International Socialist Review, January–February 2002.

Tom Lewis

Argentina’s revolt

From International Socialist Review, Issue 21, January–February 2002.
Downloaded with thanks from the ISR Archive.
Marked up by Einde O’Callaghan for the ETOL.

Tom Lewis is a member of the editorial board of the International Socialist Review and the author of numerous articles on Latin America.

WORKERS IN Argentina overthrew the government of President Fernando de la Rúa in a mass revolt December 19–20. The protests, as well as sharp conflicts within the Argentine ruling class, initially hampered the opposition’s effort to create a new government. Despite the confusion, one certainty jumped to the fore: A week of popular upheavals, marked by the government’s violent but unsuccessful attempts at repression, had ended the austerity regime of economy minister Domingo Cavallo and challenged the International Monetary Fund’s stranglehold over Argentine society.

With Argentina’s revolt, the fight in Latin America against neoliberalism and corporate globalization surged forward dramatically. The events in Argentina represent the most recent in a series of historic clashes between Latin America’s workers and their governments. In January 2000, rural and urban workers in Ecuador toppled the neoliberal administration of President Jamil Mahuad. Three months later, Bolivian workers, peasants, and coca growers triumphed over government plans to privatize water in the Cochabamba region. Sustained protests at the national level pressured an ailing Hugo Banzer to resign the Bolivian presidency in the summer of 2001.

Peru’s social movements have mobilized against reform president Alejandro Toledo over his unfulfilled promises. Unrest in Ecuador continues in the face of dollarization and a rapacious neoliberalism. The populist government of President Hugo Chávez in Venezuela has come under attack by disaffected workers, as well as by the country’s elites. In Brazil, the past two years have witnessed a significant increase in struggle, in which labor militancy in the cities has begun to catch up with the rural activism of Brazil’s powerful Landless Rural Workers Movement. And building opposition to the U.S. government’s military designs–Plan Colombia and the so-called war on terrorism–has developed into a continent-wide campaign.

In this context, the victory over the de la Rúa government heralds a new period in Latin American class struggle. In particular, Argentinians now stand at a crossroads. Events in coming months either will lead to a workers’ solution to the crisis–a solution that could also galvanize workers across Latin America into new revolts–or they will result in a squandered opportunity to seize the offensive against neoliberalism and imperialism.

Prelude to rebellion

ARGENTINIANS HAVE endured four years of recession with no end in sight. Official unemployment has risen to nearly 20 percent; another 15 percent of workers are “underemployed.”1 One-third of Argentinians live below the poverty line, and 2,000 more fall into poverty every day.2 Private-sector wages have declined by 20 percent since the beginning of the recession in 1998, and last July, the government cut public-sector wages and pensions by 13 percent as part of a “zero deficit” budget plan. Adding insult to injury, Cavallo and de la Rúa later siphoned off $3.5 billion from state pension funds to make a payment on the external debt, resulting in delayed benefits for some 1.4 million retirees and their families.3

Not only workers but also the middle class have been hit hard by the recession.4 Shopping centers–“altars to middle-class confidence and consumerism” in Argentina–registered a 22 percent slump in sales for September 2001. The figure is revealing because Argentina remains “a nation where domestic consumption accounts for 80 percent of the economy.”5 Yet banners announcing sales and liquidations have become so commonplace in the windows of city shops that they have ceased to attract buyers. And fears of default and devaluation have plagued middle-class consumers, whose credit card debt and mortgages are mostly held in dollars.

Private lending to small and medium businesses has also plunged in relation to the early 1990s. Even for the most credit-worthy borrowers, local interest rates have ballooned to a crippling 35 percent.6 For large firms, the drying up of domestic sources of credit has aided international competitors in capturing export markets previously held by Argentine companies.7

Argentina today carries $132 billion in external debt, which represents about one-seventh of all emerging market debt, and shoulders another $23 billion in internal public debt. It has received nine International Monetary Fund (IMF) bailouts since 1983. Argentina’s budget deficit for 2001 has been forecast as $7.8 billion, but it may rise further, since tax receipts decreased by 17 percent during the first two weeks of December compared to the same period the previous year.8 After predicting 2 percent growth in gross domestic product (GDP) for the current year, the government now expects the economy to contract by 6 percent or more.9 By the end of 2002, the economy may well have shrunk by as much as 10 percent since the recession began.10

The four-year decline in economic activity finally eliminated the government’s ability to service the external debt. Tax income fell by 9 percent in the third quarter alone as a result of the drop in output and sales.11 The IMF and other lenders injected $20 billion of emergency aid into the Argentine economy over the past year, but even this effort failed to compensate for the recession-based shortfall.

Political anger

OVER THE course of 2001, the economic crisis gave rise to bitter political disputes among Argentina’s ruling class. A major row over economy ministers took place in March, and a “lack of national unity” in Congress almost provoked de la Rúa to resign in the summer. In the fall, Cavallo sought to grab money from the provinces to apply toward the external debt. During the last week of October, he urged de la Rúa to break the national agreement that has guaranteed the provinces a minimum of 1.3 billion pesos in tax sharing transfers. Yet the provincial governors, who remain under intense pressure from protesters to resist federal austerity measures, walked out of negotiations after Cavallo declared they should accept payment in federal IOUs instead of cash.

