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The Militant this week
Argentine workers protest deepening social crisis
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A socialist newsweekly published in the interests of working people
Vol. 66/No.22June 3, 2002

lead article
Argentine workers protest
deepening social crisis
As imperialists demand 'reform,'
joblessness and pauperization grow
Above, thousands of striking union members rallied May 22 in Buenos Aires outside the presidential palace. Similar protests against the deepening crisis for working people were organized May 20, which was designated a "day against hunger and misery." In La Matanza, located on the outskirts of Buenos Aires, some 3,000 people gathered to demand "food, soup kitchens, the provision of jobs, free medicines."

In renewed protest actions in Argentina over the past few weeks working people are demanding the government of President Eduardo Duhalde take steps to address the deepening disaster the capitalist collapse has brought upon Argentines.

Union members and other workers in the country held a 12-hour national strike May 22 to oppose the government's IMF-prescribed austerity policies that have loaded the burden of the capitalist economic crisis onto the backs of working people. While the government scrambles to find a way acceptable to the lenders to resume interest payments to imperialist banks and institutions, a growing number of working-class and farm families face joblessness, a daily scramble for subsistence, and even hunger.

The strike was called by a dissident wing of the General Confederation of Labor (CGT). The federation had called off a strike scheduled for a week earlier because of widespread flooding. Nevertheless, groups of piqueteros--unemployed workers and others--organized occupations of the Panamerican highway and other roads and bridges leading into Buenos Aires.

Similar actions were organized May 20, which was designated a "day against hunger and misery." In La Matanza, located on the outskirts of Buenos Aires, some 3,000 people gathered to demand "food, soup kitchens, the provision of jobs, free medicines, and the preservation of PAMI (the institute of social assistance to the retired.)" The rally was called by an organization of the unemployed and the Argentine Workers Federation (CTA). Protests were also organized in at least 10 other cities.

The May 22 action was the first national strike organized against the government of President Eduardo Duhalde of the Peronist Justicialist Party, which received the backing of the top union officials on its formation in January. The CGT spokespeople are now objecting to Duhalde's ongoing negotiations with International Monetary Fund (IMF) officials.

After 46 months of recession, the official unemployment rate has risen to 25 percent. But since last December at least 3.2 million people have joined those classified as poor, making a total of up to 18 million people, or one-half of the population. As the government jumps from one proposal to the next to try to find a way to satisfy the imperialist bankers and bondholders, there is no end in sight to the downward spiral.

The prices of staple goods like flour, cooking oil, and meat have risen by at least 35 percent. Meanwhile, the peso has crashed by around 70 percent against the U.S. dollar since its devaluation in January. "Millions now rely on barter to feed and clothe their families, while shantytowns are multiplying," reported the BBC.

In Argentina, "one of the world's biggest producers of wheat, beef, and soybeans," reported Reuters on May 13, "the children of the growing ranks of unemployed are...going hungry." Teachers in Berazategui, a working-class town south of the capital, said that some of their students have fainted from hunger. "Half of my students are in a precarious situation, with parents out of work," said one. One priest who helps organize 13 soup kitchens in Jujuy province said he estimates 40 percent of children in the area are suffering from hunger.  
Problems 'defy solutions'
An article in the Washington Post outlined the extent of the crisis, as well as the willingness of U.S. officials and wealthy coupon clippers to let the situation unravel even further.

"The crisis in Latin America's third largest country, entering its 46th month of recession," the paper wrote, "is worsening beyond all earlier projections, with the peso sharply devaluing, the banking system nearing collapse, and close to 8,000 people a day falling below the poverty level line--defined as an income of $2 a day....

"Top experts say the economy in what was once the region's wealthiest nation may shrink by as much as 15 percent this year, three times worse than Russia's economic contraction after its 1998 debt default and one-and-a-half times worse than Mexico's contraction during its currency crisis of 1995."

"More frightening to many financial experts and citizens here," the article said, "is the growing sense that Argentina faces a convergence of problems that appears to defy solutions." Noting that the economic measures demanded by the IMF would cause "sacrifice now," the Post adds that the resistance of working people makes it "politically impossible for any administration to take action and survive."

