�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
* ArticlereceivedonAugust29,2005,andapprovedonSeptember19,2006.
** NúcleodePesquisaEconômica(nupec),ProgramadePós-GraduaçãoemEconomia(ppge),Uni-versidadeFederaldoPará(ufpa),e-mail:[email protected]
ArgentinA’s QuArter Century experiment with neoliberAlism:
From DiCtAtorship to Depression*
Paul Cooney**
AbstrACt Argentinasetanewhistoricalmarkin2002,havingexperiencedthelargestdebtdefaultbyanycountryever.InordertounderstandhowArgentinacouldgofromoneofthemostdevelopedcountriesoftheThirdWorld,toexperi-encingthecrisisof2001andthenenteradepressionin2002withoverhalfthepopulationlivinginpoverty,requiresanevaluationofthelastquartercenturyofeconomicpoliciesinArgentina.Theshifttowardneoliberalismbeganduringthedictatorshipof1976,deepenedduringtheMenemadministration,andwassup-portedthroughoutbytheimf.Thispaperaimstoidentifywhythecrisisoccurredwhenitdid,butalsotounderstandhowtheunderlyingshiftsinthepoliticalecon-omyofArgentinaovermorethantwodecadesledtotwowavesofdeindustrializa-tion,anexplosionofforeigndebtandsuchamarkeddeclineinthestandardoflivingforthemajorityofArgentinians.
Key words:neoliberalism,development,foreigndebt,imf
Jel Code:O10,F02,F33,F34
�
� R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
experimento De um QuArto De séCulo De neoliberAlismo
nA ArgentinA: DA DitADurA à Depressão
resumo Em2002,aArgentinaatingiuumnovomarcohistórico,aoexperimentaromaiordefault dadívidaexterna,nãosomentepelasuaprópriahistória,mastam-bémdomundo.ParacompreendercomoaArgentinadeixoudeserumpaísmaisdesenvolvidodeterceiromundoatéexperimentaracrisede2001,entrandodepoisnumadepressãoem2002,commaisdametadedapopulaçãoabaixodalinhadepobreza,precisamosfazerumaavaliaçãodaspolíticaseconômicasduranteoúltimoquartodeséculonaArgentina.Aviradaaoneoliberalismocomeçouduranteadita-duranoano1976,tendoseaprofundadonogovernoMenemesempreapoiadapelofmi.Estetrabalhotentaráidentificarporqueacriseocorreunaquelemomento,etambém,compreenderasmudançassubjacentesnaeconomiapolíticaduranteduasdécadasnaArgentina,asquaisquedesencadearamduasondasdedesindustrializa-ção,umaexplosãodadívidaexternaeumadeterioraçãobemmarcantenopadrãodevidaparaamaioriadosargentinos.
palavras-chave:neoliberalismo,desenvolvimento,dívidaexterna,fmi
�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
introDuCtion
Afterexperiencingtheworsteconomiccrisisinitshistorywiththehyperin-
flationandrecessionof1989,Argentinahasnowsetyetanewhistorical
marknotonlyforitsownhistory,butfortheworld’s,havingexperienced
thelargestdebtdefaultbyanycountryeverin2002.1TheexperienceofAr-
gentinaprovidesarathersoberingevaluationofneoliberalpoliciesfortwo
reasons.First,Argentinahaspursuedneoliberalpolicieslongerthanmost
othercountriesinLatinAmerica,havingbeenoneoftheearliestneoliberal
experimentsduringtheearly1970s,comparedtomostothercountriesthat
didnotembarkontheneoliberaltrajectoryuntilthesecondhalfofthe
1980s.Secondly,Argentinawasrecognizedashavingthehigheststandardof
livingandincomeper capitainLatinAmericaforseveraldecades,2butasa
resultofneoliberalpoliciesimplementedthroughthelastquartercentury,
itenteredadepressionsuchthatover50%ofthepopulationwaslivingbe-
lowtheofficialpovertyline,andalmostonequarterofallArgentinianswere
inastateofindigence.
InordertounderstandhowArgentinacouldgofrombeingoneofthe
most“developed”countriesoftheThirdWorld,andaposterchildforneo-
liberalism,toreachingthecrisisof2001andenteringadepressionin2002,
ahistoricalperspectiveofthelastquartercenturyinArgentinaisrequired.
Thispaperwillattempttoidentifywhythecrisisoccurredwhenitdid,but
alsotounderstandhowtheunderlyingshiftsinthepoliticaleconomyof
Argentinaovermorethantwodecadesledtothepossibilityofsuchacrisis.