Angry over the deepening crisis and the weakness of the government’s response, Argentine voters delivered a damning blow to de la Rúa and his governing Alianza coalition on October 14. Results gave the Peronist Partido Justicialista (PJ) control of both the Congress and the Senate in an unusual campaign in which Alianza incumbents often found themselves running against members of their own parties, the center-left Radical Party and the smaller Frepaso. Despite a mandatory voting law, voter turnout was the lowest since the end of the military dictatorship in 1983.

In Buenos Aires, the number of deliberately spoiled ballots surpassed the number of votes for any one candidate. Several polling stations noticed a number of votes cast for the cartoon character “Clemente.” And 50 ballot envelopes contained an unknown white powder.12

The temperature of militant struggle began to heat up last March, when demonstrators protesting drastic cuts in education and social services got rid of two economy ministers in the space of two weeks and put the newest one, Domingo Cavallo, on notice. An April protest in Buenos Aires against the hemisphere’s economy ministers–who had come to town to discuss the Free Trade Area of the Americas (FTAA)–contributed momentum.

Continuous roadblocks by unemployed workers in and around the major cities and industrial areas, as well as several protest marches each week by workers in Buenos Aires, brought the country to the boiling point over the summer (winter in Argentina).13 The Senate’s approval on July 30 of Cavallo’s 13 percent across-the-board cuts in state spending set off an especially powerful reaction. Hundreds of thousands of urban workers took to the streets in early August, while masses of unemployed blockaded highways and shut down facilities all over the country. Smaller-scale but nonetheless significant demonstrations persisted throughout September.

General strike

FROM MID-October on, a sense of inevitability surrounded the prospect of an Argentine default. Cavallo’s attempt on October 16–17 to exchange high-interest debt for new loans at much lower rates led Standard and Poor’s to declare Argentina already in default.14 Argentina’s country risk soared to 3,000 in mid-November, and the government twice found it necessary to delay payments to domestic and “minority” bondholders.15 A run on the banks forced Cavallo, on December 1, to limit Argentinians to withdrawals of no more than $250 per week from their accounts.16 Argentine banks paid out $1.3 billion on November 30 alone in response to depositors’ fears of a currency devaluation.

The weekly limit on withdrawals hurt workers and the bulk of the middle class more than it did the upper middle class and the rich. Amounts on credit card transactions were not restricted, and large sums of money could still be withdrawn for purposes open only to Argentina’s elite, such as stock purchases. This explains, for example, the surprising rally on the Argentine stock market during the first week of December.17 But for workers in general, as well as for small businesspeople in a heavily cash-dependent economy, the government’s limitation on withdrawals imposed real hardship.

The last planned action prior to outright revolt occurred on Thursday, December 13. Argentina’s three largest trade unions–the General Confederation of Workers (CGT), the dissident wing of the CGT (CGT-d), and the Argentine Workers Central (CTA)–called a general strike in order to protest the bank restrictions and to demand Cavallo’s resignation. Sporadic violence broke out on December 12, both in greater Buenos Aires and as far away as Patagonia. The December 13 strike became the eighth general strike since de la Rúa took office in 1999.

The strike drew more support than any of the previous seven and successfully paralyzed the nation due to the participation of the majority of transportation workers. Although violence occurred in several towns, including Neuquén and Córdoba, protesters peacefully occupied the government’s pension headquarters in Buenos Aires. Groups of piqueteros, picketers, also blocked streets and railways in the capital, while some 200 demonstrators hurled objects of various kinds at the Cavallo family residence.18 The most immediate result of the strike was the resignation of Cavallo’s No. 2 man at the economy ministry, Daniel Marx.

The December 13 strike had a decidedly antigovernment character, but it failed to achieve its most important demands. In part, the unwillingness of the leaderships of the CGT, CGT-d, and CTA to extend the strike into a 48-hour action explains this weakness. Of course, the leaders of the middle-class organizations, representing professionals and small businesspeople, proved even more passive. The official strike thus lacked an explicitly anticapitalist focus. Labor and middle-class leaders alike stood behind economic and political alternatives proposed by sectors of the ruling class other than that of de la Rúa and Cavallo. Those proposed by the left wing of the Peronist PJ held most appeal.

Not surprisingly, the strike enjoyed its greatest success in those areas that had recently experienced the bitterest class struggles and in which working-class consciousness was highest. In Neuquén, for example, workers angrily demonstrated against a wave of industrial lockouts. And workers in the railway and telecommunications industries, along with unemployed workers everywhere, showed themselves ready for a direct confrontation with the government.19

A spontaneous revolt

THE REVOLT of December 19–20 developed spontaneously. By refusing to call for a continuation of the general strike, the trade union officials abdicated any leadership role they might have exercised and effectively sought to give the government a respite. This had been the pattern of struggle throughout the recession, where one general strike after another succeeded, only to be rolled back, leaving the government in power. In the provinces, however, protesters themselves–comprised mainly of unemployed workers–extended the December 13 strike by seizing food from supermarkets throughout the day on Friday, December 14. The looting of stores and markets actually began late Thursday in Guaymallén (Mendoza), where riots also broke out in 1989, leading to the downfall of former president Raúl Alfonsín.20

