closer
to the capital city itself, where violence erupted on Wednesday,
December 19. Rock-throwing youth engaged police while groups of
poor and unemployed workers took food. "This is a war of
Argentines against Argentines," stated one owner of a supermarket
chain, who had locked himself and his employees inside a store
to defend it against the hungry.
Later that day, de la Rua accepted Cavallo's resignation.
That night, however, de la Rua gave a four-minute address to the
nation in which he said nothing except to order a state of siege.
The announcement of the state of siege electrified Argentinians
into mass action in the early hours of Thursday, December 20.
Rank-and-file workers mobilized, and the middle class poured into
the streets banging pots and chanting antigovernment slogans.
Around 3 A.M., demonstrators started to fill the Plaza de Mayo
in downtown Buenos Aires, across from La Casa Rosada, the presidential
palace. One eyewitness reported:
Plaza de Mayo, the heart of Argentina's political life, turned
into a war zone Thursday, with police batting protesters in a
fruitless effort to impose the state of siege ordered by the cornered
de la Rua on Wednesday night. By day's end, mounting unrest in
the capital and across the country had led to the president's
On Wednesday evening, police cordons were pushed within meters
from Government House before the president spoke on national television.
On Thursday morning, protesters were forced 50 meters away from
the building. But their angry epithets could still be heard inside.
Just after 11 A.M., under government orders, police cleared
the Plaza with tear gas and rubber bullets. Protesters dispersed
and about 30 were arrested, but in no time at all they started
to trickle back into the Plaza. The scene was repeated over and
over. The more the force used by police, the more determined the
people appeared to return.
Black-clad police fired rubber bullets and water cannons at
masses of demonstrators throughout central Buenos Aires. The battles
"raged for hours as white clouds of tear gas wafted over
the palm-lined plaza of the elegant European-style capital, whose
central boulevards were littered by rocks and smoldering trash
fires." By day's end, the casualty toll for two days of revolt
had reached 27 dead and 400 wounded. At least 2,000 people had
been arrested nationwide.
The protests subsided on Friday, December 21. Three immediate
gains had been won. First, the inept and cruel de la Rua-Cavallo
government was thrown out of office. Second, the ruling class's
project of allowing the executive branch to govern by decree-as
Cavallo had done since March, after Congress gave him "special
powers"-was defeated. And third, the government was forced
to distribute huge quantities of food to millions of the needy.
Explaining the crisis
Argentina is the last and, with the exception of Indonesia,
arguably the most ravaged victim of the "Asian flu,"
the world economic crisis that broke out in Thailand in 1997,
subsequently wreaking havoc with developing economies all over
the world, including Hong Kong, Russia, and Brazil. 'The Asian
crisis arrived on Latin American shores in 199X and 1999. The
immediate effect was a collapse of foreign trade, "with exports
in the continent's two biggest economies-Argentina and Brazil-dropping
by 15.6 percent and 11.7 respectively." Foreign direct investment
withdrew as well, leaving millions unemployed.
Other countries in Latin America recovered from the Asian
crisis by devaluing their currencies; some, most notably Brazil,
received IMF help to do so. Argentine elites rejected this option,
however, because devaluation would have destroyed the one-to-one
currency peg between the peso and the dollar established in 1991.
The currency peg-a brainchild of none other than Domingo Cavallo
during his first stint as economy minister under former president
Carlos Menem-has been credited for taming Argentina's hyperinflation
of the late 1980s, as well as for creating a climate of stability
that led to growth in the early and mid-1990s. Most importantly,
maintaining the currency peg, as opposed to devaluing, protected
Argentina's domestic lenders from huge losses.
The decision to maintain the currency peg in the face of the
Asian crisis thrust Argentina's economy into a highly contradictory
position. On the one hand, it belonged to a currency block defined
by the U.S. dollar. On the other, it belonged to a trading bloc,
Mercosur, whose other member countries had devalued. Argentina's
volume of trade with the U.S., moreover, remained small, whereas
trade with Mercosur and European Union countries accounted for
50 percent of its total exports. In such an environment, Argentine
exports quickly became uncompetitive relative to the rest of Mercosur.
And the resulting decline in export revenues adversely affected
Argentina's ability to control its budget and to service its debt.
The currency peg and export collapse offer only a partial
explanation of Argentina's present dilemma. In truth, even after
the energetic economic growth of the early 1990s, real exports
still accounted for only 11 percent of Argentina's gross domestic
product in 1998. Equally important has been the IMF's role in
producing the Argentine crisis.