Despitemainstreameconomistsbeingindenial,thedrivetowardaneo-
liberaleconomicmodel,asadvocatedbyboththeArgentinianeliteandthe
imf,hashadaclearclassbiasandthusledtoamarkeddeclineinthestan-
dardoflivingforthemajorityofArgentinians.Theparticulartypeofneo-
liberalism,whichArgentinapursued,promotedagro-industryandfinance
attheexpenseofmanufacturing,andthusproducedtwowavesofdeindus-
trializationandthereforeagreatervulnerabilityoftheArgentinianeconomy
toglobalizationinthe1990s.
Thispaperwillfirstevaluatetheperiodofthedictatorshipfrom1976-
1983andthedrivebytheimfandthemilitaryjuntafortheimplementation
ofneoliberalpolicies.Secondly,thetransitiontodemocracyandthemore
heterodoxeconomicpoliciesofAlfonsínareconsidered,followedbythe
10 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
crisisofhyperinflation.ThelatterledtothesupportforMenemandthe
eventual“ConvertibilityPlan”,peggingthepesototheusdollar.Theperiod
ofthe1990s,withrenewedemphasisonneoliberalpoliciesundertheMe-
nemandDelaRúaadministrations,arethenexamined.Thepaperthen
presentstheoverallimpactofaquartercenturyofneoliberalpolicieson
Argentinianworkers.Thisisfollowedbyadetailedlookattheperiodpre-
cedingtheoutbreakofthecrisisattheendofDecember2001.Thenextto
lastsectionassessestheroleoftheArgentinianeliteandtheimfoverthelast
quartercentury,andinparticularthelatter,giventhetrackrecordofrecent
yearswiththestringoffinancialcrisesworldwide,notjustinArgentina.
Lastly,thepapersummarizesthefailedneoliberalexperimentofthelast
quartercenturyandpresentsanoverviewofrecenteconomicandpolitical
developmentsasArgentinaemergedoutofthedepressionof2002.
1. the DiCtAtorship oF the 70s, the imF AnD
the shiFt to neoliberAlism
In1975-1976,Argentinawasenduringaperiodofchaosanduncertainty,in
largepartderivedfromtheeconomicandpoliticalinstabilityafterPerón’s
returntopowerin1973,followedbyhisdeathin1974.Therewereserious
divisionswithinPeronism:theneo-fascistAAAontherightandtheMon-
tonerosguerillamovementonthe left.Somedegreeofclasspeacewas
achievedbetweenthePeronistlaborunionsandthenationalbourgeoisie,
butonlytemporarily.AfterPerónpassedawayinJuly1974,IsabelPerón
inheritedacrisiswhichreacheditsworstpointinJune1975,whentheEco-
nomicsMinisterRodrigoattemptedanimf-styleshocktreatmenttotry
andreinininflation.Afterfailingtoachievethedesiredoutcome,thegov-
ernmentthenallowedanadjustmentof140%fornominalwagesandinfla-
tionsubsequentlyspiraledintohyperinflation.3
ItwasatthispointthatIsabelPerón’sgovernmentwasnegotiatingforan
imfpaymentasreserveswereinneedofreplenishment,giventhecountry’s
economiccrisis.Theimfwouldnotcomethroughwithapreviouslyar-
rangedtranchedespiteeffortsandseveraltripsbyhereconomicteamto
Washington.Itisevidentthatattheheightofthecrisisperiod,theimf
shouldhavehelpedtoprovidesomestabilityandpushedArgentinatohave
newelections,asopposedtosupportingamilitarycoup.
11P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
JustoneweekafterthemilitarycoupofMarch1976,andwithouthaving
tonegotiateorsendadelegation,theArgentinianjuntawasabletoobtain
overUS$100millionfromtheimf.Inadditiontothisshowofsupportfora
governmentwillingtoimplementandimposeneoliberalpolicieswithaniron
hand,theimfcamethroughwiththelargestloanevertoaLatinAmerican
country(us$260million),justfivemonthslater(Schvarzer,1986:45-46).
Duringtheperiodbetween1930and1976,Argentina,aswellasanum-
berofothercountries,pursuedtheeconomicpoliciesknownasimport
substitutionindustrialization(isi).Thisapproachisassociatedwithpolicies
designedtoprotectnascentindustrythroughtariffsandothertradeorin-
vestmentregulations,andtopromotediversificationintobothlightand
heavymanufacturing,asopposedtojustexportingagriculturalproducts.