By Sunday, December 16, “poor people [had] massed around supermarkets in the cities of Rosario, Concordia, and Mendoza, demanding handouts and sometimes breaking down doors to loot.”21 Hunger impelled the protests across greater Buenos Aires and closer to the capital city itself, where violence erupted on Wednesday, December 19. Rock-throwing youth engaged police while groups of poor and unemployed workers took food. “This is a war of Argentines against Argentines,” stated one owner of a supermarket chain, who had locked himself and his employees inside a store to defend it against the hungry.22

Later that day, de la Rúa accepted Cavallo’s resignation. That night, however, de la Rúa gave a four-minute address to the nation in which he said nothing except to order a state of siege. The announcement of the state of siege electrified Argentinians into mass action in the early hours of Thursday, December 20. Rank-and-file workers mobilized, and the middle class poured into the streets banging pots and chanting antigovernment slogans. Around 3 a.m., demonstrators started to fill the Plaza de Mayo in downtown Buenos Aires, across from La Casa Rosada, the presidential palace. One eyewitness reported:

Plaza de Mayo, the heart of Argentina’s political life, turned into a war zone Thursday, with police battling protesters in a fruitless effort to impose the state of siege ordered by the cornered de la Rúa on Wednesday night. By day’s end, mounting unrest in the capital and across the country had led to the president’s resignation.

On Wednesday evening, police cordons were pushed within meters from Government House before the president spoke on national television. On Thursday morning, protesters were forced 50 meters away from the building. But their angry epithets could still be heard inside.

Just after 11 a.m., under government orders, police cleared the Plaza with tear gas and rubber bullets. Protesters dispersed and about 30 were arrested, but in no time at all they started to trickle back into the Plaza. The scene was repeated over and over. The more the force used by police, the more determined the people appeared to return.23

Black-clad police fired rubber bullets and water cannons at masses of demonstrators throughout central Buenos Aires. The battles “raged for hours as white clouds of tear gas wafted over the palm-lined plaza of the elegant European-style capital, whose central boulevards were littered by rocks and smoldering trash fires.”24 By day’s end, the casualty toll for two days of revolt had reached 27 dead and 400 wounded.25 At least 2,000 people had been arrested nationwide.

The protests subsided on Friday, December 21. Three immediate gains had been won. First, the inept and cruel de la Rúa-Cavallo government was thrown out of office. Second, the ruling class’s project of allowing the executive branch to govern by decree–as Cavallo had done since March, after Congress gave him “special powers”–was defeated. And third, the government was forced to distribute huge quantities of food to millions of the needy.

Explaining the crisis

ARGENTINA IS the last and, with the exception of Indonesia, arguably the most ravaged victim of the “Asian flu,” the world economic crisis that broke out in Thailand in 1997, subsequently wreaking havoc with developing economies all over the world, including Hong Kong, Russia, and Brazil.26 The Asian crisis arrived on Latin American shores in 1998 and 1999. The immediate effect was a collapse of foreign trade, “with exports in the continent’s two biggest economies–Argentina and Brazil–dropping by 15.6 percent and 11.7 respectively.”27 Foreign direct investment withdrew as well, leaving millions unemployed.

Other countries in Latin America recovered from the Asian crisis by devaluing their currencies; some, most notably Brazil, received IMF help to do so. Argentine elites rejected this option, however, because devaluation would have destroyed the one-to-one currency peg between the peso and the dollar established in 1991. The currency peg–a brainchild of none other than Domingo Cavallo during his first stint as economy minister under former president Carlos Menem–has been credited for taming Argentina’s hyperinflation of the late 1980s, as well as for creating a climate of stability that led to growth in the early and mid-1990s. Most importantly, maintaining the currency peg, as opposed to devaluing, protected Argentina’s domestic lenders from huge losses.

The decision to maintain the currency peg in the face of the Asian crisis thrust Argentina’s economy into a highly contradictory position. On the one hand, it belonged to a currency block defined by the U.S. dollar. On the other, it belonged to a trading bloc, Mercosur,28 whose other member countries had devalued. Argentina’s volume of trade with the U.S., moreover, remained small, whereas trade with Mercosur and European Union countries accounted for 50 percent of its total exports. In such an environment, Argentine exports quickly became uncompetitive relative to the rest of Mercosur. And the resulting decline in export revenues adversely affected Argentina’s ability to control its budget and to service its debt.

IMF mayhem

THE CURRENCY peg and export collapse offer only a partial explanation of Argentina’s present dilemma. In truth, even after the energetic economic growth of the early 1990s, real exports still accounted for only 11 percent of Argentina’s gross domestic product in 1998.29 Equally important has been the IMF’s role in producing the Argentine crisis.

Argentina’s debt load has proven crippling to the national economy. Repudiating the external debt at the onset of the recession could have released sorely needed funds for employment, tax cuts, health care, education, and other social services. Instead, those funds ended up mostly in the hands of foreign bankers.

