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Why Argentina’s New Loans From the IMF Are Spurring Unrest and a Deepening Social and Economic Crisis

The IMF has a long history of strong-arming the direction of Argentina’s policies and economy.

At a September 2018 gala dinner organized by the Atlantic Council in New York, Argentinian President Mauricio Macri received the Global Citizen Award.  The Managing Director of the International Monetary Fund, Christine Lagarde, shared the table with Macri.

At a September 2018 gala dinner organized by the Atlantic Council in New York, Argentinian President Mauricio Macri received the Global Citizen Award.  The Managing Director of the International Monetary Fund, Christine Lagarde, shared the table with Macri.

In September, Argentine president Mauricio Macri accepted the 2018 Atlantic Council’s Global Citizen Award. In attendance were many of world’s neoliberal power players and policy makers, among them International Monetary Fund (IMF) Managing Director Christine Lagarde.

Facing the crowd, Macri gleefully admitted that “with Christine, I have to confess we started a great relationship some months ago,” referring to a series of loan agreements with the IMF amounting to $57.1 billion dollars. “I expect that this is going to work very well, and we will end up with the whole country crushing on Christine,” he continued. This dynamic of chasing an improved image with the world’s big banks and the dominant economies in the West is emblematic of Macri’s priority to secure a relationship with the IMF and improve the country’s image with global financial institutions. But it comes at a devastating cost for the majority of the population who will suffer from neoliberal policy prescriptions of structural adjustment and slashed social spending, as well as the resulting growing unemployment and poverty.

Meanwhile, Argentina’s debt to the IMF continues to climb. In June, Macri and the IMF agreed on a $50 billion loan. In September, the amount increased to an unprecedented $57.1 billion over three years. During an announcement from the presidential office in August regarding recent agreements with the IMF, Macri told the people of Argentina that this “decision will put an end to any uncertainty that has come about regarding our image on an international level.” In other words, seeking the approval of the world’s international banks and global power players (the U.S. included) is worth the conditions of austerity, the havoc wreaked on the lives of Argentina’s poor, working and middle classes, and the limitations that it will put on future generations of Argentina’s leadership (a limitation that we have seen most recently in Mexico as President López Obrador pushes back against decades of neoliberal policies and conditions agreed to by his predecessors).

In order to afford the repayment plan, the 2019 budget eviscerates social spending, slashing it by 35 percent while increasing debt payments by 50 percent. Christine Lagarde recently defended the evisceration of social welfare, citing a current program in its place that allocates $6 per person among the 13 million poor in Argentina for the last six months of 2018. This is hardly enough for the country’s 3,965,840 unemployed (8.9 percent of the population) and 12,167,610 residents living below the poverty line (27.3 percent of the population), based on numbers that have steadily increased since 2016 according to the IMF’s own measure and the National Institute of Statistics of the Republic of Argentina’s latest report.

Argentina’s Long Relationship With the IMF, From 1976 to Today

The IMF has a long history of strong-arming the direction of Argentina’s policies and economy, beginning with the military junta in 1976 that tortured, killed, and disappeared 30,000 people in the span of six years. The junta largely targeted the left and the country’s poor and working class as they implemented a series of neoliberal policies, a tactic that journalist Naomi Klein discusses in depth in her book, The Shock Doctrine. Despite the human toll of Argentina’s genocide, the IMF was willing to look the other way as long as the junta followed their policy prescriptions. As Paul Cooney explained:

“just one week after the military coup of March 1976, and without having to negotiate or send a delegation, the Argentinian junta was able to obtain over US $100 million from the IMF. In addition to this show of support for a government willing to implement and impose neoliberal policies with an iron hand, the IMF came through with the largest loan ever to a Latin American country (US $260 million), just five months later.”

Meanwhile, Isabel Perón, the country’s president from 1974 to 1976 until she was ousted by the military coup, was unable to secure funds from the IMF. Her agenda, it would seem, was not to their liking. This is what Tricontinental: Institute for Social Research Director Vijay Prashad calls an investment strike; the idea that credit is only available to countries who follow neoliberal policies. Governments that stray—or are perceived to stray—from this agenda are deprived from access to credit by the world’s financial institutions. In other words, the banks and credit lenders go on a strike of sorts, withholding funds and access to credit until their neoliberal policy prescriptions are met. But, unlike labor strikes—where the demands are centered around conditions to improve the lives of the majority—investors, through their strikes, “insist on cuts to national budgets paid for by taxes on workers and peasants and lower living standards for workers and peasants.” They use their leverage— capital—to increase their own wealth at the expense of the people who produce it—the majority of the world’s population.