Fromthemiddleofthe1960s,Argentinawasexperiencinganewphenom-
ena—thegrowthofindustrialmanufacturingexports.Infact,theyhad
reachedovertwothirdsofallexportsin1973(KosacoffandAzpiazu,1989:
109).However,whenthemilitaryjuntacametopowerinMarch1976,the
newgovernmenthadachangeofplans,andtheimportanceofArgentinian
industrywouldneverbethesame.Thiswasevidentintheeconomicpoli-
ciesimplementedbythejuntawithitsnewEconomicsMinister,Martinez
deHoz.Theseneoliberalpoliciesreflectedashifttowardalaisseiz-faireap-
proach,andwerestronglyassociatedwitheconomistsfromtheUniversity
ofChicago,suchasMiltonFriedmanandRobertLucas.4Thedictatorship
carriedoutatransformationcalledtheProcessofNationalReorganization
(El Proceso de Reorganización Nacional),whichwasareactionarypolitical
andeconomicagenda.
Thejuntaintendedtoshiftsupportawayfrommanufacturingindustry
andtowardsagro-industry.Theyarguedthattherentfromagriculture,pri-
marilybeefandgrains,wasnolongergoingtobeusedasasubsidyforin-
dustry,butratherforthedevelopmentofothervalue-addedagro-industry.
Therearethreekeyfactorswhichexplainthisapproachbythejunta.One
representedashifttowardagro-industryasopposedtoindustrialmanufac-
turing.Thejuntawasbeingmoresupportiveofthelandowningoligarchyas
opposedtothemanufacturingindustry.Ataninstitutionallevel,thiswas
reflectedinthegovernmentallyingitselfmorewiththeArgentinianRural
Society(Sociedad Rural Argentina,sra),whichrepresentsthelandowning
12 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
oligarchy,thanwiththeIndustrialUnionofArgentina(Union Industrial de
Argentina,uia),whichrepresentstheindustrialists.
Thesecondfactorreflectedthejunta’sobsessionwithstampingoutdis-
sentingeneral,butespeciallyamongorganizedworkers.Mostnotablywas
thememoryofstrikesinRosarioandCordobainthelate1960sandearly
1970s,andespeciallytheCordobazoin1969.5Thejuntawascommittedto
eliminatingtheindustrialparkinArgentinabecauseitwasseenasfacilitat-
inglaborunrest.
Thethirdfactorisaccommodatingmultinationalcapital,sincetransna-
tionalcorporations(tncs)wouldbenefitifArgentinaconcentratedonpro-
ducingprimaryproductsandagro-industry,thusleavingautomobile,steel
andheavymanufacturingtoimportsortolocalproductionbythetncs.6
Theeconomicandsocialpoliciespursuedbythemilitarygovernment
hadaverynegativeimpactonArgentinianindustry,especiallymanufactur-
ing.Between1975and1981,themanufacturingshareofthegdpdeclined
from29to22%,industrialemploymentdeclinedbymorethan36%,and
industrialproductionasawholewentdownby17%(Smith,1989:251-
253).Theresultoftheneoliberalpoliciesofthejuntabeganthefirstwaveof
deindustrializationinArgentina,whichwouldnotseemtobeinthebest
interestsoftheArgentinianbourgeoisie.However,thatisbasedontheidea
thattheinterestsoftheArgentinianbourgeoisiearestrictlytiedtotheex-
pansionofArgentinianindustrialcapital.TherealityofArgentinaisthat
manyindividualsoftheArgentinianbourgeoisiehavemoreandmoreof
theirinvestmentportfolioinfinanceandagro-industry.Thechangesingov-
ernmenteconomicpolicytendedtobenefitthemostpowerfulcompanies,
suchasBunge&Born,Macri,PerezCompanc,etc.7butevidentlytheless
powerfulfirmsamongArgentinianindustrywereconsideredexpendable.
OneofthemostimportantneoliberalpoliciesthatMartinezdeHozim-
plementedwastheFinancialReformof1977(Reforma Financiera de 1977),
whichabolishedcontrolofinterestratesandremovedmanyfinancialregu-
lationsregardingcreditandinvestment.Thishadbeenstronglypushedby
Argentina’sfinancialelite,referredtoinArgentinaasla patria financiera8
andalsosupportedbytheimf.Thisfinancialreformgreatlyfacilitatedthe
shiftfromindustrytofinance,promotedfinancialspeculation,andcreated
anatmosphereconducivetolaxfinancialcontrolsandcapitalflight.Infact,
13P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
duringthemilitarydictatorship,therewasanestimatedus$28billionin
capitalflight(Minsburg,2001:148).Anothertellingexampleofboththe
lackoffinancialcontrolsandtheimpunityonthepartofthejuntawaswhen,
duringthenegotiationswiththeimfforastandbyagreement,us$10billion
simplyvanishedfromtherecordsoutofatotalofus$40billiondebt(Smith,
1989:249).Thisisalsorevealingwithregardstotheimf’swillingnesstolook
theotherwaywithamilitarygovernmentpursuingtheneoliberalmodel,
howevercorrupttheymaybe.Suchanoversightwouldhaveproduceda
scandalwiththeAlfonsíngovernment,justacoupleofyearslater.
