[translated by Cole Miller]
There’s no way I’d let my friend Jorge fall,” said George W. Bush as he authorized a bridge loan for 800 million dollars from the Treasury Department.
The president of the United States certainly deals with privileged information, but there was nothing to make one suspect, on the afternoon of Tuesday the 30th, that president Joge Batlle was teetering on the presidential throne. President Bush should fully explain the implications of his statement. And if Jorge Batlle, “George’s friend,” has a minimum of dignity, he should clarify for his subjects whether he was really about to fall. Where was he falling? How was he falling? Why was he falling? And he should fill us in on what conditions his “friend George” imposed for granting the loan; surely the small print in the contract explains the surprising rash of “solidarity” that afflicted Bush.
President Batlle should explain what Ariel Davrieux and Isaac Alfie promised during the five days they knocked on Washington doors without success, while here in Uruguay money drained from the banks and central reserves to such an extent that the banks had to be temporarily closed. Alfie was one of the most qualified witnesses of this critical situation; and his role as direct advisor to the ex-minister of Economy didn’t hamper him from withdrawing most of his own money from the private banking institution in which it was deposited.
A few days ago the Treasury Secretary allowed himself to criticize “these policies that permit money granted by multilateral bodies to escape from the banks,” but president Battle, unlike his Argentine and Brazilian colleagues, opted to ignore the implication (which suits the situation in Uruguay perfectly) and pretended not to “get it”, thereby avoiding the nuisance of having to ask for rectifications and plead excuses, as Fernando Henrique Cardoso had been forced to do. Nevertheless, the policy criticized by the Secretary of the Treasury was imposed by the International Monetary Fund (IMF). It was the IMF that conditioned the loan on an ironclad restriction against imposing insurance mechanisms on the banks and requiring the punctual return of deposits even before the run on the banks had been contained. It was the IMF that required the state to rescue the emptied banks. It was the IMF that conditioned the loan on the reprivitization of institutions in no more than six months. It was the IMF that demanded a restructuring of the financial system once the crisis is overcome. And it was the IMF that imposed the free floating dollar, mandatory approval of fiscal adjustment and the recessive policies of the project to audit accounts.
The story that a few “reliable sources” tell about Davrieux and Alfie’s Washington performance in Washington is pathetic. Soon after their arrival on Thursday, July 25th, these “negotiators” were already packing their bags to leave, crushed by the harshness and intransigence of the IMF. Then, just in the “nick of time”, Hollywood style, they received a call from the Treasury Department and a declaration of love from the president of the world’s most powerful country to the feeble head of state of the smallest country in the most financially punished region of the world. ”I can’t let my friend Jorge fall.” The suspense anticipating this “happy ending” reveals an ideological “corralito” [corralling-- term used to describe limitations placed on access to individual bank accounts]. You don’t have to be very perceptive to understand that for some time now – ever since the “economic agents” began to exhibit hysteria, the markets became fickle and the risk assessors as capricious as teenagers- the IMF and Treasury Department have been playing “good cop, bad cop” while the people of the region sank deeper and deeper into poverty and despair.
If the reserves of the Central Bank were exhausted, it was because the good cops and bad cops imposed the condition that the State back deposits and alone withstand the run on the banks. If Minister Bension was obligated to use funds from general revenues to shore up the Commercial Bank, it was because Washington had so stipulated. If the government resolved to “administer” the ruined banks in order to reprivatize them, it was because someone had whispered it into the ears of local lobbyists who make 30 grand a month.
This policy, established with a razor-thin margin of autonomy, ate through the reserves, caused the dollar to rise sharply and grew the state bank mechanism. It pushed the country to the brink of bankruptcy. It was then that “friend George” entered the scene, while his Treasury Secretary said all the measures that had been taken were a mistake. The government would make corrections, as appropriate: liquidate the banks, assume debt-ridden portfolios, push forward with a restructuring of the system. Of course: once the piranhas sunk their teeth in (devouring the good customers of weak banks), we discovered that the financial market is not what is used to be and will have to shrink, and if from 1985 through last week we have been foolishly putting in money to preserve its stability, we’ll now have to admit that we ran through the money like drunken sailors.
The foreign bank made its own “national selection” of the specie; now it’s the official bank’s turn because, according to the reasoning of colonized mentalities, “the IMF won’t accept State control of 90 percent of the activity.” State managed banks and banks with mixed management – those on which private businessmen don’t profit – will have to be liquidated.
Except, of course, for the Commercial Bank, since if CrÃ©dit Suisse, the Dresdner and JP Morgan are not yet ready to capitalize now, perhaps they will be in the future: although that does not explain why it makes sense for a private Republic Bank to exist. For the entire package to work, it was necessary to create the appropriate suspense. But the scheme – like love – needs two. For months the government’s economic line has been dictated, on a daily basis, by the IMF and the Treasury Department. President Batlle has fulfilled every one of their demands, point by point – but he hasn’t shed any tears over the prospect of school children eating grass. He obediently accepted a recipe that one knew beforehand was destined for failure, one that would increase external debt to such extremes that it would be impossible to pay even the interest. But he has shown no sign of sensitivity toward impoverishment, unemployment and want.
Premeditatedly, with the approval of our rulers and the backing of an immobilized parliamentary coalition, they have led us down this blind alley. The external debt and the country’s reserves were thrown away on a strategy to defend the banking and financial system that collapsed like the Maginot line – a financial system that is, as Tabare Vazquez recently declared, “corrupt to its very roots.” It has failed in the rescue of a corrupt system that displays a generous indolence toward fraud, a total incapacity to maintain control, and an unswerving determination to raise tariffs and apply adjustments. Now we know that the President of the Republic’s obedience is worth 800 million dollars to “friend George.”
What remains to us in this land devastated by the neoliberal model? Along with a few people who scandalously enriched themselves by selling out their country, we’re left with our state businesses. ”Friend George” will want to be paid off with Ute [state electrical bureau], with Antel [state phone company], with Ancap [state oil refining bureau]. If he extended this bridge of 800 million, it was because he already had our assets in his pocket. Within a short time, they will tell us that we are obligated to honor “our” commitments: “they” will be the same people who predicted during the last electoral campaign that the Frente Amplio would lead the country into bankruptcy, and who soothed us about our dollar debt with assurances that the Partido Colorado (conservative party) would not devalue.
And when “we” honor the commitments of those who didn’t inform us about them, we’ll be selling grandma’s jewels. We will be, whether implicitly or explicitly, like Puerto Rico, a “Freely Associated State,” in the last analysis one of the options that will remain for this empty shell that has ceased to be a nation.