Meanwhile, the administration of President Fernando De la Rúa is caught between the demands by foreign investors for squeezing more blood out of Argentina's recession-battered economy, on one hand, and the growing unrest and resistance by working people there to the brutal austerity measures of the government, on the other.

To protest drastic cuts in wages and pensions proposed by the De la Rúa government, the three trade union federations in Argentina carried out a one-day general strike July 19, shutting down factories, government offices, schools, and public transportation. At the same time, unemployed workers have been blockading highways throughout the country to demand jobs and relief.

The Argentine crisis has caused international jitters, especially in Brazil, where the markets have been reeling from its neighbors' problems all year. The Brazilian currency, the real, has hit a record low against the dollar, and the government has used an energy crisis to carry out austerity measures. On July 17 hundreds of workers protesting bus fare hikes blocked a highway near Brasília, the country's capital.

The cops attacked the protesters with tear gas and live bullets, arresting 20 and wounding 55.

International bankers and investors have been demanding that the De la Rúa government cut the annual budget by $2 billion to $3 billion in order to ensure that "investors are confident that Argentina's government will be able to meet future payments" on the foreign debt, the Wall Street Journal stated in a July 10 article. The paper pointed to the country's social security system as a major cutback target.

On July 11 De la Rúa announced his latest package of economic austerity measures. He called for slashing wages and pensions of public employees by up to 13 percent. Some 250,000 public employees would be immediately affected by the plan.

The government projects that the plan, if implemented, will result in cuts of $1 billion in public spending. The provincial governments have agreed to cut their spending by $650 million over the rest of the year.

Within two days of De la Rúa's announcement, the prices of Argentine stocks and bonds plummeted to record lows, indicating the lack of confidence that capitalist investors have in the ability of the government in Buenos Aires to carry out the draconian cuts in social spending they demand as a condition for investment and loans.

U.S. national security advisor Condoleeza Rice announced July 13 that the Bush administration was carefully monitoring the economic turmoil in Argentina but indicated that Washington had no plans to offer its own "assistance" to help Argentina meet its foreign debt payments. "The best course of action right now is for Argentina to be able to take the steps it needs to take at home," Rice asserted.

Barely seven months ago, the International Monetary Fund granted Argentina a massive $40 billion "bailout" loan to help keep interest payments on the debt flowing. Yet the debt keeps growing. It is now more than half the country's gross domestic product.

Explaining his "zero deficit" plan, De la Rúa vowed that his government will stop "living off borrowed money" and will only spend what it collects. Economy minister Domingo Cavallo insisted that "Argentina will meet its obligations, pay the interest on its debt."

Cavallo has also denied that Argentina will devalue its currency, the peso, which has been pegged to the U.S. dollar since 1991.

Argentina has been in a deep recession for the past three years. The official unemployment rate is now 16.5 percent, and is even higher in the Buenos Aires area, where the largest concentration of industry is located. The pegging of the peso to the dollar has maintained prices for many basic goods that are extremely high for most working people.  
 
Foreign investors: pay debt
The priority for capitalist investors abroad and at home, however, has been to pay the ever-rising foreign debt. They have pressed the government to dismantle the social security system and other social gains that working people in Argentina have won in struggle over the past six decades.

While the regime has made some headway in its attacks, it has increasingly bumped into working-class resistance. In March, when economy minister Ricardo López Murphy announced sharp cuts in social spending, including a $900 million cut in education, workers and students held mass protests, forcing him to resign after only two weeks in office. He was replaced by Cavallo. Since De la Rúa became president in December 1999, the unions have called five national strikes against government austerity measures; the latest is the sixth.

As investors have lost confidence in the Argentine government's ability to stabilize the economy, they are demanding higher interest rates, which have risen to 14 percent, the highest in five years. That in turn has only increased the country's foreign debt.

At the same time, the peso's parity with the dollar is becoming increasingly unsustainable. While it was imposed under the presidency of Carlos Menem--with Cavallo as economy minister--to combat hyperinflation, it has left Argentine exports uncompetitive with neighboring currencies and the euro. Many economists are predicting an inevitable devaluation.

Last month Cavallo established a multiple exchange rate for importers and exporters, giving exporters an 8 percent subsidy based on a floating exchange rate equivalent to the average value of the euro and the dollar.

In face of the crisis, the opposition Peronist party, which in the past has sought to distance itself from the regime's austerity policies, has endorsed the government's latest moves. On July 17 De la Rúa signed an agreement with 14 Peronist governors to eliminate the budget deficits in order to assure that the payments to the imperialist bankers continue.

The government has used the impending debt default to try to blackmail workers into accepting economic "sacrifices." Labor minister Patricia Bullrich even appealed to workers to "donate one hour's wages" for a national fund to help the government dig out of the crisis. The proposal was met with derision among working people.

Instead, workers shut down the country July 19. The protests began the day before with a strike by the Association of State Workers (ATE). Thousands of public employees and pensioners marched through Buenos Aires to protest the 13 percent wage and pension cuts.

In a display of unity in action, the general strike was carried out by the two public wings of the General Labor Confederation (CGT) and the smaller Confederation of Argentine Workers (CTA).

Also on July 18, some 4,000 unemployed workers blocked the highway near the city of La Plata in the province of Buenos Aires. They organized a huge caravan along the road, in a protest to demand jobs. Some 300 cops tried unsuccessfully to prevent the action. The blockade was organized by a union formation called the Class and Combative Current (CCC) and several unemployed organizations including the Teresa Rodríguez Movement of Unemployed Workers.  
 
Jobless workers take action
Around the country from north to south, jobless workers have been setting up roadblocks to demand that the government provide jobs, food, and unemployment insurance. In a growing number of cases, industrial workers who lost their jobs have been involved.

At the end of June, 100 laid-off meatpacking workers in the central province of Santa Fe blocked a major highway to Buenos Aires, demanding relief payments that were promised to them. A total of 1,300 workers have been laid off from the U.S.-owned meatpacking giant Swift and other companies. The packinghouse union's general secretary, Jose Fantini, told the press that many times the relief payments are not paid on time or not paid at all.

In General Mosconi, a city in the northern province of Salta, unemployed workers have been blocking the highway that connects Argentina and Bolivia since May 30. They were joined by construction workers demanding wage parity. Some 40 percent of the workforce in this city of 20,000 are jobless. Many are former oil workers who lost their jobs after the Menem government sold off the oil company, YPF.

On June 17 the conflict exploded when border cops firing tear gas and rubber bullets removed a group of 60 protesters from the highway. Two people were killed by gunfire, 14 protesters were wounded, and 39 were arrested.

The next day, a group of protesting workers attempted to take over the nearby Refinor oil refinery. The government attacked them with 1,000 cops.

A national focus of labor protests has been the airlines. Workers at Aerolíneas Argentinas have been resisting the bosses' attempt to slash jobs, impose new work rules, and lower wages, under the threat that it will otherwise be forced to close Aerolíneas.

The airline, purchased 10 years ago by the Spanish government, is now facing more than $1 billion in debt. In April the airline withheld the employees' pay, supposedly because of the huge debts racked up by Aerolíneas.

Hundreds of airline workers have carried out actions at the Buenos Aires airports, blocking the main highway to Ezeiza International Airport and threatening to occupy the runways.

On July 14, hundreds of airline workers crashed the wedding of Cavallo's daughter, pelting the economy minister and the well-heeled wedding guests with eggs. Cavallo was virtually besieged inside the church for two hours The airline workers protested the consequences of the airline's privatization and demanded action.
 
 
Related article:
Cancel Third World debt!  
 
 
Front page (for this issue) | Home | Text-version home