Duringthemidtolate1970s,theimfandotherinternationalfinancial
institutionswerepromotingcountriestotakeondebtduetoexcesspetro-
dollarsontheworldmarket.Itisnotsurprisingthatthisistheperiodwhen
Argentina’sdebtfirstbegantoincreasesignificantly,growingfromus$9.7
billionin1976tous$45billionin1983.Infigure1,onecanseeasharp
increaseinthegrowthofdebtaround1978,resultingina363%increaseof
foreigndebtbetween1976and1983,theyearsofthemilitarydictatorship.
AlthoughbothBrazilandMexico,likeArgentina,sawtheirforeigndebt
jumpup,increasingby3.5and4timesrespectively,thisdebtledtoagrowth
andexpansionofmanufacturingincontrasttoArgentina’sdeindustrializa-
tion.Thoughallthreecountrieshadcrisesintheearly1980s,Braziland
Mexicohadcrisesofgrowthandexpansion,whileArgentinahadacrisisof
mill
ion
s o
f d
olla
rs
Figure 1: Argentina’s foreign debt (1975-1983)
Source: Ministerio de Economía.
Year
50,000 –
45,000 –
40,000 –
35,000 –
30,000 –
25,000 –
20,000 –
15,000 –
10,000 –
5,000 –
0 –
| 1975
| 1976
| 1977
| 1978
| 1979
| 1980
| 1981
| 1982
| 1983
|
14 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
shrinkage.ItshouldbepointedoutthatpartofArgentina’sdebtincrease
wasduetoadrasticfinancialreformimplementedbyDomingoCavallo,
whowasthenpresidentoftheCentralBank.Withinjustsixmonths,40%of
theprivatesector’sdebt(~us$6billion)wasconvertedtopublicdebt
(Smith,1989:247).
Itisalsoimportanttonotetheshiftthattookplaceafter1982withre-
gardstotheavailabilityofforeigncredit.AfterMexico’sdebtcrisisin1982,
theimfandotherlendinginstitutionsshifted180degreeswithregardsto
creditpolicyfortheThirdWorld.Inthegraphabove,thiscanbeseenbythe
levelingoffbetween1982and1983.Thiswasamanifestatonoftheshift
towardmonetaristpoliciesingeneral,butespeciallyintheUS,whereinter-
estrateswerepushedupwardsarguablytocontrolinflation,startingwith
PaulVolker’sappointmenttotheheadoftheFederalReserveunderCarter
in1979.AfterVolker’sinitial“shock”treatmentin1979,interestratespeaked
at14%in1981,thuscausingmajorincreasesfortheforeigndebtofmany
countries,Argentinaamongthem.9
Inadditiontotheprocessofdeindustrializationandthenegativeimpact
onmanufacturing,thefinancialreformandotherneoliberaleconomicpol-
iciesofthedictatorshipledtoamuchgreatereconomicinstabilityand
three-digitinflationin1982.Atamoreconcretelevel,Argentinawasexpe-
riencingafiscalcrisisofthestate,butfromalong-termview,thiscrisisre-
flectedtheproblemsassociatedwithashiftfromisitoaneoliberalaccumu-
lationstrategy,aneconomymoredependentonfinanceandagro-industry
thanonthemanufacturingbaseofthepast.Inaddition,theworkingclass
ofArgentinaanticipatedaclearimprovementeconomically,regainingsome
ofthegroundlostduringtherepressivemilitaryregime;however,thecapi-
talistclassandthepatria financierahadnointentionofrelinquishingtheir
gainsofrecentyears.ThiswasthedifficultcontextthatAlfonsíninheritedas
Argentinatransitionedtodemocracy.
2. the trAnsition to DemoCrACy AnD
hyperinFlAtion: the AlFonsÍn perioD
ThusAlfonsínwasexpectedtohelprightthewrongsofthepreviousmili-
tarygovernmentandimproveArgentina’sailingeconomy.Amajorproblem
wasthedifferentexpectationsbycompetingsocialclassesregardingthefu-
15P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
tureoftheeconomy.Afteryearsofsocialexclusion,theworkingclasswas
demandinganimprovementofrealwages,havingexperiencedamajorde-
clineintheirpurchasingpower,suchthatitwasbelowthatofthedecadeof
the1960s.Althoughgdpin1983wasroughlyequivalenttothatof1970,
Argentina’spopulationhadgrownby22%,implyingasignificantdeteriora-
tioninper capitaincome.Fromcapital’sviewpoint,fixedinvestmenthad
fallenmorethan30%comparedtotheaverageofthe1970s.Ironically,
muchofthiswasduetotheneoliberalmodel,whichmanycapitalistshad
advocated.
