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A socialist newsweekly published in the interests of working people
Vol. 65/No.13April 2, 2001

Workers, students protest austerity plan in Argentina
Economy minister forced to resign, more actions planned
(lead article)
Photo - see caption below
Maricé Maser/Buenos Aires Herald
Some 25,000 people rallied March 20 at Plaza de Mayo in Buenos Aires to demand halt to government's latest announced plan to slash the social wage.
Workers and students throughout Argentina took to the streets in response to a massive new round of austerity measures aimed at slashing the social wage, holding mass demonstrations in the capital and other cities March 2021. Their actions, in addition to a crisis in the government of President Fernando de la Rúa, forced the resignation of the new economy minister who announced the moves.

In a nationally televised address March 16, Ricardo López Murphy, economy minister for only two weeks, announced plans to drastically reduce government spending by some $8 billion by 2003. This includes nearly $2 billion to be eliminated from this year's budget and an estimated $2.5 billion in 2002. Among the areas facing the biggest cuts are funding for the university, teachers' wages, the social security system, and funds provided by the central government to the provinces. Long-protected subsidies for tobacco and fuel were also to be ended.

The education sector would be hit the hardest with a reduction of $900 million in its budget. More than half the spending cuts were aimed at state universities and the state school system. The rulers' aim is to siphon these funds out of programs benefiting workers and farmers so that they can meet the mounting interest payments on the country's huge foreign debt.

According to the Wall Street Journal, even before López "finished announcing deep spending cuts, which were widely hailed by foreign investors and the International Monetary Fund, half of the president's cabinet members said they would resign, and the main opposition party appeared poised to try to block the cuts."

Immediately after the austerity package was announced protests began to erupt around the country. Hundreds of jobless workers threw up roadblocks around Buenos Aires, the capital, as university students staged sit-ins and joined in blocking traffic on major thoroughfares. The major trade union federations called for a general strike March 21. Opposition parties distanced themselves from the plan, stating they would not join a national unity government as long as this proposed package was on the table.

In response to the growing opposition both inside and outside the government, López resigned March 19. He was replaced by Domingo Cavallo, who had served as economy minister in the early 1990s in the administration of former Peronist president Carlos Menem. Cavallo vowed to institute his own cutback plan, but without elaborating much on the details.

Despite the resignation, some 25,000 people rallied in Plaza de Mayo in Buenos Aires and the country's largest teachers union began a 48-hour strike, closing schools throughout the country. The union representing university staff joined the walkout. The university federation of Buenos Aires said the 13 schools in the system had been peacefully occupied and public classes were held in the streets to protest the cuts. A national education march has been called for March 28.

The three main labor groups had called for a general strike March 21. Officials from the General Labor Confederation (CGT), however, decided not to participate after meeting with Cavallo, who promised that the measures announced by former economy minister Murphy would not be applied. The dissident CGT and the Argentine Workers Congress (CTA), however, went ahead with the action, which shut down transportation throughout the capital city. A 36-hour national strike called by the labor federations is still set to occur April 5-6.

Protests occurred throughout the country. According to a March 21 article in the Buenos Aires Herald, pensioners and unemployed workers set up roadblocks in the Greater Buenos Aires district of Avellaneda. Oil workers blocked roads outside Comodor Rivadavia, in the province of Chubut, and tobacco growers and workers blocked roads in Salta. Unemployed workers also blocked roads in Mar del Plata.  
Large and combative working class
Argentina has the third largest economy in Latin America and a working class that is one of the biggest and most combative in Latin America. Along with farmers they have organized numerous protest actions against the drive by the capitalist rulers to reduce their social wage over the past several years. This has included three national strikes over the past 15 months.

The U.S. rulers are deeply worried about the spreading effects of the political and economic crisis in Argentina. Deepening concerns by capitalist investors about the Argentine economy have sent stock markets throughout Latin America falling over the past several weeks. Brazil's currency, the real, plunged to its lowest level in two years.

A March 19 Financial Times article on Argentina commented, "The virtual collapse...of the governing alliance has increased the danger that Latin America's third biggest economy is about to enter a new and more dangerous period of turmoil."

Pointing to the larger global implications of developments in Argentina for the imperialist rulers, the British financial daily also pointed out, "After Turkey's devaluation last month markets have focused their attention on Argentina. Because of the large amount of debt outstanding, international financial officials worry that a potential default or devaluation could affect countries around the globe."

Argentine president de la Rúa is now calling on all Argentine political parties to form a national unity government. In a nationwide televised address March 19, he said he will ask Congress to grant him "superpowers" to tackle the current "public emergency." The president stated, as reported by the Buenos Aires Herald, "There is no more margin to think about political interests. We are going through a situation of emergency. We can't waste time."

De la Rúa, who is in the process of reshuffling his coalition government for the third time in his 15 months in office, had earlier stated his intention to bypass Congress and implement the proposed austerity measures by presidential decree.

Cavallo, who the Wall Street Journal describes as "the country's economic white knight," led the move in 1991 to peg Argentina's currency, the peso, on a one-to-one basis with the dollar. He is currently the leader of a small conservative party, the Action for the Republic.

In one of his first pronouncements as economy minister, Cavallo vowed to boost the government's projected budget cuts for this year from $2 billion to $3 billion by, he said, combating "excessive bureaucracy, corruption, tax evasion, and waste." Cavallo is seeking backing from the Peronist Party for the new national unity government, though so far the Peronists are refusing to take part.

The Argentine economy has been mired in recession for the past 32 months. Thirty percent of the population lives below the government-designated poverty level, and the country is saddled with a $123 billion foreign debt, owed to U.S. banks and other financial institutions. Last year this debt accounted for 54 percent of the country's gross domestic product, up from 41 percent in 1996.

Last December, in a move aimed at ensuring that interest payments on the debt keep flowing into the imperialist coffers, the IMF granted a $40 billion "bailout" loan and demanded the regime impose austerity measures as a condition for receiving the funds. The government's latest announced measures are simply aimed at meeting this condition. Speaking for the wealthy imperialist investors who see the massive debts of semicolonial countries like Argentina as a lucrative asset enabling them to transfer vast wealth out of the country and into their own coffers, an article in the Financial Times stated, "Analysts say failure to implement the cuts would bring the country a step closer to a possible debt default, a prospect that worries other emerging markets, because Argentina's debt makes up nearly a quarter of the asset class."
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