Revolt of the wronged

Argentina was a model IMF student. And it's still suffering as a result

Naomi Klein in Buenos Aires
Thursday March 28, 2002
The Guardian

On the same day that Argentinian President Eduardo Duhalde was embroiled in yet another fruitless negotiation with the International Monetary Fund, a group of Buenos Aires residents was going through a negotiation of a different kind. On a sunny Tuesday earlier this month, they were trying to save themselves from eviction. The residents of 335 Ayacucho, including 19 children, barricaded themselves inside their home, located just blocks away from the National Congress, and refused to leave. On the concrete façade of the house, a hand-printed sign read: "IMF Go To Hell."
It may seem strange that an institution as decidedly macro as the IMF would be implicated in an issue as micro as the Ayacucho eviction. But here in a country where half the population has fallen below the poverty line, it's hard to find any sector of society whose fate does not somehow hinge on the decisions made by the international lender.

Librarians, teachers and other public sector workers, who have been getting paid in hastily printed provincial currencies, won't get paid at all if the provinces agree to stop printing the money, as the IMF is demanding. And if deeper cuts are made to the public sector, as the lender is also insisting, unemployed workers - close to 30% of the population - will be even closer to the homelessness and hunger that have led thousands to storm supermarkets demanding food.

If a solution isn't found to the recently declared medical state of emergency, it will certainly affect an elderly woman I met on the outskirts of Buenos Aires. In a fit of shame and desperation, she pulled up her blouse and showed me the open wound and hanging tubes from a stomach operation that her doctor was not able to stitch up or dress due to lack of medical supplies.

Maybe it seems rude to talk about such matters here. Economic analysis is supposed to be about the peg to the dollar, "peso-ification" and the dangers of "stagflation" - not about children losing their homes or old women with gaping wounds. Yet reading the reckless advice being hurled at Argentina's government from beyond its borders, perhaps a little personalising is in order.

The international consensus is that the IMF should see Argentina's crisis not as an obstacle to further austerity but as an opportunity: the country is so desperate for cash, the reasoning goes, it will do whatever the IMF wants. "During a crisis is when you need to act, it's when Congress is most receptive," explains Winston Fritsch, chairman of Dresdner Bank AG's Brazilian unit.

The most draconian suggestion has come from Rocardo Cabellero and Rudiger Dornbusch, a pair of MIT economists writing in the Financial Times. "It's time to get radical," they say. Argentina "must temporarily surrender its sovereignty on all financial issues". The country's economy - its "spending, money printing and tax administration" - should be controlled by "foreign agents" including "a board of experienced foreign central bankers".

In a nation still scarred by the disappearance of 30,000 people during the 1976-83 military dictatorship, only a "foreign agent" would have the nerve to say, as the MIT team does, that "somebody has to run the country with a tight grip". Yet it seems that repression is the necessary precondition to the real work of saving the country, which, according to Cabellero and Dornbusch, involves prying open markets, introducing deeper spending cuts, and of course a "massive privatisation campaign".

Only there's a hitch: Argentina has already done it all. As the IMF's model student throughout the 1990s, it flung open its economy (which is why it's been so easy for capital to flee since the crisis began). As far as Argentina's supposedly wild public spending goes, a full third goes directly to servicing the external debt. Another third goes to pension funds, which have already been privatised. The remaining third - some of which actually goes to healthcare, education and social assistance - has fallen far behind population growth, which is why shipments of donated food and medicine are arriving by boat from Spain.

As for "massive privatisation", Argentina has dutifully sold off so many of its services, from trains to phones, that the only examples of further assets Cabellero and Dornbusch can think of privatising are the country's ports and customs offices. No wonder so many who sang Argentina's praises in the past are now rushing to blame its economic collapse exclusively on national greed and corruption. "If a country thinks they're going to get aid from the United States, and they're stealing money, they're just not going to get it," Bush pointedly said in Mexico last week. Argentina "is going to have to make some tough calls".

Argentina's population, which has been in open revolt against its political, financial and legal elite for months, hardly needs to be lectured on the need for good governance. In the last federal election, more people spoiled their ballots than voted for any single politician. The most popular write-in candidate was a cartoon character named "Clemente", chosen because he has no hands and therefore cannot steal. It's just that it's hard to believe that the IMF is going to be the one to clean up Argentina's culture of payola and impunity, especially since one of the conditions the lender has placed on new funds is that Argentina's courts stop prosecuting the bankers who illegally pulled their money out of the country, drastically deepening the crisis. As long as the destruction of this country is presented as a uniquely national pathology, it will conveniently keep the spotlight off the IMF.

In the familiar narrative of an impoverished country begging the world for a "bail-out", a crucial development is being obscured: many people here have little interest in the IMF's money, especially when it will clearly cost them so much. Instead, they are busily building new political counter-powers to both their own politicians and the IMF. Tens of thousands of residents have organised themselves into neighbourhood assemblies, networked at the city and national levels. In town squares, parks and on street corners, neighbours discuss ways of making their democracies more accountable and filling in where government has failed. They are talking about creating a "citizen's congress" to demand transparency and accountability from politicians. They are discussing participatory budgets and shorter political terms, while organising communal kitchens for the unemployed. The president, who wasn't even elected, is so scared of this growing political force that he has begun saying the asambleas, as they are called, are anti-democratic.

There is reason to pay attention to all this. The asambleas are also talking about how to kick-start local industries and renationalise assets. They could go even further. Argentina, as the obedient pupil for decades, miserably failed by its IMF professors, shouldn't be begging for loans; it should be demanding reparations. The IMF had its chance to run Argentina. Now it's the people's turn.

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