TheAlfonsíngovernment,feelingconfidentaftertheelections,attempt-
edtobemoreindependentfrombothdomesticandoutsideforcesandto
forgeaheadwithaneconomicsolutionwithouthavingtomakeconcessions
tothePeronists,otherpoliticalparties,orotherestablishedinstitutions,
suchasthesra,uiaorcgt.10Thus,AlfonsínandhisEconomicsMinister
RicardoGrinspunchosetobreakfromthestrictneoliberalorthodoxap-
proachandpursueanheterodoxvariantwhichwouldreinvigorate the
economyandalsoallowforamoreequitabledistributionofincome.This
wasinspiteofandcountertotheimf’scallsforeconomicorthodoxy-
growthfirst,followedbyredistribution.
In1984,Alfonsíntooktheboldstepofsuspendingalldebtpaymentson
theprincipalandsystematicallydelayinginterestpayments.Thebattleof
economicpolicywiththeimfcontinuedthroughtheyear,butgiventhe
balanceofpaymentscrisis,thenewgovernmentwasforcedtoshiftfrom
brinkmanshiptoconciliationandsignatraditionalorthodoxadjustment
planwiththeimfinSeptember1984.Theresultingimfausterityplanpro-
scribedrealwageincreases,eliminatedpricecontrolsandforcedArgentina
toliberalizetraderestrictions.
In1985,theannualinflationratehadreached1,000%,butafterintro-
ducingtheAustralPlanwiththenewEconomicsMinisterJuanSourrouille,
Argentinafinallyhadareprieve,asmonthlyinflationratesdroppedfrom
30%tobelow5%.Nevertheless,overthenextcoupleofyears,inflationcon-
tinuedtobeagrowingproblemandeventuallyescalatedintothecrisisof
hyperinflationof1989.ThroughoutAlfonsín’stenure,therehadbeena
rockyrelationshipwiththeimf,ashisadministrationwasmorewillingto
asserttheirpreferredsetofpolicies.However,giventhecontinuedproblems
16 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
ofagrowingdebtburdenandgallopinginflation,timeaftertime,theAlfon-
síngovernmenthadtosuccumbtothedemandsoftheimfforneoliberal
austerityplans.AlthoughArgentinaoftendidnotfollowtheseplanstothe
letter,thenetresultwasmoreasetoforthodoxpoliciesthanheterodox
ones,asthegovernmentoriginallyadvocated.
Thisresultedinacontinuityofneoliberaleconomicpoliciesaspursued
bythedictatorshipandMenem.TheAlfonsínadministrationbeganwith
theintentionofpursuingeconomicgrowthwithamoreequitabledistribu-
tionofincome.However,throughthecourseofthe1980s,duetopressure
fromboththelocalelites,aswellastheimf,theycametopursue“anti-in-
flationary”policiesthatpreventedincreasesinrealwages,notjustnominal
wages.Alfonsínalsoattemptedtocontrolworkerswagedemandsusingthe
discourseofdemocratizationoftheunionsasameansofweakeningunions.
Ontheonehand,therewasaneconomicincentivetocontrolwagedemands,
buttherewerealsopoliticalmotivations,giventhestrongassociationbe-
tweenthecgtandthePeronistparty,themainoppositiontoAlfonsin’s
Radicalparty.11
Dinersteinpresentsananalysisofhoweconomicpoliciesevenundera
democraticgovernmentcanconstituteaweaponofrepressionagainstthe
workingclassesofacountry.Shearguesthat
Thetransitiontodemocracywasonlythepoliticalexpressionoftheother
transition:fromeconomicinstabilitytothelegitimisationoftheterrorism
ofmoneyintheformofstabilityinthe1990s.Thestruggleforandagainst
thelegitimizationoftheterrorismofmoneyoverthepoliticaltooktheform
ofhyperinflation.Hyperinflationbecamethemeansofboththevalorization
ofcapitalandtherepressionoflabour.Facedwiththeburdenoftheinterests
oftheexternaldebt,in1989thegovernment’simpossibleaimofsimultane-
ouslysatisfyingsocialdemandsandsubjugatingitselftothemandateofthe
imf,theWorldBankanditscreditorsasserteditselfas‘distrust’inthena-
tionalcurrencyandproducedafinancialcrisis.(Dinerstein,2003a:12-13).