A program of government spending is the normal response by most governments to periods of recession. Increased government spending combined with tax cuts, for example, is the response being given by the Bush administration to the U.S. recession (although Bush is spending less on health care and social services and more on war and tax cuts for the rich). Yet, throughout the Argentine recession, the U.S.-dominated IMF has imposed exactly the opposite policies on Argentina: tax increases, reductions in government spending for salaries and services, and continued privatizations. These measures, required by the IMF as conditions for new loans, have led to mass impoverishment and far less money available for domestic consumption. In addition to devouring huge amounts of Argentine wealth in the form debt payments, the IMF is one of the main sources of the downward spiral in the national economy.

Comparative debt statistics suggest a conscious intent by the IMF to make Argentina suffer. At 45 percent of GDP, Argentina’s external debt of $132 billion is not exorbitant by international standards. Japan’s ratio of debt-to-GDP presently stands at 125 percent, and Italy’s at 130 percent. At 4 percent of GDP, neither is Argentina’s current account balance unusual. In other words, Argentina’s external debt is average, and so is its government deficit. But the IMF purposely forced Argentina to pursue policies that could only weaken the national economy even further in a time of recession. And a continuing decline of the national economy, of course, could only lead to a further falloff in government revenues, which then eventually doomed Argentina’s ability to pay on the external debt.

It seems clear that the U.S. and the IMF wanted to push Argentina into devaluation and default. Having convinced themselves that the Argentine crisis was unlikely to spread, they simply drove the country to the wall.

Why would the U.S. and its main arm of world financial domination desire such an outcome? First, it sends a message to developing nations during a period of world recession that the U.S. will not sign off on IMF aid to countries where the prospect of U.S. profits is not immediate and assured, or where there is no compelling U.S. strategic interest. Second, a weak Argentina serves as a brake on Mercosur. Along with the European Union, Mercosur is the main economic competitor of the U.S. in the region.

Mercosur remains the primary obstacle to finalizing the U.S.-driven FTAA. Speculative though it may be, it is worth observing that after a period of devaluation and readjustment, Argentina could still decide to follow the path of dollarization. The U.S. probably opposes dollarization at the moment because of the peso’s overvaluation. But an eventually dollarized Argentina could render Mercosur obsolete.

Neoliberalism and globalization

THERE ARE other factors, such as government corruption and massive corporate tax evasion, that have contributed to Argentina’s current crisis. But none surpasses the role of neoliberalism and corporate globalization.30 Former president Carlos Menem, a Peronist turned free-marketeer who oversaw the implementation of neoliberalism in Argentina in the early 1990s, recently denied any responsibility for the economy’s current implosion: “But what kind of self-criticism can I do if during my government Argentina grew more than 60 percent, if my government left more than $33 billion in reserves in the Central Bank, more than $100 billion in the financial system, and if we were reinserted in the global economy?”31

Yet neoliberal (or corporate-led) globalization is precisely the larger framework that is required in order to explain Argentina’s implosion after 10 years of Menem’s rule. The “Asian flu” itself was a crisis of “neoliberal” capitalism. Neoliberalism’s record across Latin America in the 1980s and 1990s, moreover, has amply revealed that gains in GDP–such as those touted by Menem–have not translated into greater equality or better living standards for the majority of people on the continent.32 For example, the astonishing number of privatizations must bear the blame for initiating Argentina’s extreme levels of unemployment. Twenty years ago, approximately one-third of big enterprises had foreign owners in Argentina. In what is still Latin America’s third-largest economy (after Brazil and Mexico), fully two-thirds of big enterprises were foreign-owned in 2000, including such key sectors of the economy as petroleum, energy, telecommunications, public services, and the rail industry.33 And each new privatization brings additional layoffs.

Neoliberal apologists have criticized even what little remains of the Argentine government’s spending for social programs. But mass unemployment and mass underemployment create hunger and misery, which in turn heighten the demand for social services–especially in a recession. Critics have also targeted federal transfers to the provinces as evidence of excess spending. But given the uneven distribution of Argentina’s economic activity and resources, such transfers are inevitable in the absence of a more complete modernization.34 In Argentina as elsewhere, neoliberalism tends to exacerbate rather than to reduce regional inequalities.

Even in the “good times,” “neoliberal economies don’t create enough decent-paying jobs to provide basic necessities.”35 Thus there always exists pressure for raising or at least maintaining government spending on social services. The Argentine revolt has powerfully shown that social spending can be slashed only so far before a society explodes. By wrecking the lives of the working majority, neoliberalism digs its own grave.

Disarray at the top

THE IMMEDIATE political crisis prompted by de la Rúa’s resignation on December 20 persisted into January 2002. Argentina’s vice president had resigned earlier in the year, so power passed constitutionally to Senate leader Ramón Puerta, who is a member of the main opposition party, the Peronist PJ. Puerta stated that he would serve only until his party could name a successor, who would then occupy the presidency until new elections could be called. Anticipating de la Rúa’s fall, the PJ had declined de la Rúa’s last-hour invitation to form a government of national unity.

