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“Un-indebting” Argentina?


The President of Argentina, Néstor Kirchner, has just surprised everybody with an unexpected announcement. Argentina will cancel its whole debt with the IMF at once, before the end of this year. The amount of money to be paid is US$ 9.810 million, which will be covered by using over a third of the reserve in the Central Bank. Contrary to some rumors few months ago, according to which Kirchner was planning to cancel the debt within the next five years and then quit the IMF, after canceling its debt Argentina will remain affiliated with the IMF.

Kirchner justified his unexpected decision in the need to “gain a degree of freedom” from IMF notoriously harmful programmes, so the country can continue with its current economic policies of economic growth. He also argued for the need to “un-indebt” (one word that he loves) Argentina after decades of policies of irresponsible loan-taking. 48 hours before Kirchner, President Lula made a similar announcement in Brazil. As a matter of fact, Kirchner acknowledged that he has discussed this decision with all the presidents of Mercosur.

The reactions in Argentina were mixed. Progressive-oriented people became ecstatic with the prospects of Argentina’s recovery of its sovereignty and its final “independence” from the much-hated IMF. However, progressive parties, such as ARI, warned that, while “un-indebting” the country is good, this decision misses the chance to make the IMF pay for its share of responsibility in Argentina’s economic disaster in 2001. Businessmen -both in the financial and industrial sectors– on the other hand, supported the government’s announcement.

The left wing parties and activists, and some social movements -such as the anti-FTAA campaign and the Darío Santillan Front of Unemployed Workers– have strongly criticised Kirchner’s decision. There is nothing really “heroic” or “patriotic” in it, they say; on the contrary, what in the rhetoric of the government is called “to un-indebt” is just what used to be called “to pay back” in plain Spanish. As a matter of fact, as they argue correctly, for all its anti-IMF, “nationalist” and “progressive” rhetoric, this government has paid back to the IMF more than any other administration before. If we include this announcement, this government will have paid U$S 19.000 millions in four years, besides the U$S 6.000 millions that went to the World Bank and the BID. This money, needless to say, should be used for the benefit of the people instead.

Judging by the reactions of IMF and US officials, the left is right. Rodrigo Rato, the head of the IMF, celebrated both Lula’s and Kirchner’s decisions. As he rightly said, “to pay back” had been his own advise in July this year, when he said that Argentina had enough reserve in the Central Bank to cancel its debt. John Snow, in the name of the US administration, also welcomed Kirchner’s “good will”. Indeed, in spite of some popular enthusiasm that the announcement sparked, the cancellation of the debt with the IMF is likely to have little impact in people’s lives. It will not even reduce the total amount of the public debt (although it does mean some saving in terms of future interests). Most of Argentina’s external debt is with private investors; moreover, while freeing itself from the IMF, the state will now become indebted with the Central Bank. Of course, it is not the same, neither politically nor financially, to have the IMF of the Central Bank as creditors. But in any case the state will have to return the money thus “borrowed” from this half-autonomous institution, which means that public spending will have to remain strictly under control.

This announcement is likely to be interpreted by many progressive-oriented people in the world as a new achievement of one of the so-called new anti-imperialist governments of Latin America. To me, I am afraid it sounds more like the confirmation of a lost chance and, historically speaking, well in tune with the developments of the capitalist world-system. Let us start by the lost chance. Argentina lost two crucial opportunities to reject its external debt. It is worth remembering that, before the last military dictatorship (1976-1983) Argentina had almost no external debt at all. In few years, while murdering and torturing social activists, the military privatized large sectors of the economy and imposed neo-liberal measures that destroyed the national industry and impoverished the population. They also borrowed endless amounts of money from the IMF, which in the mid-1970s helped to find good financial opportunities for vast capitals accumulated in the First World. At that time, the IMF supported and encouraged the economic policies of the dictatorship (and also, by extension, the dictatorship as such). We now know that he US administration also supported that bloody regime: as it has been revealed in declassified CIA documents, Henry Kissinger urged the military to “finish their job” quickly, before the new Carter administration started to ask questions about human rights.

When democracy was reestablished in 1983, Argentina’s external debt was already a burden impossible to carry. President Alfonsín then gave up to international pressures, and lost the chance to reject the debt on the grounds that it had been acquired by an illegal regime (actually, he should have gone farther and make the IMF responsible for financially supporting a murderous dictatorship). Alfonsín tried and failed to change the economic model; by then Argentina was so vulnerable to financial pressures, that he was forced to adopt neo-liberal measures. In the 1990s, President Menem carried out the most radical neo-liberal program, by which he privatized in record time and with utterly corrupt methods all that could be privatized -including oil, pensions, electricity, water, trains, mail, and pretty much everything else. The result of these measures was again the destruction of local industry, 25% of unemployment, and the collapse of the whole economy in 2001. Again in this case, the IMF supported the whole process by giving Menem political support and new loans. In fact, it was the decision of the IMF not to renew its financial help after the neo-liberal reforms were finished what triggered the crisis in 2001. As the IMF practically commanded Argentina’s economy throughout the 1990s, and as Argentina was presented by the IMF experts as the “leading case” in defense of neo-liberal programs all over the world, it was obvious that they had to be made accountable for the total collapse of the country in 2001. Kirchner himself once and again claimed that they had to cover part of the cost of recovery and to acknowledge their fault. But in terms of real policy, he gave the IMF the status of “privileged creditor”, which meant that Argentina’s debt with them was never in default and wasn’t cut off in the restructuring of the country’s external debt in 2004. At that time, the inconsistency between the government’s anti-IMF discourse and its actual measures was interpreted in terms of political strategy: Argentina did not have the strength to fight private investors and the IMF at the same time. It was a matter of political necessity to have the IMF as an ally while screwing the investors. There was going to be a chance to “fix” the IMF later. Now this excuse is no longer tenable. Kirchner’s recent announcement makes it clear that the IMF will finally evade its responsibility and get away with murder, at least for the moment.

Besides, Kirchner’s “un-indebting” of the country can hardly be considered a “national” or even “regional” policy. It is not by chance that first Russia, and then Brazil and Argentina -three of the IMF biggest debtors- have recently decided to cancel their debts with that institution. Unlike the situation in the1970s, we are in times of a much more restrictive international financial market, in which countries such as the US are in great need of fresh capitals. The G7 policies for the IMF in the past years made it clear that the international financial institutions need to recover their financial endowments and be stricter with future loans, now that the historical role of the IMF -that is, to force peripheric countries to become “free market economies”– has been accomplished.

President Kirchner has become a great master in the art of big radical announcements and empty-progressive, national-pride fostering statements. But reality, this time again, shows that his policies are quite in tune with the developments of the capitalist world-system. His decision to “un-indebt” Argentina should be named with the old name: paying back.

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