Attheheightofthecrisisin1989,therateofinflationreachedfourdigits
(4,923%),thepercentageofArgentinianslivingbelowthepovertylinewas
approaching50%andtherewasoverallinstability(indec,2003).There-
sultwasaperiodofchaos,withlooting,policerepression,andfearofaso-
cialrebellion.Aftertheelectionsof1989,insteadofaccommodatingAlfon-
1�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
sínwithaninterimloantillthepresident-electCarlosMenemtookoffice,
theimfpushedforAlfonsíntoresignbeforecompletinghisterminoffice.
Theclimateofeconomicinstabilityandparticularlyhyperinflationpro-
ducedanatmospherethatallowedMenemtogainthesupporttofurther
anddeepentheneoliberalprocessofeconomictransformationbegunin
1976.
3. neoliberAlism unDer menem AnD the impACt
oF globAliZAtion12
InMarch1991,theMenemadministrationimplementedaneconomicplan
knownasthePlan Cavallo,namedaftertheEconomicsMinisterDomingo
Cavallo.Thisplanborestrikingresemblancetothatoftheeconomicpoli-
ciespursuedbythedictatorshipandMartinezdeHozbackinthe1970s.13
Thisisbecausetheywerebothfundamentallyneoliberal,asreflectedby
theirthreemainelements:financialderegulation,reformofthestate,and
tradeliberalization,nottomentionthegeneralpro-capitalbias.14TheMe-
nemadministrationwascommittedtoanaccumulationmodelwithitsbase
infinanceandagro-industry,sacrificingmanufacturingandthusproducing
asecondwaveofdeindustrialization.
3.1 Convertibility and Financial reforms
TheoneaspectofthePlan Cavallo whichwasnotbasedonneoliberalideol-
ogywasthepeggingofthepesotothedollaratarateofone-to-one,com-
monlyreferredtoasconvertibilidadorconvertibility.15Althoughinconsis-
tent with a pure laissez-faire orthodoxy, but consistent with how
neoliberalismispracticed,convertibilitywasacceptedandsupportedbythe
IMFandWashington,rightupuntil1998.Thiswasseenasashrewdand
successfulploy,byencouragingArgentinianstobringtheirusdollars“out
of themattresses”andto trust thenationalcurrencyandbanksagain.
Thoughrisky,itturnedouttobeextremelyeffectiveinendingthehyperin-
flationofthelate80sandearly90s.Therewasfinallyasenseofstability,
whichhadgreatpsychologicalappealafterthecountryhadenduredaperi-
odofhyperinflation,asdiscussedabove.Thecountrywasdesperatefor
somelevelofeconomicstabilityandthuswillingtoseeiftheneoliberalPlan
Cavallo couldwork.
1� R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
Thepeggingofthepesotothedollar,alsoknownasacurrencyboard,
wasaclearadvantageforforeigninvestorsthatdidnothavetoworryabout
instabilityorsuddendevaluationscausingmajorlossesontheirinvestments
denominatedinpesos.TherewasanincreasedconfidenceintheArgentin-
ianbondmarket,aswellasintheeconomyasawhole.Thedownsideof
convertibilitywasthatArgentiniangoodsweremoreexpensiveontheworld
marketandimportswerecheaperforArgentinians,thuscontributingtoa
worseningtradedeficit.Theimpactofconvertibilityonimportsandex-
portsisfurtherdiscussedinthesectionontradeliberalizationbelow.
Oneofthethreemainneoliberalpoliciesisfinancialderegulation,im-
plyingtheeliminationofrestrictionsonforeigninvestment,andalsoonthe
outfloworrepatriationofprofits,royalties,etc.Thisclearlyfacilitatedthe
flightofcapital,beitforeignordomestic.Basualdohasestimatedtotalcap-
italflighttobeus$115billionsince1980,andoneofhisgraphsshowsa
veryclearcorrelationwiththeexpansionoftheforeigndebtandinterest
payments(Basualdo,2001:37).Theproblemofcapitalflightisaclearex-
ampleofhowfinancialderegulationleadstoinsufficientcontrolofcapital
movementformanycountries,notjustArgentina.Financialderegulation
producesanenvironmentthat’smuchmorepronetocrisiswhenacertain
degreeofconfidencebyinternationalinvestorsislost.