Argentina's debt load has proven crippling to the national
economy. Repudiating the external debt at the onset of the recession
could have released sorely needed funds for employment, tax cuts,
health care, education, and other social services. Instead, those
funds ended up mostly in the hands of foreign bankers.
A program of government spending is the normal response by
most governments to periods of recession. Increased government
spending combined with tax cuts, for example, is the response
being given by the Bush administration to the U.S. recession (although
Bush is spending less on health care and social services and more
on war and tax cuts for the rich). Yet, throughout the Argentine
recession, the U.S.-dominated IMF has imposed exactly the opposite
policies on Argentina: tax increases, reductions in government
spending for salaries and services, and continued privatizations.
These measures, required by the IMF as conditions for new loans,
have led to mass impoverishment and far less money available for
domestic consumption. In addition to devouring huge amounts of
Argentine wealth in the form debt payments, the IMF is one of
the main sources of the downward spiral in the national economy.
Comparative debt statistics suggest a conscious intent by
the IMF to make Argentina suffer. At 45 percent of GDP, Argentina's
external debt of $132 billion is not exorbitant by international
standards. Japan's ratio of debt-to-GDP presently stands at 125
percent, and Italy's at 130 percent. At 4 percent of GDP, neither
is Argentina's current account balance unusual. In other words,
Argentina's external debt is average, and so is its government
deficit. But the IMF purposely forced Argentina to pursue policies
that could only weaken the national economy even further in a
time of recession. And a continuing decline of the national economy,
of course, could only lead to a further falloff in government
revenues, which then eventually doomed Argentina's ability to
pay on the external debt.
It seems clear that the U.S. and the IMF wanted to push Argentina
into devaluation and default. Having convinced themselves that
the Argentine crisis was unlikely to spread, they simply drove
the country to the wall.
Why would the U.S. and its main arm of world financial domination
desire such an outcome? First, it sends a message to developing
nations during a period of world recession that the U.S. will
not sign off on IMF aid to countries where the prospect of U.S.
profits is not immediate and assured, or where there is no compelling
U.S. strategic interest. Second, a weak Argentina serves as a
brake on Mercosur. Along with the European Union, Mercosur is
the main economic competitor of the U.S. in the region.
Mercosur remains the primary obstacle to finalizing the U.S.-driven
FTAA. Speculative though it may be, it is worth observing that
after a period of devaluation and readjustment, Argentina could
still decide to follow the path of dollarization. The U.S. probably
opposes dollarization at the moment because of the peso's overvaluation.
But an eventually dollarized Argentina could render Mercosur obsolete.
Neoliberalism and globalization
There are other factors, such as government corruption and
massive corporate tax evasion, that have contributed to Argentina's
current crisis. But none surpasses the role of neoliberalism and
corporate globalization. Former president Carlos Menem, a Peronist
turned free-marketeer who oversaw the implementation of neoliberalism
in Argentina in the early 1990s, recently denied any responsibility
for the economy's current implosion: "But what kind of self-criticism
can I do if during my government Argentina grew more than 60 percent,
if my government left more than $33 billion in reserves in the
Central Bank, more than $100 billion in the financial system,
and if we were reinserted in the global economy?"
Yet neoliberal (or corporate-led) globalization is precisely
the larger framework that is required in order to explain Argentina's
implosion after 10 years of Menem's rule. The "Asian flu"
itself was a crisis of "neoliberal" capitalism. Neoliberalism's
record across Latin America in the 1980s and 1990s, moreover,
has amply revealed that gains in GDP-such as those touted by Menem-have
not translated into greater equality or better living standards
for the majority of people on the continent. For example, the
astonishing number of privatizations must bear the blame for initiating
Argentina's extreme levels of unemployment. Twenty years ago,
approximately one-third of big enterprises had foreign owners
in Argentina. In what is still Latin America's third-largest economy
(after Brazil and Mexico), fully two-thirds of big enterprises
were foreign-owned in 2000, including such key sectors of the
economy as petroleum, energy, telecommunications, public services,
and the rail industry. And each new privatization brings additional
Neoliberal apologists have criticized even what little remains
of the Argentine government's spending for social programs. But
mass unemployment and mass underemployment create hunger and misery,
which in turn heighten the demand for social services-especially
in a recession. Critics have also targeted federal transfers to
the provinces as evidence of excess spending. But given the uneven
distribution of Argentina's economic activity and resources, such
transfers are inevitable in the absence of a more complete modernization.
In Argentina as elsewhere, neoliberalism tends to exacerbate rather
than to reduce regional inequalities.