Nevertheless, conflicts within the PJ ultimately ruled out an easy transition. A number of powerful Peronist governors, including Carlos Ruckhauf (Buenos Aires), José Manuel de la Sota (Córdoba), and Carlos Reutermann (Santa Fe), have presidential ambitions. So also do Menem and Eduardo Duhalde, who is twice a former governor of Buenos Aires and a former vice president as well. The personal political interests of these PJ power brokers had to be conciliated before a successor to de la Rúa was named. Eventually, the governors and the other PJ elites settled on Adolfo Rodríguez Saá, the governor of San Luis province, to serve as president until new elections in March.

Once in office, Saá acted more like a real president than a three-month caretaker. He announced an economic plan that included suspending payments on the external debt, maintaining the dollar peg for the peso, and issuing a third currency (the argentino) alongside the peso, which would be used to pay state salaries and float freely against the dollar. Saá also proposed the creation of one million new jobs, a hiring freeze in the public sector, a doubling of the minimum wage, and the repeal of a law passed in 2000 that “flexibilized” the labor market.36 It was a policy designed to protect the holdings of the rich, while at the same time attempting to improve aspects of the plight of poor and unemployed workers.

It is doubtful, of course, that Saá could have delivered on his promises to workers, especially on new jobs and wage hikes. The jobs program was more of a “workfare” program than a plan to produce real jobs. The introduction of the argentino, moreover, would have constituted an effective devaluation that would be highly unfavorable to the majority of Argentinians. The bulk of the Argentine ruling class also opposed the argentino plan, preferring an outright devaluation or dollarization. This, and the more progressive aspects of Saá’s program, put him deeply at odds with many of his fellow governors, the IMF, and U.S. imperialism.

Under the pretext that Saá had failed to consult them before announcing his economic program, only five of the fourteen Peronist governors attended a meeting with the new president just seven days into his term. Saá correctly understood the boycott as a signal that the PJ had withdrawn its support, and he promptly resigned after only a week in office. The presidency reverted to Senate leader Puerta, who then quickly tossed the hot potato to the head of the Chamber of Deputies, Eduardo Camano.

Throughout the two weeks that separated de la Rúa’s resignation from Eduardo Duhalde’s designation as the president who would serve out de la Rúa’s term, protests continued daily in the capital and major cities. In the middle of Saá’s week of power, riot police launched tear-gas canisters and shot rubber bullets at rock-throwing demonstrators during a large but peaceful protest against government austerity measures.37 The protesters were mainly middle-class Argentinians who took to the streets with sticks and stones to express their anger over continuing restrictions on bank accounts, as well as to object to Saá’s appointment to the cabinet several politicians widely considered to be corrupt. Spirited demonstrations involving workers and the left also took place outside Congress as politicians decided on a successor to Saá on December 31 and January 1. A demonstration of some 5,000 protesters banging pots greeted Duhalde on his first day in office.38

Of course, it was not the bank restrictions or the smell of corruption that had caused the PJ governors to walk away from Saá and to line up behind Duhalde. Rather, it was Saá’s policies, which were considered too “left” and out of step with IMF and U.S. wishes. This can be gauged immediately from Duhalde’s personal character and the shape of his economic program.

Duhalde has been known as a vehement critic of free-market policies over the course of the 1990s. At the same time, he earned a reputation for corruption during his two terms as governor of Buenos Aires. According to James Petras, a longtime analyst of Latin American politics, the selection of Duhalde as the new president

is clearly a provocation. He’s a man of the right, and he’s organized, in the past, a political apparatus of thugs. Despite what the press says, he is capable of putting right-wing street fighters out–fascist-like groups that can draw on lumpens and some disoriented unemployed to challenge for hegemony in the streets and take pressure off the police. There already has been one major confrontation, with, of course, police taking the side of Duhalde’s Peronist thugs.39

Duhalde presented his economic program shortly after his inauguration, using the populist slogans “Let’s end the alliance of political power with financial power,” and “Let’s construct the alliance of the community of producers.”40 It included both a provision prohibiting layoffs for reasons other than misconduct during the next 90 days and the promise of price controls on basic necessities such as medicines.41 To cushion the economic blow of the crisis for the middle class, Duhalde also pledged to convert into pesos up to $100,000 of individual mortgage and credit card debt currently held in dollars. He also said that he would seek to eliminate the provision in the original utility privatization contracts that allows companies such as Spain’s Telefónica and France’s Telecom Argentina to charge in dollars and index prices to U.S. inflation.42

Yet Duhalde’s program clearly reflects much of the economic remedy prescribed by the IMF and the United States. First, it abandons the dollar peg and devalues the peso by 40 percent (1.4 pesos now equals one dollar).43 This forces Argentine and European banks to assume the lion’s share of the losses that will correspond to domestic and international capital. It also means that Argentine and European banks face risk of even greater losses should the peso fall below 1.4. Although Duhalde’s indication that some protectionist measures may be in the offing for Argentine enterprises could not have pleased Bush and the IMF, it did allow him to win over the Argentine business community during his first week in office.44 And Duhalde also took a step to placate domestic and foreign banks by announcing that a portion of the profits from petroleum production will be used to reimburse them for the cost of turning credit card debt into pesos.45

The devaluation visits yet another horrific disaster on Argentine workers by effectively slashing their wages–as well as any savings they may have left–by 40 percent. A fixed rate (1.4 pesos to one dollar) will be used for international capital transactions, but the peso will float freely as far as ordinary Argentinians are concerned. Thus workers may experience an even greater loss in wages and savings. Needless to say, under Duhalde’s program, the promise of new jobs created through increased state spending has disappeared, and most, if not all, of the flexibilization of labor will remain.