3.2 privatizations of public enterprises
Anotherofthethreepillarsofneoliberalism,privatizations,ortheselling
offofpublicenterprises,playedasignificantroleduringthe1990sinArgen-
tina.Between1991-1998,Argentinasoldoffatotalofsomeus$31billion
worthofpublicenterprises(Rock,2002:68),thoughthemajorityofwhich
wassoldoffbetween1991-1995. Althoughthisimprovedthefiscalbalance
forthoseyears,thiswaspartiallyoffsetduetothedebtequityswapsagreed
tobytheMenemadministration.However,thismeantthatafter1994there
wasnotonlynothinglefttosell,butalsoresourcesthatcouldhavebeena
steadysourceofrevenue,suchastheNationalOilCompany(ypf),16would
beprovidingnofutureincomeotherthantaxes.17Besidesypf,theArgen-
tiniangovernmentalsosoldoffthenationalairline,theelectricandgas
utilities,water,therailroadsandmanyotherpublicenterprises.
1�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
Anothermajorconcernwasthemannerinwhichtheprivatizationpro-
cesstookplace,oftenlackingtransparencyandclearlyfavoringthetransna-
tionalcorporationsandlocalconglomerates,asevidencedbythemajority
ofthestateenterprisesbeingsoldbelowtheirworthorinvolvingdebteq-
uityswaps(AzpiazuandSchorr,2004).Althoughthedrivetowardprivati-
zationswascomingfromthePeronistparty,theimfprovidedasignificant
externalpushbystronglyadvocatingthesepoliciesandsupportingtncsin
subsequentnegotiations.18
Itwasduringthemilitarydictatorshipof1976-1983thatpublicenter-
prisesweredeliberatelyundermined,beingdisproportionatelyimpactedby
budgetcuts.Therehadbeenagrowingneedfortherenovationofphysical
capitalthatdidnottakeplace,“arguably”becauseofthelevelofthestate’s
indebtedness.Changesinmanagementoccurredonaregularbasisbecause
ofpoliticalshifts,causingalackofcontinuityintermsofmanagementand
leadership,andthereforetheirabilitytoservethepublicdeclinedandthe
qualityofserviceworsened.Suchanimpactisindependentofbeingapub-
licorprivateenterprise.Insteadofprivatizingpublicenterprises,thejunta
ortheMenemgovernmentcouldhavemadetheirfunctioningagreaterpri-
ority,andgiventhemtheinfrastructurenecessarytoperformwell,aswith
anyprivatefirmprovidingservices.
Privatizationsofstateenterpriseshadarathersignificantimpactonun-
employmentinArgentina,especiallyintheprovinces.Atotalofover110,000
workerswerelaidoffbetween1990-1993(Duarte,2002:76).Thisincrease
inunemploymenthadthegreatest impact inthepoorerprovinces.19It
shouldcomeasnosurprisethat,afterthewaveofprivatizations,theseprov-
inceswerehavinggreaterproblemswiththeirbudgets.Additionalimpacts
ofneoliberalpoliciesonworkersarediscussedbelowinsection5.
3.3 privatization of social security
Anotherneoliberalpolicysupportedby—butnotasstronglydemandedby
theimf—istheprivatizationofsocialsecurityprograms.Unfortunately
forArgentina,theMenemadministration,withsupportfromtheWorld
Bank,partiallyprivatizeditsSocialSecuritysystemin1994.Payrolltaxes
thathadpreviouslygonetothegovernmentfortheSocialSecuritysystem
wereinsteaddivertedtoprivateaccounts.Thisresultedinasignificantre-
20 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
ductionintaxrevenue.Accordingtotheimf(imf,1998)thereductionof
revenuescorrespondedtoroughly1.0percentofannualgdp,whichwould
resultinatotalofroughlyus$18billionfortheyears1994-2000.20How-
ever,otherresearchhasincludedadditionalrevenueshiftsandestimatethat
thelackofrevenuereceivedbythegovernmentbetween1994and2000was
approximatelyus$52billion(Basualdo,2003:22andDamill,Frenkel,Juve-
nal,2004:303).
Atthetime,theMenemadministrationtriedtoameliorateconcernsfor
thelackofrevenuebyarguingthattherevenuesobtainedbytheprivatiza-
tionofpublicenterpriseswouldhelpduringthetransitionperiodofpriva-
tizingSocialSecurity.Therealitywasthatmuchoftherevenueanticipated
bytheprivatizationswaslostthroughdebtequityswaps,andthusArgentina
hadtoborrowinordertomakeupforthelostrevenue.Thiswasnotan
idealtimetohavetoincreaseborrowing,astheusFederalReserveincreased
interestratesinFebruary1994,andthencamethestringoffinancialcrises:
Mexico,SoutheastAsia,Russia,andBrazil.
