Argentina’s trade surplus last year tripled to $15 billion, with about half of its total hard-currency earnings coming from sales of agricultural products, an agribusiness official told the New York Times March 25.
Washington and the other imperialist powers that control the International Monetary Fund (IMF) and World Bank, hope to restart the siphoning off of wealth produced by Argentine working people into the coffers of their banks. This flow came to an abrupt halt at the end of 2001 when Buenos Aires declared its default on its $100 billion foreign debt, and stopped making any payments.
The government of President Eduardo Duhalde is aiming to use exports as a lever to bring the country out of its economic freefall, and gain time in its negotiations over the debt with the IMF and World Bank.
The source of the spike in export-related income is the drastic decline in the value of the Argentine peso since January 2002, when Buenos Aires ended its 10-year policy of pegging the peso to the dollar. This precipitated a 70 percent devaluation of the currency, slashing the buying power of workers’ wages and the savings of retirees, shopkeepers, and others. The peso is now worth about 34 U.S. cents.
The Gross Domestic Product shrank by 12 percent last year, and the understated unemployment rate has soared to nearly 25 percent. Official statistics indicate that working people face the double burden of record-high unemployment rates, and a 75 percent increase in the cost of the basic basket of food for a family.
In late 2001 the struggles of unemployed workers, known as piqueteros, and other workers and farmers in earlier years, catapulted into a social explosion in response to the drastic cuts in social programs carried out by then president Fernando de la Rúa. Through general strikes, road blockades, and mass marches, working people forced de la Rúa from office. Congress appointed Duhalde as president in January 2002.
The plunge in the value of the peso has been a blessing for agricultural exporters. It wiped out their debts by making their products much cheaper overseas, and effectively tripling the domestic value of their export sales.
These capitalists are throwing their resources behind a stepup in production on the land. Soybeans, Argentina’s major cash crop, now occupy 64 million acres of farmland. With projections of record harvests, Argentinian and Brazilian capitalists together, are on track to harvest more soybeans than their rivals in the United States.
"It was a one-off," said Alejandro Elsztain, chief executive of Cresud, an Argentine agricultural company, of the impact of the devaluation of the peso. "It’s generating an amazing cash flow. Agribusiness is, without doubt, the engine that is driving" the government’s efforts to stabilize the economy.
The Duhalde administration is trying to build on this momentum by adopting a more aggressive stand on breaking down barriers to Argentina’s exports.
Buenos Aires is allying itself with Washington in its efforts to break down a European Union (EU) ban on the import of genetically-modified food (GMO), Dow Jones news reports. U.S. and Argentine trade officials stated March 13 that they share a common position against EU agricultural policy, and are considering taking legal action to the World Trade Organization (WTO), charging their rival in the EU with protectionism.
"We haven’t made a decision yet (on a WTO case)," Argentina’s vice minister for foreign affairs, Martin Redrado, told reporters at a joint press conference with a U.S. trade representative. "We have a strategic interest" in GMOs, said Redrado, noting that 95 percent of Argentine soy bean production and 25 percent of its cotton are GMOs.
The sharp increase in food production in Argentina has not brought relief to the workers and farmers suffering widespread hunger and malnutrition. According to an article in the March 2 New York Times, Tucumán in northern Argentina, a "garden of the republic," as this city is known, is now famous for its "stunted, emaciated children." With GDP growth plunging to levels similar to those in the United States during the 1930s Great Depression, two-thirds of the population of the province now live in conditions defined by the government as "extreme poverty."
The boom in production for the export of food also masks the very limited progress the government has made in achieving its goal of using exports to strengthen the economy. Foreign sales for all of 2002 were actually 5 percent below their level of the previous year. Dow Jones news reports that "only a dramatic fall in imports"--the result of the collapse in purchasing power for millions of workers, farmers, and others--"helped the country run strong trade surpluses."
The government announced March 28 that it was lifting the freeze on bank savings accounts it had imposed at the end of 2001. The decree, however, does not include compensation for banks, whose holdings were also affected by the devaluation of the peso. Paying off the banks would cost another $30 billion.
Roberto Lavagna, the minister of the economy, said those with savings accounts would receive 80 percent of the $5.5 billion owed in cash and government bonds. A business analyst in Chile, while optimistic about the Argentine plan, noted, "Maybe these bonds will actually be worth something in five years."
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