Meanwhile, Menem, the current president of the PJ, has harshly criticized Duhalde–a member of his own party–for Duhalde’s economic measures.46 Menem supports full dollarization and staunchly opposes any concessions to protectionism. For its part, the U.S. has criticized Duhalde’s fixed exchange rate for capital transactions and has strongly advised him to allow the peso to float freely on international markets as well. Thus it is likely that the current arrangement–a fixed rate for international trade and a floating rate for domestic consumption–will be temporary. A free-floating peso will probably be declared at some point, but the possibility of dollarization still exists.

Many fiery words against the IMF and the U.S. will come out of Duhalde’s mouth in the coming weeks, but the truth is that, with the exception of proposing a few price controls and some protectionist measures, Duhalde has acted to safeguard IMF and U.S. interests as much as he could be realistically expected to for the moment. Duhalde ratified Saá’s debt moratorium, but he will surely negotiate repayment. Argentine and European capital will end up eating the costs of default and devaluation, and the stage is set to “solve” the crisis by ramming further austerity and misery down the throats of the Argentine working class.

Toward a workers’ alternative

FOLLOWING Saá’s resignation, Buenos Aires governor Carlos Ruckhauf called for a government of “national salvation” to comprise all of the main political parties.47 Of course, de la Rúa had issued the same call during the final hours of his presidency. By including Alianza figures in his cabinet, Duhalde has now delivered, under PJ dominance, what is precisely a government of “national salvation.” The Duhalde government thus represents an attempt at unity among Argentina’s rulers in preparation for the class struggles that lie ahead.

At first it may have appeared that the revolt of December 19–20 dealt a decisive blow to Argentina’s rulers by kicking de la Rúa out of office and stomping on Cavallo’s special powers. But the Argentine ruling class has temporarily regrouped around a program largely accepted, at least behind the scenes, by the IMF and the United States. Furthermore, for the next two years, Duhalde will enjoy the same special powers that Cavallo wielded. In the end, workers still face an extremely tough battle in order to dismantle the regime of neoliberalism in Argentina.

One of Duhalde’s most attractive qualities, in the eyes of domestic and international capital, is his willingness to crack down on the protests. Although foreign and domestic investors are swallowing a bitter pill with the default and devaluation, these measures will probably shorten the Argentine recession. (Without devaluation, economists estimate that it would take another five to ten years for Argentina to recover.) But investors could conceivably lose much more if workers achieved state power and were able to construct their own solution to the crisis.

Already, the state’s ideological apparatuses are preparing the ground for massive repression. The pro-government newspaper La Nación recently published an editorial that in essence called for the criminalization of protest and suggested that the middle class might better fear workers and the unemployed rather than ally with them:

The cacerolazos [pot-banging protests] have demonstrated their unquestionable capacity to guillotine governments ... Behind the peaceful cacerolazos there scurried the violence of groups for which it is hard to know in whose service they act and, if they don’t stop, they’ll end up taking lives and property, including those of the peaceful caceroleros ... What do [the middle class] caceroleros want to do with the great Constitution that, in article 22, proclaims that the people govern and deliberate only by means of their elected representatives and that all armed force or gathering of people that attributes to itself the rights of the people commits the crime of sedition?48

Despite the attempt of the ruling class to intimidate protesters with the use of state terror, an increasing number of Argentine workers–employed and unemployed–are becoming conscious that neither Alianza, nor the PJ, nor any of the mainstream parties has any viable solution to the crisis in Argentina. National and international capitalism produced the crisis, and its program for recovery offers no hope for ordinary Argentinians. Already, shortages of flour and sugar are widespread, and the prices of bread and vegetables–as well as import items such as coffee, appliances, and toiletries–have risen sharply.49 And on January 9, the government declared a “medical state of emergency” because of the lack of adequate medical supplies.50 The crisis will only worsen, casting more and more workers into misery and despair.

Duhalde has already begun to try to divide workers and the middle class by urging groups of consumers to confront shopkeepers and supermarket managers over price increases. On January 7, the new economy minister, Jorge Remes Lenicov, called on the population “to argue and fight” the prices charged by businesspeople.51 Such a call encourages workers to view the middle class as their main enemy instead of the ruling class. And repeated confrontations, especially if they turn to violence, will push the middle class closer to the ruling class in an effort to protect their property and livelihoods.

