Argentina is no paradise

With its vaunted growth and inflation numbers that don't add up, this is not a country in recovery but a client state

Argentina's growth in GDP is closely tied to the increase in commodities, particularly soya and maize, for use as biofuels

It was sticky and humid when dawn broke on 20 December 2001. The sound of shots could be heard behind us; the angry crowd protesting in the Plaza de Mayo began to move back. Then I saw him: that man in the blue trousers and Hawaiian shirt who fell on the steps of parliament. I knew he was dead. We started to retreat, pursued by the Infantry Guard Corps. Any of us could have ended up that way, with a bullet in the head. Yet we returned, despite the state of seige and the teargas and the bullets, until, later in the afternoon, President Fernando de la Rúa, the man who had ordered the repression, made his escape in a helicopter.

The final tally was 34 dead, and the Republic of Argentina plunged into a crisis that led to five changes of President in a week. So what had happened to the most European country of Latin America, the one with the least extreme social inequalities, the first to eradicate tuberculosis and illiteracy and the one that had built a solid welfare state by the mid-1940s?

The answer can perhaps be provided by Michel Camdessus, then head of the International Monetary Fund, who gave Argentinian President Carlos Menem the seat of honour at the fund's annual meeting in October 1998 as an example to be followed. And any parallel with present-day Europe's indignados and the IMF's repetition of self-serving advice is not pure coincidence. As it was then, so it is now. When the financial bubble bursts, it is not the bankers and their poltician supporters who suffer the consequences but the wage earners, the small savers and the unemployed.

It is a curious paradox that Menem, the Argentine president most eulogised by the IMF, is also a Justicialist, that is a Peronist. He belongs to the party that created the welfare state in Argentina. As the Uruguay writer Eduardo Galeano put it to me, when Menem privatised all the state companies, "the same ones who drafted the prologue were now writing the epilogue".

With the uncompromising style so typical of converts, Menem completed the devastating work begun by the post-Peron military dictatorship and was in turn succeeded in the task by Fernando de la Rúa, who drove the country into the abyss in his desire to maintain the artificial pegging of the peso to the dollar. Called "convertibility", this was applauded by the IMF but ultimately resulted in the flight abroad of 170 thousand million dollars (equivalent to the country's total foreign debt), the end of credit, the fall into default and – most serious of all – millions of people excluded from the market, marginalised, transformed into the wretched of the third millennium.

The depression was so deep that the turnaround begun by Néstor Kirchner, who came to office in 2003, and continued by his wife, the current President Cristina Fernández de Kirchner can be seen as a significant contrast: growth of 9% almost every year since 2003 and a strong increase in consumption.

Despite this, and the undoubted fact that the "Kirchner model" does not follow the recipes of the IMF in an orthodox way, Argentina is very far from the paradise that is painted by the official propaganda. The country might see those demonstrations return again.

Growth does not automatically mean development. When Kircher speaks of the creation of five million jobs and presents this as the most prosperous age in Argentine history, she fails to mention a few fundamental details. First, the growth in GDP is closely tied to the increase in commodities, particularly soya and maize, for use as biofuels. This model impoverishes the soil, fosters the concentration of land ownership and limits the diversity of agro-industrial options that the countryside could have. As if this were not enough, it depends on market factors that are unaffected by national decision-making. Second, the huge resources generated by this international "tail wind" have not succeeded in putting an end to either the enormous social marginalisation that Argentina is still suffering or the political clientelism that this has brought about. Third, by lying shamelessly about the inflation rate (it is said to be 8% annually when actually it touches 25% percent), the government is concealing the true level of poverty and priming a bomb that is threatening to explode in the near future.

Furthermore, by opting for future development through mega-mining using cyanide (such as that by Barrick Gold in the Andes) and offshore exploitation in the Patagonian Sea, the government of Cristina Kirchner is taking Argentina back to the model of extraction of raw materials that held sway in colonial times. Which may explain an apparent contradiction: the under the table negotiations with the dangerous consultants of the IMF.

Miguel Bonasso.

Article taken from here.