Against the system: Argentina's meltdown is a result of, and protest over, IMF policy

Geov Parrish - WorkingForChange - 01.02.02

Yesterday's front-page New York Times article on the escalating
political and economic meltdown of Argentina, like most U.S. media
accounts of that crisis in past weeks, was an exercise in deception by
omission. By keeping its lens tightly focused on the unfamiliar names,
institutions, and procedures of domestic Argentinian politics,
audiences here are left with little information as to how the crisis
developed, why it has developed, and what it means for desperately
poor third world countries -- and their corporate slumlords --
throughout the world.

This includes the United States, where much of Argentina's economic
policy has been forged. Even though the Argentinian story (like that
of the dissolving arms control structure) has been given short shrift
by a U.S. media still obsessed with 9-11, that missing larger context
would help explain to audiences why this may ultimately be a far more
significant story than 9-11 for much of the world.

The phrase "International Monetary Fund" did not even appear in the
Times article, but it's hard to find a more important factor in the
economic disaster now unfolding across Argentina. The government of
President Fernando de la Rua, ushered in two years ago, began
determined to be particularly aggressive in its implementation of the
free market policies and "Structural Adjustment Programs" (SAPs) now
routinely demanded by the IMF of virtually every poor country in the

As in most of those countries, the IMF-preferred policies -- slashed
social spending, reduced tariffs, reliance on exports, and devalued
currencies - - worked very well in enriching Argentina's corrupt
economic and political elites (as well as foreign investors, which was
the whole point); but it has made an already tenuous economy worse,
not better, for ordinary Argentinians.

And as in most such countries, the government shrugged its shoulders,
explaining that such privations were necessary to appease foreign
creditors and help the country meet payments on its staggering foreign
debt -- a debt incurred by a succession of corrupt and
corporate-friendly governments dating back even to the ugly military
dictatorships of the '70s and beyond.

As the economy worsened and Argentina's government was left with less
tax revenue, and therefore less money to meet debt payments, it went
back to the IMF in August, reaching agreement on a new $8 billion
bailout with the usual escalation of draconian SAP policies attached.
The agreement, and the failing economy it was supposed to fix, sparked
massive daily demonstrations of tens of thousands of people, in cities
across Argentina, for weeks in August.

That cycle repeated itself by early December, when the failures of
August's Reforms had led Argentina to negotiate for another $1.3
billion in assistance. By this point, Argentinians were fearful that a
currency devaluation would wipe out their lives' savings; when some
mounted a run on banks on Friday, November 30, over the weekend the
now-departed Finance Minister responded with a series of extreme and
in some cases unprecedented steps: limiting bank withdrawals and
movement of money out of the country (by individuals, but not
businesses), and demanding that the country abandon its currency
entirely and transform itself into the world's first modern cashless

The resulting, enormous nationwide street demonstrations promised to
make the country ungovernable. First de la Rua, his vice president,
and his entire cabinet resigned and literally fled the seething masses
of the capitol city on Dec. 20. Then, last weekend, the interim
opposition party regime that replaced de la Rua -- and that had frozen
foreign debt payments and lifted some of his regime's more onerous
steps -- also fell.

The Argentinian public's hostility to just about any potential
government is rooted in a number of factors. Two of the most obvious
are: One, its distrust of the rampant cronyism and corruption that
permeates the country's interchangeable political and economic elites.
Two, anger that the imposition of foreign demands -- not just for
usurious chunks of the country's wealth, but to dictate domestic
economic, social and political policies -- will force any government,
regardless of its lofty words, to wind up financially crushing its own
people to appease New York, London, Tokyo, and D.C.

This is a familiar story throughout the capitals of the Third World.
What is new is that the people of Argentina -- the wealthiest country
in South America -- have fought back, not merely against one or
another political party, but against the entire system of foreign
debt, resource extraction, forcibly opened markets, and economic
colonialism that is steadily widening the gap between rich and poor
throughout the world.

In U.S. media, the heavy but largely invisible hands that write the
rules of this system of global capital are widely being critiqued for
having "overplayed their hand" or "gone too far" in Argentina -- like
beating your slave and finding out he died, having not properly
absorbed the lesson of the desirability of working still harder. Such
analyses from comfortable offices in North America ignores the anger
of hundreds of thousands of Argentinians, across economic classes, who
took to the streets because their personal welfare was threatened not
by one policy adjustment or another, but by the system itself.

While media accounts here focus on finding a new government for
Argentina -- with the subtext (as with Afghanistan) being that it can
be elected or not, so long as it respects the rules laid down up north
-- for much of the world, the current system of debt, exploitation,
and misery, not one or another set of Cabinet ministers that
implements it, is what must be replaced.

This, of course, is precisely the same agenda that has inspired young
activists in two years of street demonstrations from Seattle to D.C.
to Quebec to Genoa. The difference between Genoa and Buenos Aires is
the difference between being horrified by principles and being unable
to feed your children. It's the difference between breaking a window
at Starbucks and going home, in Seattle, and staying until you
overthrow the government, in Buenos Aires. The United States and other
lendor countries, and the financial institutions (like the IMF) that
they control, need to get serious about debt relief and improving the
fate of the world's dispossessed. Otherwise, Americans' security and
comfort, and the economic empire that makes it possible, will be
threatened by far more than a few zealots in a cave in 2002. The
anti-WTO protests in Seattle inspired like- minded people across North
America and Europe to launch similar protests.

Argentina could mark a similar, but far more serious, watershed.