Yet, in this same climate, the revolutionary left in Argentina faces tremendous possibilities for growth and an eventual leadership role among Argentine workers. The historic problem of the Argentine left has been its history of fragmentation and sectarianism. In this regard, an encouraging sign in the aftermath of December 19–20 has been the joint call for a constituent assembly, or national meeting, issued by the Partido Obrero, Izquierda Unida, Movimiento Socialista de los Trabajadores, Liga Socialista Revolucionaria, and Frente Obrero Socialista. Such an assembly would include all employed and unemployed workers demanding change: the piqueteros movement, the combative sectors of the unions and the social movements, the left political parties, and “all those who are fighting against the present economic system.”52

The coming weeks and months must be used to build organizations of workers’ power that can vie for state power with the neoliberal regime. In this regard, some infrastructure already exists in the piquetero assemblies and in the workers’ committees that have been active in a number of factories and industries. The constituent assembly called for by the Argentine left, moreover, would advance these struggles and significantly develop the extent of working-class organization at the national level.

Key to building workers’ power will be the formation of a mass revolutionary party that is conscious of the need to overthrow capitalism in Argentina. A fundamental characteristic of class struggle in Argentina, and throughout all of Latin America during the 1980s and 1990s, has been the development of social movements outside of the traditional organizations of the working class–the trade unions and the left parties. In the vast majority of cases, this phenomenon has resulted from the refusal of trade union officials to aggressively confront neoliberal governments and from the confusion and demoralization of the left after the collapse of the Soviet Union. Many left groups reacted by becoming reformist and electorally oriented parties, while others degenerated into irrelevant sectarianism. But none of this eliminates the need for developing a revolutionary mass political organization.

Now is the moment to work for reconnecting the social movements with a democratic and revolutionary left. Bettering workers’ lives in Argentina will require not only the vision articulated last year at the World Social Forum in Porto Alegre, Brazil–”a different world is possible”–but also the strength of a mass party that is committed to contending for state power in order to be able to actually bring another world into being.

Whether toward victory or defeat for the Argentine working class, it will become absolutely clear as events unfold in Argentina that any real hope for a better world passes through the revolutionary struggle for a socialist future. And this is true not only in Argentina, but all across Latin America. A workers’ revolution, while by no means a guaranteed outcome, is definitely on the agenda in Argentina. Should it occur, what a wonderful inspiration it will provide to workers everywhere who suffer under the twin horrors of neoliberalism and corporate globalization.

* * *

Notes

1 Thomas Catán, “Once confident Argentina now dances to a different tune,” Financial Times, November 12, 2001.

2 “Argentina suspends debt payments.” BBC Online Americas News, December 25, 2001.

3 Thomas Catán and Richard Lapper, “Argentina seizes $3.5bn from pension funds,” Financial Times, December 7, 2001.

4 The U.S. media, as well as much of the international media, refer to an Argentine “middle class” that includes substantial numbers of white-collar workers: office workers, service-sector workers, teachers, engineers, bank workers, nurses, etc. In this article, the term “middle class” is reserved for owners of small and medium businesses and the equivalent of those in the U.S. who are known as the “professional middle class.” For the “squeeze on the professional middle class,” see Catán, “Once confident Argentina.”

5 Alison Scruton, “Argentina’s Cavallo pressured to deliver,” Reuters, October 28, 2001.

6 Joshua Goodman, “Now, Argentina’s default looks inevitable,” Business Week Online, October 29, 2001.

7 “Analysis: Argentina’s woes explained,” BBC Online Business News, December 3, 2001.

8 “Analysis: Argentina’s woes explained.”

9 Richard Lapper and Thomas Catán, “Argentina’s hard road,” Financial Times, November 5, 2001.

10 Richard Lapper and Thomas Catán, “Argentina hit by strike as economy dips further,” Financial Times, December 14, 2001.

11 “Calling for change–but in which direction?” Economist, October 18, 2001.

12 Thomas Catán, “Argentine voters vent their anger on de la Rúa,” Financial Times, October 16, 2001.

13 The roadblocks set up by piqueteros, or picketers, have been a constant factor in Argentine class struggle since as far back as 1996. The bulk of piqueteros are unemployed workers, whose movement continued to gain strength throughout 2001. Once attracted to the CTA, the piquetero movement broke organizationally with the trade unions because it viewed union leaderships as too willing to accommodate the bosses and politicians. The piquetero movement held two congresses during the past year but has not emerged as a conscious leadership of the forces involved in the December revolt. It emphasizes radical democracy–that is, it mistrusts any organized leadership–and grassroots activism.

14 John Lyons, “Argentina signals default on $38 billion of debt,” Bloomberg.com, October 29, 2001.

15 “La crisis argentina, paso a paso,” El País Online, December 20, 2001.

16 Thomas Catán, “Argentina bank curbs to staunch cash exodus,” Financial Times, December 3, 2001.

17 Richard Lapper, “Capital flight keeps Argentine stocks above water,” Financial Times Online, December 12, 2001.

18 Francesc Relea, “La huelga general contra el plan de ajuste de de la Rúa paraliza Argentina,” El País Online, December 14, 2001.

19 José Ortiz, “El reciente paro general,” Partido Obrero, December 20, 2001, available online at www.po.org.ar.

20 Francesc Relea, “El estallido complica el intento de lograr un pacto de unidad nacional,” El País Online, December 20, 2001.

