Argentine President Faces Off With the IMF


Nestor Kirchner of Argentina is emerging as the leading nemesis
of the International Monetary Fund and the private financial speculators
in South America. Assuming office in May 2003 with less than a quarter
of the popular vote, he now enjoys 85 percent support in the opinion
polls, due in large part to his determination to take on the neoliberal
policies that led to the country’s economic collapse in 2001-2002. 

the crisis Argentina defaulted on portions of its $140 billion international
debt. Kirchner has now thrown the G-7 nations, the leading capitalist
countries, into a quandary with his declaration that the private
investors who bought about $50 billion in government bonds in Argentina
in the 1990s will receive only 25 percent of the face value of their
bonds. Kirchner argues the bondholders gambled on Argentina during
the heady days of the corrupt, neoliberal government of Carlos Menem,
when some bonds paid upwards of 30 percent annual returns. Caring
little about what these exorbitant rates meant for the Argentine
people, the Kirchner government argues the bondholders should now
reap the results of their speculative adventures that helped fuel
the boom and bust of the Argentine economy. 

2002 and 2003 the IMF, the World Bank, and other international financial
institutions lent new funds to Argentina in hopes of keeping the
country from opting out of the international financial system. There
were even signs that some of the lending institutions were backing
off from their history of demanding dramatic cutbacks in basic social
programs and balancing the budget on the backs of the poor. In early
2003, the Inter- American Development Bank lent $1.5 billion to
help shore up the country’s social programs, including the
special government payments of about $50 a month to the heads of
household who were unemployed. Due in large part to the government’s
decision to insist that the domestic economy came first and that
social spending needed to be increased, the country’s economy
in 2003 grew at 7.5 percent after having contracted by over a quarter
in 2001 and 2002. 

recently, the finance ministers of the G-7 nations, who met in Monterrey,
Mexico in January, insisted the government must “be more flexible”
in its debt renegotiations with the private bondholders. Beholden
to the financial and political dictates of the G-7 countries, the
IMF and the World Bank are both pressuring the government to change
its approach. The IMF called Economics Minister Roberto Lavagna
to Washington to renegotiate the release of a loan for $8 billion,
while the World Bank held up a loan for $5 billion that was scheduled
for release on February 11. 

government, however, is giving few signs of budging and has hinted
it may even suspend debt repayments to the IMF and the World Bank.
On February 4, Lavagna released a report pointing out that these
institutions continued to drain the country of financial resources
even during the midst of a severe economic crisis. In 2002 and 2003,
they lent $9.3 billion to the country while collecting $16.6 billion
in old debt. In other words, due to the repayment demands of institutions
like the IMF and the World Bank the country suffered a net loss
of over $7 billion. 

fact that Nestor Kirchner, a little known politician from the sparsely
populated province of Santa Cruz, would take on the dominant international
institutions is due in large part to the fact that the Argentine
people have rebelled against prior governments and openly mobilized
in the streets against the payment of the foreign debt to the IMF
and its kindred institutions. A popular slogan in 2002 was “Que
se vayan todos,” meaning the entire political class and its
international financial backers should be tossed out. International
private banks like the Bank of Boston and Citibank were denounced
in particular for their role in precipitating the country’s

Piqueteros were the leaders of this popular revolt. Comprised of
the underclass that is suffering the brunt of the country’s
20 percent unemployment rate, they poured into the streets blocking
traffic to demand jobs, government assistance for their families,
and land to grow their own foodstuffs. The political beliefs of
the entire country were shaken by the crisis. Popular assemblies,
cooperatives, alternative currencies, worker- seized and -run factories,
along with a host of local self-help institutions have taken root
in the country as the people strive to overcome their economic desti-

French foreign minister, Dominique de Villepin met with the Popular
Assembly of San Anselmo in the province of Buenos Aires, announcing
a special contribution to the Assembly’s free popular dining
center as well as to its educational and cultural programs. A leader
of the assembly told De Villepin: “We organized the assembly
because we need to resist the efforts to privatize even the political
spaces…” It was not specifically mentioned at the Assembly,
but one of De Villepin’s reasons for making this gesture was
to try to protect French investments like the Argentine water company
that was privatized during the Menem government. 

Piqueteros of Argentina are especially militant, often denouncing
government programs as “reformist” at best and for not
going far enough to take on foreign interests and the economic groups
that still dominate the country. In early February, several groups
of Piqueteros seized the labor ministry, denouncing the government
decision to eliminate the $50 a month payments to about 250,000
families. This occurred on the eve of Lavagne’s visit to Washington
where he was to negotiate with the IMF on the dispersal of the new
loan. The government says there were irregularities in many of these
payments, but the Piqueteros are demanding a public review of the
cases of those who were dropped from the roles. 

the time being Kirchner maintains his high level of support,”
says Manrique Salvarrey, a political journalist who also works as
a staff assistant in the Argentine Congress. “But if he cedes
too much to the IMF and does not carry out fundamental economic
changes, the country could witness further political eruptions from
groups like the Piqueteros.”

Roger Burbach
is the author of

The Pinochet Affair (2003)

is co-author, with Jim Tarbell, of

Imperial Overstretch:
George W. Bush and the Hubris of  Empire (

Zed Books).