Even in the "good times," "neoliberal economies
don't create enough decent-paying jobs to provide basic necessities."
Thus there always exists pressure for raising or at least maintaining
government spending on social services. The Argentine revolt has
powerfully shown that social spending can be slashed only so far
before a society explodes. By wrecking the lives of the working
majority, neoliberalism digs its own grave.
Disarray at the top
The immediate political crisis prompted by de la Rua's resignation
on December 20 persisted into January 2002. Argentina's vice president
had resigned earlier in the year, so power passed constitutionally
to Senate leader Ramon Puerta, who is a member of the main opposition
party, the Peronist PJ. Puerta stated that he would serve only
until his party could name a successor, who would then occupy
the presidency until new elections could be called. Anticipating
de la Rua's fall, the PJ had declined de la Rua's last-hour invitation
to form a government of national unity.
Nevertheless, conflicts within the PJ ultimately ruled out
an easy transition. A number of powerful Peronist governors, including
Carlos Ruckhauf (Buenos Aires), Jose Manuel de la Sota (Cordoba),
and Carlos Reutermann (Santa Fe), have presidential ambitions.
So also do Menem and Eduardo Duhalde, who is twice a former governor
of Buenos Aires and a former vice president as well. The personal
political interests of these PJ power brokers had to be conciliated
before a successor to de la Rua was named. Eventually, the governors
and the other PJ elites settled on Adolfo Rodriguez Saa, the governor
of San Luis province, to serve as president until new elections
Once in office, Saa acted more like a real president than
a three-month caretaker. He announced an economic plan that included
suspending payments on the external debt, maintaining the dollar
peg for the peso, and issuing a third currency (the argentino)
alongside the peso, which would be used to pay state salaries
and float freely against the dollar. Saa also proposed the creation
of one million new jobs, a hiring freeze in the public sector,
a doubling of the minimum wage, and the repeal of a law passed
in 2000 that "flexibilized" the labor market. It was
a policy designed to protect the holdings of the rich, while at
the same time attempting to improve aspects of the plight of poor
and unemployed workers.
It is doubtful, of course, that Saa could have delivered on
his promises to workers, especially on new jobs and wage hikes.
The jobs program was more of a "workfare" program than
a plan to produce real jobs. The introduction of the argentino,
moreover, would have constituted an effective devaluation that
would be highly unfavorable to the majority of Argentinians. The
bulk of the Argentine ruling class also opposed the argentino
plan, preferring an outright devaluation or dollarization. This,
and the more progressive aspects of Saa's program, put him deeply
at odds with many of his fellow governors, the IMF, and U.S. imperialism.
Under the pretext that Saa had failed to consult them before
announcing his economic program, only five of the fourteen Peronist
governors attended a meeting with the new president just seven
days into his term. Saa correctly understood the boycott as a
signal that the PJ had withdrawn its support, and he promptly
resigned after only a week in office. The presidency reverted
to Senate leader Puerta, who then quickly tossed the hot potato
to the head of the Chamber of Deputies, Eduardo Camano.
Throughout the two weeks that separated de la Rua's resignation
from Eduardo Duhalde's designation as the president who would
serve out de la Rua's term, protests continued daily in the capital
and major cities. In the middle of Saa's week of power, riot police
launched tear-gas canisters and shot rubber bullets at rock-throwing
demonstrators during a large but peaceful protest against government
austerity measures. The protesters were mainly middle-class Argentinians
who took to the streets with sticks and stones to express their
anger over continuing restrictions on bank accounts, as well as
to object to Saa's appointment to the cabinet several politicians
widely considered to be corrupt. Spirited demonstrations involving
workers and the left also took place outside Congress as politicians
decided on a successor to Saa on December 31 and January 1. A
demonstration of some 5,000 protesters banging pots greeted Duhalde
on his first day in office.
Of course, it was not the bank restrictions or the smell of
corruption that had caused the PJ governors to walk away from
Saa and to line up behind Duhalde. Rather, it was Saa's policies,
which were considered too "left" and out of step with
IMF and U.S. wishes. This can be gauged immediately from Duhalde's
personal character and the shape of his economic program.
