The Long Climb [Argentina]
An energized Argentine democracy
is holding its own against the IMF, but for how long?
by James North
In These Times magazine, January
Luis Bianchi is a well-spoken, clear-thinking
man who does not have an ounce of self-pity. He has an interesting
and nuanced view of Argentina's $180 billion in foreign debt,
which is presently the subject of talks among the Argentine government,
international banks and bondholders, and the International Monetary
Fund (IMF)-which is playing an even more wicked role here than
Luis Bianchi is not happy that his government
in 2001 defaulted on about $100 billion in bonds, the largest
default in history, and he feels guilty about individual investors.
He is clearly the sort of man who honors his own obligations,
as he did when he bought his taxi 20 years ago.
Luis Bianchi does not say Argentina should
not pay 100 percent of the defaulted debt, or that they will not
pay it; rather he echoes President Nestor Kirchner in saying the
country simply cannot pay. He would remind bondholders (most of
them European) that investing does mean risk, and that the big
investment firms that advised them to buy are also responsible.
Anyone returning to Argentina after a
long absence is astonished at how poor the country has become.
Buenos Aires, once the Paris of South America, has a faded, rundown,
unpainted air, and provincial cities, like Tucumán and
Santiago del Estero in the north, are even worse off.
Over the past few decades, the shantytowns
known as villas miserias (villages of misery) have expanded; you
see them now along the Rio de la Plata and on the road to the
national airport. It is the equivalent of tens of thousands of
people in shacks along, say, Manhattan's West Side Highway.
What were obviously once middle-class
people are now stationed here and there in the once-fashionable
center of Buenos Aires, surviving as street vendors or even by
outright begging. Underemployed people of all ages stand all along
the Calle Florida, the chic pedestrian street, handing out fliers
to earn a few pesos. Bands of cartoneros, sometimes entire families,
live by collecting waste cardboard for resale.
Yet despite the new shabbiness, Argentina
today is not a defeated place. People are out demonstrating in
the streets nearly every day-for an end to impunity for the military
criminals who tortured and murdered during the U.S.-supported
dictatorships in the '70s and '80s, against the rising rate of
common crime today, for an increase in the old-age pensions that
have been reduced to a pitiful level during the crisis.
The tall buildings that house international
banks in downtown Buenos Aires no longer have windows at ground
level. They' are instead encased in metal armor, as protection
against groups of former depositors, armed with hammers, who regularly
create a raucous din, still infuriated at losing two-thirds of
the value of their savings in the 2001 economic collapse.
Normally, it is hard to organize the unemployed,
who are dispersed and dejected. But here in Argentina the movement
of the piqueteros (literally, the picketers) has had tremendous
success in mobilizing tens of thousands to demand higher social
welfare payments and, ultimately, jobs. Piqueteros march through
the central business district and blockade highways across the
metropolitan area. (Unfortunately, something of a backlash is
emerging among those who are regularly inconvenienced by some
piquetero direct actions.)
An energized public is probably the center-left
President Kirchner's greatest asset as he negotiates with international
financiers. The talks continue, and Argentina will almost certainly
reach an agreement with the bondholders in the first few months
Alan Cibils, an Argentine economist who
lives here but works with the Center for Economic and Policy Research
in Washington, estimates bondholders will in the end receive about
50 percent of the value of their original investment. He says
President Kirchner has politely reminded American officials that
holders of Enron bonds only got back 14 cents on the dollar after
that corrupt enterprise defaulted.
But Cibils is worried that even after
a satisfactory agreement with the bondholders Argentina will remain
vulnerable. "The public debt will still be roughly $130 billion:'
he says. "That is between 90 and 100 percent of gross domestic
product-still a potentially unstable level of debt."
Cibils, like Argentinians generally, has
especially harsh words for the IMF, which is very publicly pressuring
the government to come to terms with the bondholders. He points
out that the IMF, which is supposed to work as an "objective
arbitrator:' is actually largely responsible for the awful economic
advice and some of the bad loans that contributed greatly to the
crisis in the first place.
Back in the '905, Argentina was regarded
as a model student of the IMF and praised with sickening regularity
in The Economist and the rest of the global press, even though
unemployment has been in double digits since 1997. After the 2001
collapse, the mainstream globalizers tried to back off, hypocritically
blaming Argentine governments.
Now, without IMF advice, Argentina is
in fact steadily recovering. Growth is estimated at 8 percent
this year, and the government is actually running a budget surplus.
But now the IMF wants Argentina to use that surplus and give priority
to international bondholders over its own citizens, some of whom
are desperately hungry.
In August, the IMF managing director,
Rodrigo Rato, invited himself to Argentina and told President
Kirchner, "At the IMF, we have a problem called Argentina."
Kirchner answered, "I have a problem called 15 million poor
Argentina's stagnation over the past 50
years has no single cause. But one major factor has been agricultural
protectionism in the West. Europe, and to a lesser extent the
United States, have kept Argentina's chief exports, beef and grain-a
clear violation of "free trade" that the IMF has not
been particularly noisy about.
Alan Cibils thinks Argentina has nothing
to lose by breaking with the IMF and continuing to manage its
own recovery. But no country has ever defaulted to the Fund, and
Cibils realizes Argentina would be completely on its own, with
no real support from Brazil, Mexico or other Third World nations.
He expects the government to give in to the Fund in the end.
Argentina's isolation is a sad sign of
the decline in the international anti-globalization movement that
followed 9/11. Once, the IMF's terribly unfair policy would have
gotten world attention, and been attacked in noisy demonstrations
elsewhere. But no longer.
So far, Argentina's crisis has not prompted
calls for a return to dictatorship; democracy is proving remarkably
resilient. But for how long can any country endure mass unemployment
and continued decline without the eventual danger of murderous
extremism? Meanwhile, 75-year-old Luis Bianchi continues to work
12-hour days, and considers himself lucky that he has a job.
JAMES NORTH (email@example.com) has
reported for In These Times from Africa, Asia and Latin America