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A socialist newsweekly published in the interests of working people
Vol. 65/No.30August 6, 2001

lead article
Argentine general strike condemns austerity drive
Diario Hoy/Daniel Muñoz
Workers march in Telam, Mar del Plata, during general strike July 19. Unionists, unemployed workers, and farmers across Argentina are protesting austerity measures.
Amidst protests inside and outside Argentina's government palace, the lower house of Congress narrowly approved legislation July 20 that includes drastic cuts in wages and pensions for public employees. The vote came one day after hundreds of thousands of workers across the country carried out a one-day general strike--shutting down factories, government offices, schools, and public transportation--to protest the austerity measures, which had been announced July 11 by Argentine president Fernando De la Rúa.

Pablo Micheli, general secretary of the State Workers Association (ATE) in Buenos Aires, said in an interview with the Militant that the "austerity measures only deepen the recession in Argentina." He added, "The Argentine government is responsible for creating the budget deficit when they emptied out the resources of the state by privatizing everything."

Micheli spoke July 25 as members of the ATE in Buenos Aires held another one-day strike to oppose the scheduled Senate vote on the austerity package, as well as moves by the provincial government to begin paying part of the wages of its employees with government certificates instead of pesos. The walkout was 80-90 percent effective.

In their efforts to promote the use of these certificates, which are printed by the Buenos Aires provincial government, authorities held a series of meeting with utility companies, banks, and businesses to convince them to accept the pieces of paper at a one-to-one parity with the peso. The certificates are widely opposed by workers because they will not be accepted as payment in many places, and if devalued will result in a drop in their wages. "Imagine if this is happening in the richest province in Argentina, what is going to happen in the poorest one," said Micheli in reference to the certificate scheme.

The work stoppage "was the people's response to a plan that falls most on retirees, on families with fixed incomes," said CGT leader Hugo Moyano. "We will not stand for it."

Faced with increasing pressure by foreign imperialist banks and investors to implement steeper austerity measures to guarantee payment toward the country's $130 billion foreign debt, the Argentine government hopes to slow down the financial crisis and win the confidence of international finance capital by cutting the annual budget by $1 billion.

The centerpiece of the austerity legislation, which must still be approved by the Senate, is a 13 percent cut in wages and pensions for all government employees and retirees who receive at least $500 per month. Sixteen percent of pensioners and 90 percent of public employees will be affected by the cut.

The "zero deficit" austerity package also calls for eliminating an existing subsidy in gas prices and lifting previously enacted tax breaks to the middle class, as well as a reduction in spending by the provincial governments of $650 million over the rest of the year.

The July 20 work stoppage, organized jointly by the General Labor Confederation (CGT) and the Confederation of Argentine Workers, was the sixth general strike under the De la Rúa administration. The Argentine daily El Día described the strike as a plebiscite of the workers against the belt-tightening measures.

Unemployed workers demanding jobs, food, and unemployment relief backed the general strike. They blockaded several highways leading into the capital and others in the provinces of Santa Fe, Chaco, and Jujuy. Thousands of police were mobilized around the country to try to control the protests. In the capital, riot police with a water cannon truck attacked workers protesting in front of the building housing Argentina's stock exchange.

The next day when legislators met to approve the economic plan, hundreds of workers organized by the ATE surrounded the government palace after they were prevented from entering the building.

Hundreds of employees from the legislature and other trade unionists who succeeded in getting inside organized marches in the hallways, chanting and singing songs accompanied by the beat of improvised drums made of empty water bottles. Their protest continued throughout the 10-hour debate.

The austerity plan was approved with an agreement to implement the cuts on wages and pensions of more than $500 a month as a "transitional measure." In theory the wage cuts are to be rescinded for those with salaries of up to $1,000 a month based on projected revenue collection. In arguing for the measure, Horacio Pernasetti of the president's party assured legislators that the pay cut is to be in place only through the end of this year.

The position of the Peronist opposition has been to facilitate the application of the measure while at the same time trying to minimize the political price it will pay for supporting the widely opposed cuts. For decades the labor bureaucracy has subordinated the unions to the Peronist party. The Peronist delegates to the lower house held up the meeting for several hours to prevent the gathering from having a quorum, saying they would approve the measure but only if the pay cuts begin with those receiving a salary or wages of at least $1,000 a month. They eventually did participate in the vote, however.

The Peronists, who control the Senate, have announced that they will postpone the debate there until next week while they continue to search for alternatives. "We share the zero deficit policy, but not the wage cut," said José Luis Gioja, head of the Peronist bloc in the Senate, "but this shouldn't scare anybody, or cause alarm in the markets, because the government already has by decree all the tools it needs." He was referring to the powers the executive has to implement the measures unless they are reversed by the congress.

The initial proposal by Economy Minister Domingo Cavallo sought to begin the cuts at $300. In exchange for raising the floor on the pay cuts, the legislators decided to obtain "alternative funds" by eliminating a gas subsidy as well as a tax rebate granted to the middle class last month.  
Imperialist investors still nervous
Capitalist investors reacted with cautious optimism to the "zero deficit" budget. Argentina's stock market rose and its "country risk," a measure of bond performance, fell. The bonds are still viewed as a more risky investment than those issued by Brazil, Russia, and Turkey, however. "The prices are moving in the right direction, but Argentina has a long way to go yet," Peter West of BBVA Securities told London's Financial Times. "Investors are likely to remain nervous until they see government austerity measures implemented."

Workers have been hit hard in the recession that has gripped Argentina for the last three years, even before the latest austerity measures. The government's decision to hold the peso at a one-to-one ratio with the U.S. dollar has kept prices high at a time of rising unemployment. Just hours after the strike began July 19 the Ministry of Economy reported that the official national unemployment rate had gone up from 15 percent last October to 16.4 percent. In the urban areas around Buenos Aires the jobless rate is up to 18.7 percent.

The real rate is higher, since many workers have given up hope of finding a job. According to the Argentine newspaper El Clarin, before the current recession 200,000 people entered the workforce every year in the greater Buenos Aires area and the capital. One-fourth of that number went out looking for a job in recent months, evidence of "discouragement" among a big sector of the unemployed population.

A National Assembly of Popular Organizations, the Landless, and Unemployed Workers was held July 24 to map out a plan of action against the government's policies. The participants were members of organizations and associations that have been carrying out social protests and roadblocks across the country. The meeting was called the First Congress of Piqueteros, referring to the name given to those participating in the roadblocks.

The participants decided to carry out 24-hour roadblocks in 50 of the most important cities on September 2 and to call on state workers, small farmers, teachers, and airline workers to join the action. The organizations present are also planning to participate in a march on September 11 demanding a minimum of $380 in monthly unemployment benefits and other subsidies.

Norma Nassif, of the Class and Combative Current, said at the meeting that "if the foreign debt was not paid the state could have enough to provide a $400 subsidy to each unemployed worker." Claudio Lozano of the Confederation of Argentine Workers received an ovation when he called for replacing the "zero deficit" plan with one for "zero unemployment."
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