"The situation is hopeless," the article quotes Bruno Boccara, Standard and Poor's director of Latin American sovereign ratings, as saying. Another pundit adds that the solution lies in getting people in the South American country to lower their expectations. "Argentines thought they were living in Italy or Spain," Bocarra said. "But now Argentines are waking up to the fact that their economy is closer to Bolivia than Europe. Their denial of reality is part of the problem."  
Imperialists' demands
The stance of the imperialist bankers and government officials in Washington has so far been to state their demands and let the crisis deepen, hoping the economic "contagion" will not spread.

On May 16 IMF spokesman Thomas Dawson said that the Argentine government would be given an extra year to pay a $130 million installment, originally scheduled for the end of May, on its IMF debt. The previous day, Argentina's congress had amended a bankruptcy law that had drawn the ire of imperialist officials by placing legal limits on creditors' ability to put the squeeze on debtors for outstanding loans. Dawson described the law's passage as "a step in the right direction."

Paul O'Neill, the treasury secretary of the U.S. government, the dominant power in the IMF, said the Argentine government does "seem to be making some progress, however fitful, in moving forward and doing the things that are necessary to achieve a sustainable condition." He repeated demands that the country's government now proceed to amend the "economic subversion" law that places limits on the banking sector and on foreign investors. According to news wire reports, O'Neill also said that "Argentina must also continue to cut government budgets to meet IMF targets."

Following the IMF decision, World Bank officials said they would "prepare new loan operations." The Argentine government is still pleading with the bank, another Washington-based institution, to allow the postponement of $800 million in loan payments that came due in mid-May.

A recent study by the Center for Economic and Policy Research in Washington, D.C., contradicts the claims of IMF officials that "spending by provincial governments was the cause of Argentina's economic crisis," reported the Weekly News Update on the Americas. The study pins the blame on "debt service, largely to foreign investors."

On occasion, these governments--faced with widespread protests by government workers, piqueteros, and others--have balked at the budget cutbacks demanded of them by Buenos Aires. A number have begun printing their own scrip as a substitute for dried-up national funds in order to pay their employees.

"From 1993 to 2000," wrote the Update, "Argentina's primary government spending--for salaries, government programs, and operations--was essentially flat, while interest payments on the government debt rose threefold." The March 24 Miami Herald observed, "It is this debt trap--not overspending by the government--that caused the crisis."  
Banking crisis
The actions of the Duhalde government, caught between the never-ceasing demands of imperialist banks and governments, and the refusal of workers and farmers to submit meekly to imperialist-foisted austerity measures, have begun to reek of desperation. After abandoning a plan to convert billions of dollars in frozen bank deposits into government bonds, Duhalde's new economy minister, Roberto Lavagna, said, "We're now back to Square 1," to which the New York Times added that the "government was out of ideas." The Times story was headlined, "Argentine Foundation Keeps Crumbling."

On May 20 the Argentine national bank took over the Suiquía, Bisel, and Entre Ríos banks, which function primarily in the farming sector and had previously been controlled by the giant France-based Crédito Agricole. Three days earlier the French company withdrew funding from the banks, saying that they had lost $500 million in recent months. The takeover "will be temporary," said the head of Duhalde's cabinet, Alfredo Atanasof, "until these banks can return to private hands. The government does not plan to nationalize the banking system."

The Financial Times reported that the government had come under pressure to take over the banks from grain-growing provinces where bank loans and credits are essential for farmers and capitalist export companies.

In the five months since the government drastically limited bank withdrawals, some better-off people have withdrawn hundreds of millions of dollars stored in accounts in neighboring Uruguay--fully 15 percent of the deposits in that country's banks. Added to the decline in Uruguay's trade with Argentina, which previously took one-fifth of its exports, and a steep drop in tourism, that drain in value is having a growing impact on the Uruguayan economy.  
Uruguay president: 'Grit your teeth'
Neighboring countries of Brazil, Paraguay, and Uruguay have been affected by the deepening crisis, but have so far avoided the kind of collapse that has been sweeping Argentina.