Duhalde has been known as a vehement critic of free-market
policies over the course of the 1990s. At the same time, he earned
a reputation for corruption during his two terms as governor of
Buenos Aires. According to James Petras, a longtime analyst of
Latin American politics, the selection of Duhalde as the new president
is clearly a provocation. He's a man of the right, and he's
organized, in the past, a political apparatus of thugs. Despite
what the press says, he is capable of putting right-wing street
fighters out-fascist-like groups that can draw on lumpens and
some disoriented unemployed to challenge for hegemony in the streets
and rake pressure off the police. There already has been one major
confrontation, with, of course, police taking the side of Duhalde's
Duhalde presented his economic program shortly after his inauguration,
using the populist slogans "Let's end the alliance of political
power with financial power," and "Let's construct the
alliance of the community of producers." It included both
a provision prohibiting layoffs for reasons other than misconduct
during the next 90 days and the promise of price controls on basic
necessities such as medicines.' To cushion the economic blow of
the crisis for the middle class, Duhalde also pledged to convert
into pesos up to $100,000 of individual mortgage and credit card
debt currently held in dollars. He also said that he would seek
to eliminate the provision in the original utility privatization
contracts that allows companies such as Spain's Telefonica and
France's Telecom Argentina to charge in dollars and index prices
to U.S. inflation.
Yet Duhalde's program clearly reflects much of the economic
remedy prescribed by the IMF and the United States. First, it
abandons the dollar peg and devalues the peso by 40 percent (1.4
pesos now equals one dollar). This forces Argentine and European
banks to assume the lion's share of the losses that will correspond
to domestic and international capital. It also means that Argentine
and European banks face risk of even greater losses should the
peso fall below 1.4. Although Duhalde's indication that some protectionist
measures may be in the offing for Argentine enterprises could
not have pleased Bush and the IMF, it did allow him to win over
the Argentine business community during his first week in office.
And Duhalde also took a step to placate domestic and foreign banks
by announcing that a portion of the profits from petroleum production
will be used to reimburse them for the cost of turning credit
card debt into pesos.
The devaluation visits yet another horrific disaster on Argentine
workers by effectively slashing their wages-as well as any savings
they may have left-by 40 percent. A fixed rate (1.4 pesos to one
dollar) will be used for international capital transactions, but
the peso will float freely as far as ordinary Argentinians are
concerned. Thus workers may experience an even greater loss in
wages and savings. Needless to say, under Duhalde's program, the
promise of new jobs created through increased state spending has
disappeared, and most, if not all, of the flexibilization of labor
Meanwhile, Menem, the current president of the PJ, has harshly
criticized Duhalde-a member of his own party-for Duhalde's economic
measure Menem supports full dollarization and staunchly opposes
any concessions to protectionism. For its part, the U.S. has criticized
Duhalde's fixed exchange rate for capital transactions and has
strongly advised him to allow the peso to float freely on international
markets w well. Thus it is likely that the current arrangement-a
fixed rate for international trade and a floating rate for domestic
consumption-will be temporary. A free-floating peso will probably
be declared at some point, but the possibility of dollarization
Many fiery words against the IMF and the U.S. will come out
of Duhalde's mouth in the coming weeks, but the truth is that,
with the exception of proposing a few price controls and some
protectionist measures, Duhalde has acted to safeguard IMF and
U.S. interests as much as he could be realistically expected to
for the moment. Duhalde ratified Saa's debt moratorium, but he
will surely negotiate repayment. Argentine and European capital
will end up eating the costs of default and devaluation, and the
stage is set to "solve" the crisis by ramming further
austerity and misery down the throats of the Argentine working
Toward a workers' alternative
Following Saa's resignation, Buenos Aires governor Carlos
Ruckhauf called for a government of "national salvation"
to comprise all of the main political parties. Of course, de la
Rua had issued the same call during the final hours of his presidency.
By including Alianza figures in his cabinet, Duhalde has now delivered,
under PJ dominance, what is precisely a government of "national
salvation." The Duhalde government thus represents an attempt
at unity among Argentina's rulers in preparation for the class
struggles that lie ahead.
At first it may have appeared that the revolt of December
19-20 dealt a decisive blow to Argentina's rulers by kicking de
la Rua out of office and stomping on Cavallo's special powers.
But the Argentine ruling class has temporarily regrouped around
a program largely accepted, at least behind the scenes, by the
IMF and the United States. Furthermore, for the next two years,
Duhalde will enjoy the same special powers that Cavallo wielded.
In the end, workers still face an extremely tough battle in order
to dismantle the regime of neoliberalism in Argentina.
One of Duhalde's most attractive qualities, in the eyes of
domestic and international capital, is his willingness to crack
down on the protests. Although foreign and domestic investors
are swallowing a bitter pill with the default and devaluation,
these measures will probably shorten the Argentine recession.
(Without devaluation, economists estimate that it would take another
five to ten years for Argentina to recover.) But investors could
conceivably lose much more if workers achieved state power and
were able to construct their own solution to the crisis.