When countries faithfully go along with these conditions and implement neoliberal policies, debt is allowed to disappear from the records, and credit is extended (such as when US $10 billion disappeared from the records out of a total of US $40 billion during negotiations between the IMF and military junta, or when the IMF loans to Argentina were extended from $50 billion to $57.1 billion in September 2018 under Macri). Should the policy direction change to show any inclination of a people-driven agenda, however, access to credit quickly disappears and a variety of tactics are used to destabilize “uncooperative” administrations—whether through the “unconventional wars” that we have seen recently in Venezuela and Brazil, or in Salvador Allende’s Chile, or through military intervention.

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The IMF continued to ‘guide’ the country’s policies after the dictatorship under Carlos Menem (1989-1999). It was Menem’s neoliberal policies that led the country into the straits of the Great Depression of 1998 to 2002 when the country set a record for the largest debt default in history up to that point. In 2001, unemployment neared 20 percent and, by 2002, 53 percent of the country was living below the poverty line.It wasn’t until the Kirchner administrations from 2003 to 2015 that Argentina began to pull back from the grip of the IMF (Nestor Kirchner, 2003-2007, and Cristina Fernández de Kirchner, 2007-2015). In these 13 years, as Mark Weisbrot of CEPR explained in a recent interview, the poverty rate was reduced by 70 percent, extreme poverty by 80 percent, and unemployment fell from 17 percent to 6.5 percent. In contrast, in the three years since the beginning of Macri’s term, unemployment has increased to 8.5 percent. In Weisbrot’s view, the Kirchners “did very well after the terrible experience with the IMF, which was one of their worst depressions from 1998 to the beginning of 2002. That’s why they were popular, and that’s why Cristina was re-elected. If she could have run again, she would still be there.” The sharp turn of Macri’s administration is all the more painful with the recent memory of the country’s struggles with the IMF and a glimmer of what life could be like if the country were to free itself of the shackles of neoliberalism.

De-Linking From the IMF Agenda

It is possible, however, to imagine an alternative to the dismal reality created by neoliberal policies and the noose created by the investment strikes of the world’s banking institutions. The late Egyptian Marxist Samir Amin provided us with a framework for building an international agenda that prioritizes the needs of the world’s poor and dispossessed, an alternative to today’s globalization that is dictated by the interests of global capital. In his interview with Tricontinental: Institute for Social Research, Amin reflects on the era of the Non-Aligned Movement (NAM) and multi-polar globalization. This era, Amin said, was “a time when imperialism was compelled to make concessions and to accept the national-popular programmes of India and other African and Asian countries. Instead of the countries of the south adjusting to the needs and demands of globalisation, it was the imperialist countries which were compelled to adjust to our demands.”

By 2030, Amin continues, 85 percent of the population will be living in the Global South. The interests of the majority of this group are neglected by neoliberal policies that slash social spending and place social wealth in private hands. This 85 percent, Amin said, “can successfully de-link to various degrees in accordance not only with our size but also in accordance with our alternative political block, which would replace the core imperialist blocks which are controlling our countries today.” The result of building such an alternative could indicate the ability of the world’s poor to “compel imperialism to accept [their] conditions or part of those conditions,” or to de-link.

Argentina’s poor and dispossessed are already challenging Macri’s agenda and pushing back against the constraints of global capital, having organized four general strikes since his term began in 2015. The country has been mired in protests similar to the cacerolazos that halted the streets of Buenos Aires during the 1998-2002 depression. As Tricontinental: Institute for Social Research’s recent dossier points out, groups such as the Federation of Workers of the Popular Economy (CTEP)are creating cooperatives among the country’s growing sector of informal workers, providing “an illustration of how the working class has been fragmented and reorganised by neo-liberal policies.”

These efforts are not limited to Argentina. In the Indian state of Kerala, the Left Democratic Front governmentled one of the most successful rescue and reconstruction efforts in the country’s history after the most devastating floods seen in 94 years, despite an attempt from the country’s right-wing to not only neglect but actively stifle aid to the communist-led state. In South Africa, shack dwellers of the Abahlali baseMjondolo movement are occupying lands and building homes, refusing to leave their dignity up to the whims of the State and the country’s elite. Across the world, people, and people’s movements, are fighting back and creating alternatives to neoliberal policies. As long as this happens, global capital will use any means that it has—whether through economic policy and coercion or through military force—to protect its interests. But, as Amin suggests, if the 85 percent of the world’s poor, from Argentina’s informal workers to South Africa’s shack dwellers, de-link from a neoliberal agenda and link with each other, they may very well be able to compel the current world order to accept their conditions and begin to create a future free from the shackles of global capital.

This article was produced by Globetrotter, a project of the Independent Media Institute.

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Celina della Croce

Celina della Croce

Celina della Croce is a coordinator at Tricontinental: Institute for Social Research as well as an organizer, activist, and advocate for social justice. Prior to joining Tricontinental Institute, she worked in the labor movement with the Service Employees Union and the Fight for 15, organizing for economic, racial and immigrant justice.

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