President Jorge Batlle lectured the 3.4 million people in Uruguay not to "be swept up in the worsening mood," according to the May 16 Wall Street Journal. "I want to tell you not to watch so much Argentine television and to have confidence in your country," he said as he announced a series of "emergency" budget cuts. "Grit your teeth and don't believe that things that happen someplace else are going to happen here. "

The Journal reported that "defenders insist Uruguay has a more manageable public debt than Argentina, a far more stable political system and an even-keeled populace that isn't given to the kind of bloody street protests that brought down a series of Argentine presidents following the banking freeze." The big-business paper noted that the government in Montevideo had "responded to Argentina's devaluation by speeding up the controlled rate at which its peso falls."

While the economic contagion appears to be under control for the capitalists at the moment, there is little talk of the possibility of a political crisis that could set off a collapse in confidence by imperialist investors.

However, some nervousness is being registered over the possible outcome of the October elections in Brazil, Argentina's giant northern neighbor. Workers Party (PT) candidate Luiz Inacio "Lula" da Silva has been rising in the polls and is currently ahead of the candidate of the ruling Social Democratic Party. While da Silva has emphasized that he would continue payments on the country's foreign debt and has pointed to the PT's record of stable government at the state and municipal level, working people are likely to have higher expectations of any PT government.

The British Economist wrote that spokespeople for Brazilian big business have "complained of a lack of detail on how Mr. da Silva would finance ambitious plans to cut poverty and help industry." The Washington Post stated that the PT candidate "has tapped into the frustrations of millions of Brazilians," including with promises to defend Brazil's interests in a "more open and daring way," and with some criticism of Washington's aggressive military and trade policies.  
Decline in trade with Argentina
The Brazilian trade ministry has announced that the country's exports to Argentina fell 69 percent in the first quarter of this year. Argentina, which is linked with Brazil, Uruguay, and Paraguay in the Mercosur trading bloc, now takes 3.6 percent of Brazil's exports, down from 9.8 percent a year earlier.

"Latin Americans," wrote the May 19 Post, "are upset about increases in U.S. farm subsidies, which will likely reduce agricultural exports from the region, and about tariffs on imported steel, a major export for Brazil and Argentina." In crisis-ridden Argentina, noted the paper, "many U.S. banks have fortified their offices with steel barriers and hired private security firms" to protect their businesses from angry crowds who stage frequent demonstrations.  
Protests from Peru to Bolivia
Elsewhere in Latin America, working people have continued to organize protests and strikes against economic hardships and government austerity policies:

In Peru, thousands of working people and youth mobilized for national strikes and protests on May 14. The strikes were called by the teachers union and the Peruvian General Workers Confederation to protest the policies and broken promises of the government of President Alejandro Toledo. The country's second largest city, Arequipa, was brought to a halt by the actions. The northeast department of Loreto, the central departments of Junín and Pasco, and the northern city of Chiclayo were also heavily affected. Among the strikers were teachers who demanded wage increases, the appointment of more staff, and a change in the anti-working-class course of the government.

Toledo defeated the discredited strongman president Alberto Fujimori in an election eight months ago. Public opinion polls record a precipitate decline in Toledo's popularity from the first days of his presidency to the present. His failure to ensure economic growth and to generate the thousands of new jobs promised in his election campaign have aroused growing popular discontent.

Primary and secondary teachers in the provinces of Francisco Morazán and Cortés in the Central American state of Honduras stopped work for one day on May 20, demanding a pay raise of 15 percent in 2002 and 16 percent in 2003. The government has replied with an offer of 12 percent in both years. The National Teachers Federation organized protest marches in the capital of Tegucigalpa and San Pedro Sula, the country's second largest city. Some 300,000 students went without classes for the day.

More than 1,000 members of indigenous peoples in the east of Bolivia have completed the first week of a march from Santa Cruz to the capital of La Paz in support of their demand for the convocation of a constituent assembly. The action was called by the Confederation of Indigenous Peoples (CIDOB).

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