21 Clifford Krauss, “Shaken by riots, Argentina declares state of siege,” New York Times, December 20, 2001.

22 Francesc Relea, “Argentina declara el estado de sitio para frenar la violencia en las calles,” El País Online, December 20, 2001.

23 Marcelo García, “Angry Argentines lash out at politicians,” MSNBC International News, December 20, 2001.

24 “Argentina has interim president,” MSNBC International News, December 21, 2001.

25 “Al menos 27 muertos y más de 400 heridos durante las protestas en Argentina,” El País Online, December 21, 2001.

26 “A crise econômica na Argentina.” Correio Internacional, March 2001, p. 2.

27 Lance Selfa, “Latin America: Rebirth of resistance.” International Socialist Review, Winter 2000, p. 8.

28 The Mercosur countries are Argentina, Brazil, Paraguay, and Uruguay. Bolivia, Chile, and Venezuela are associate members.

29 Economist Intelligence Unit, “Country briefing: Argentina,” available online at www.economist.com.

30 Neoliberalism was first introduced into Argentina during the military dictatorship of 1976–83. Military violence and state terror were central in breaking the strength of the unions and the organized left as part of the process of opening the economy to the world market. In the eyes of most observers, however, the introduction of neoliberalism under Economy Minister Martínez de la Hoz was only partial, insofar as the military would not allow drastic reductions in state spending to accompany the rest of the neoliberal measures. Without those cuts, inflation could not be controlled, and state spending increased with disastrous consequences.

The world recession of 1981–82 led the military government to react by closing the economy again, while at the same time borrowing heavily in international financial markets. In what became a generalized debt crisis in Latin America, both domestic and foreign investment fell precipitously as capital flight took hold. Subsequently, the government of President Raúl Alfonsín (1983–89) pursued a series of policies beset by a similar contradiction, between globalizing the economy and safeguarding existing interests, including the social safety net. Inflation thus continued to rise, and the economy stagnated overall. A wave of protests similar to those that got rid of de la Rúa brought about a premature end to the Alfonsín government. It was not until successive Menem governments (1989–99) that Argentina fully embarked on the neoliberal path.

A detailed discussion of neoliberalism during the military dictatorship and the Alfonsín administration lies beyond the scope of this essay. Useful information can be found in Paul H. Lewis, The Crisis of Argentine Capitalism (Chapel Hill and London: University of North Carolina Press, 1990).

31 “Menem criticó la política económica de Duhalde,” La Nación Online, January 4, 2002.

32 Thomas O’Brien, The Century of U.S. Imperialism in Latin America (Albuquerque: University of New Mexico Press, 1999), p. 166.

33 José Welmovicki, “América latina en el cambio del siglo: Revolución o colonia.” Marxismo Vivo, October 2000–January 2001, p. 9.

34 For an interesting analysis of Argentina’s regional dynamics, see David J. Keeling, Contemporary Argentina: A Geographical Perspective (Boulder, Co.: Westview Press, 1997).

35 Selfa, pp. 8–9.

36 Michelle Wallin and Matt Moffett, “Can leader of Argentina fulfill vows?” Wall Street Journal, December 28, 2001.

37 Kevin Gray, “Protests turn violent in Argentina,” Associated Press, December 29, 2001.

38 Cristián Alarcón, “El primer cacerolazo del nuevo año,” Sindicato Mercosul/Mercosur, January 2, 2002, available online at www.sindicatomercosul.com.br.

39 James Petras, full interview in this issue of International Socialist Review.

40 “Los empresarios se llevaron una buena impresión de la quinta de Olivos,” La Nación Online, January 4, 2002.

41 “Duhalde intenta apagar el fuego antes de que surja,” El Nuevo Día, January 8, 2002.

42 Thomas Catán and Leslie Crawford, “Argentine recovery plan under pressure,” Financial Times, January 7, 2002.

43 The Bush administration prefers that Argentina allow the peso to float freely altogether. This may well happen in the next couple of months. In any case, some sort of devaluation was what Washington wanted to see as opposed to Cavallo’s and Saá’s plans to preserve the dollar peg.

44 La Nación reported on January 2, 2002, that Duhalde now enjoys the support of “businesspeople and some external influences who, in the past, had singled out Duhalde…for having been, as governor of Buenos Aires, one of the principal figures responsible for the deterioration of the national economy as a result of the debt he left his province.”

45 Annabella Quiroga, “El dólar libre se ofreció a $1,45, pero hubo pocos compradores,” Clarin, January 8, 2002.

46 “Menem dice que Duhalde es inepto para gobernar,” Los Tiempos, January 10, 2002.

47 “Clash erupts near Argentine Congress,” Associated Press, January 1, 2002.

48 José Claudio Escribano, “Triunfó la política del acuerdo,” La Nación Online, January 2, 2002.

49 “Ya hay aumentos en muchos precios,” Clarín, January 2, 2002.

50 “Argentina declaró ayer ‘emergencia sanitaria,’” Los Tiempos, January 10, 2002.

51 El Nuevo Día, January 2, 2002.

52 “Declaration of the Argentine left,” Indymedia Argentina, December 24, 2002, available online at www.argentina.indymedia.org.