Already, the state's ideological apparatuses are preparing
the ground for massive repression. The pro-government newspaper
La Nacion recently published an editorial that in essence called
for the criminalization of protest and suggested that the middle
class might better fear workers and the unemployed rather than
ally with them:
The caceroiazas [por-banging protests] have demonstrated
their unquestionable capacity to guillotine governments.... Behind
the peaceful cacerotazos there scurried the violence of groups
for which it is hard to know in whose service they act and if
they don't stop, they'll end up taking lives and property, including
those of the peaceful caceroeros.... What do [the middle class]
caceroleros want to do with the great Constitution that, in article
22, proclaims that the people govern and deliberate only by means
of their elected representatives and that all armed force or gathering
of people that attributes to itself the rights of the people commits
the crime of sedition?
Despite the attempt of the ruling class to intimidate protesters
with the use of state terror, an increasing number of Argentine
workers-employed and unemployed-are becoming conscious that neither
Alianza, nor the PJ, nor any of the mainstream parties have any
viable solution to the crisis in Argentina. National and international
capitalism produced the crisis, and its program for recovery offers
no hope for ordinary Argentinians. Already, shortages of flour
and sugar are widespread, and the prices of bread and vegetables-as
well as import items such as coffee, appliances, and toiletries-have
risen sharply. And on January 9, the government declared a "medical
state of emergency" because of the lack of adequate medical
supplies. The crisis will only worsen, casting more and more workers
into misery and despair.
Duhalde has already begun to try to divide workers and the
middle class by urging groups of consumers to confront shopkeepers
and supermarket managers over price increases. On January 7, the
new economy minister, Jorge Remes Lenicov, called on the population
"to argue and fight" the prices charged by businesspeople.
Such a call encourages workers to view the middle class as their
main enemy instead of the ruling class. And repeated confrontations,
especially if they turn to violence, will push the middle class
closer to the ruling class in an effort to protect their property
Yet, in this same climate, the revolutionary left in Argentina
faces tremendous possibilities for growth and an eventual leadership
role among Argentine workers. The historic problem of the Argentine
left has been its history of fragmentation and sectarianism. In
this regard, an encouraging sign in the aftermath of December
19-20 has been the joint call for a constituent assembly, or national
meeting, issued by the Partido Obrero, Izquierda Unida, Movimiento
Socialista de los Trabajadores, Liga Socialista Revolucionaria,
and Frente Obrero Socialista. Such an assembly would include all
employed and unemployed workers demanding change: the piqueteros
movement, the combative sectors of the unions and the social movements,
the left political parties, and "all those who are fighting
against the present economic system.'
The coming weeks and months must be used to build organizations
of workers' power that can vie for state power with the neoliberal
regime. In this regard, some infrastructure already exists in
the piquetero assemblies and in the workers' committees that have
been active in a number of factories and industries. The constituent
assembly called for by the Argentine left, moreover, would advance
these struggles and significantly develop the extent of working-class
organization at the national level.
Key to building workers' power will be the formation of a
mass revolutionary party that is conscious of the need to overthrow
capitalism in Argentina. A fundamental characteristic of class
struggle in Argentina, and throughout all of Latin America during
the 1980s and 1990s, has been the development of social movements
outside of the traditional organizations of the working class-the
trade unions and the left parties. In the vast majority of cases,
this phenomenon has resulted from the refusal of trade union officials
to aggressively confront neoliberal governments and from the confusion
and demoralization of the left after the collapse of the Soviet
Union. Many left groups reacted by becoming reformist and electorally
oriented parties, while others degenerated into irrelevant sectarianism.
But none of this eliminates the need for developing a revolutionary
mass political organization.
Now is the moment to work for reconnecting the social movements
with a democratic and revolutionary left. Bettering workers' lives
in Argentina will require not only the vision articulated last
year at the World Social Forum in Porto Alegre, Brazil-"a
different world is possible"-but also the strength of a mass
party that is committed to contending for state power in order
to be able to actually bring another world into being.
Whether toward victory or defeat for the Argentine working
class, it will become absolutely clear as events unfold in Argentina
that any real hope for a better world passes through the revolutionary
struggle for a socialist future. And this is true not only in
Argentina, but all across Latin America. A workers' revolution,
while by no means a guaranteed outcome, is definitely on the agenda
in Argentina. Should it occur, what a wonderful inspiration it
will provide to workers everywhere who suffer under the twin horrors
of neoliberalism and corporate globalization.
Tom Lewis is a member of the editorial board of the International
Socialist Review and the author of numerous articles on Latin