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From: The Socialist issue 252, 3 May 2002: Five Years Of Failure

Search site for keywords: Argentina - IMF - Government - Economy

Argentine crisis: Taking To The Streets Against The IMF

WHEN IT seemed to most Argentinians that conditions in their bankrupt country couldn't get any worse, then they did. The five-month long financial crisis and 46-month long recession that has devastated the lives of Argentina's working class and once-prosperous middle class, has deepened in the last week.

According to the Buenos Aires Herald: "With the peso sharply devalued and joblessness hovering near 24%, the country is undergoing its worst economic crisis in history. Over 40% of its 36 million residents now live under the poverty line and massive protests have become a daily feature of the country's life." The economy is expected to contract by 15% this year!

Fear of financial meltdown and a banking collapse led to panicked savers withdrawing huge quantities of cash from banks (over $100 million a day) forcing Argentina's Peronist president Edwardo Duhalde to order a nationwide bank holiday.

Meanwhile the economy minister, Remes Lenicov, returned empty handed from a meeting of International Monetary Fund (IMF) delegates in Washington. His pleas for a resumption of loans to Argentina's $141 billion debt-ridden economy was rebuffed. The IMF want further cuts in public spending by the country's regional governments. More cuts will increase unemployment, worsen health and education and cut pensions.

Lenicov proposed converting billions of frozen savings into government bonds in order to stop a drain on bank ie to force savers to take on government debt.

This provoked more street protests, strikes and occupations. "Thousands of deposit-holders banging pots and pans gathered outside a heavily guarded Congress for a second day to protest against any attempt by widely despised legislators to approve the savings-for-bonds plan. On Monday night, frightened senators had to be escorted under guard from the building." (Buenos Aires Herald, 25 April)

Needless to say, Congress kicked out Lenicov's plan and he then resigned. Another crisis of Duhalde's administration resulted in the appointment of Roberto Lavagna as the new economy minister.

To buy time in order to "mollify impatient international money lenders", as the BBC put it, the parliament passed a law denying most savers access to their bank deposits. Under the measure, only savers who mount successful challenges against existing restrictions on withdrawals will get access to their money, though the government will be able to appeal against court decisions.

However, the last time parliament passed the 'hot potato' to the Supreme Court mass protests forced the judges to throw it back to Congress in a hurry!

Months of emergency measures have failed to stem the crisis, which isn't simply the result of incompetent and corrupt politicians, but is a root and branch capitalist crisis that can only be ended when the country's working class, pulling behind it the disaffected middle classes, take control.

Only a workers' government which nationalises industry and the banks and implements an emergency plan of production to re-employ people and restore functioning services can resolve the crisis.

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