Itisironicthatoneofthepoliciespushedbytheimf,namelyprivatiza-
tionofSocialSecurity,wasoneofthecontributingfactorstothefiscalcrisis
Argentinawasexperiencingduring2001,andwhenneedingaloan,theimf
forcedthemtocutthebenefitsinitstraditionalSocialSecurityprogramby
13%inSeptember2001.Itisyetanotherexampleofhowtheneoliberal
policiespushedbytheimfcontinuetobeagainsttheinterestsofthecoun-
trytheyareimposedupon.
3.4 trade liberalization
Sincethemilitaryjuntacametopowerin1976,therehasbeenadrivefor
tradeliberalization,throughthereductionoftariffsandtheeliminationof
non-tariffbarriers.Thesetendencieswereextendedanddeepenedasof
1990undertheMenemadministration.Thetariffstructureestablishedas
of1991was22%forconsumergoods,15%forinputsand5%forcapitalor
intermediategoodsnotproducedinArgentina.Thegoalswereinitially20%,
10%and0%respectivelyin1991,asadvocatedbytheimfandgatt.21The
objectiveofreducingthemaximumtariffinaperiodoffouryearsto20%
andeliminatingnon-tariffbarriers—suchasquotas,licensesandimport
restrictions—waspracticallyachievedaroundthebeginningof1991.Oth-
21P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
ertradebarrierswerecompletelyremoved,withtheexceptionofrestric-
tionsonautoimports,whichnotcoincidentally,wasbyfarthemostdy-
namicsectorduringthe1990s.22
Theresultofthesetradepoliciesmeantmoreproblemsforlocalindus-
try,whichnowhadtocompetewithmuchcheaperimports,andnolonger
withtheprotectionoftariffs,etc.Theloweringoftariffsandeliminationof
traderegulationsmadetheArgentinianeconomymorevulnerabletothe
coldshockofglobalcompetition.Between1992and1999,Argentinahada
tradedeficitineveryyearexceptfor1995and1996,whenthe“tequilaeffect”
oftheMexicanpesocrisisforcedArgentinatokeepimportsinlinewith
exports,asshownintable1.
Despitethefrequentlyusedargumentthatthecurrencyboardprevented
Argentina’sexportsfromgrowing,theybasicallydoubledbetweentheearly
1990sandlate1990s.23Theproblemhadmoretodowiththeincreaseof
imports,whichgrewfrom4to8billionintheearly1990stoover30billion
by1997-1998.Thisconsistentandsubstantialimbalancebetweenexports
andimportsresultedinanaccumulatedtradedeficitofoverus$18billion
between1991and1999,asseenbelow(indec,2005).Thisisarguablydue
tothecombinationoftradeliberalizationandthecurrencyboard,notjust
convertibility.Inthesectionbelow,weexaminetheshiftawayfrommanu-
facturingtowardagro-industryandhow,aftertwowavesofdeindustrializa-
tion,Argentinawasincreasinglyvulnerabletoamorecompetitiveworld
economy.
table 1: Argentina’s trade balance (millions of us$)
Year Exports Imports NetExports
1991 11,978 8,275 3,703
1992 12,235 14,872 – 2,637
1993 13,118 16,784 – 3,666
1994 15,839 21,590 – 5,751
1995 20,963 20,122 841
1996 23,811 23,762 49
1997 26,434 31,377 – 4,944
1999 23,309 25,508 – 2,200
Total 174,117 192,740 –18,623
Source: Indec, 2005.
22 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
3.5 Deindustrialization revisited
Asmentionedabove,priorto1976,industrialmanufacturingexportshad
reachedovertwothirdsofallArgentinianexports.However,withthetwo
wavesofdeindustrialization,oneunderthemilitaryjuntaandtheother
underMenem,theroleofmanufacturingintheArgentinianeconomyexpe-
riencedasignificantdecline.Forexample,duringtheMenemyears,manu-
facturingasashareofgdpwentfrom30.9%in1989downto17.1%in1998
(Rapoport,2000:1026).Estimatesbasedoncensusdatashowthatmanufac-
turingjobsdeclinedby32.6%,from1,132,499to762,992between1991and
2001.
Thesestatisticsconstituteevidenceofthesecondwaveofdeindustrial-
izationinArgentina.However,since1976therecontinuedtobetheempha-
sisonagro-industryandthelackofanationalindustrialpolicytopromote
technologicalchangewithinArgentina.TheMenemgovernment,justasthe
militarygovernment,claimedthatitwascommittedtotradeliberalization
throughtariffreductionandtheeliminationoftariffbarriers,inorderto
forceArgentinianindustrytobeabletocompeteinternationally.Thisfairy-
taleformularootedinthemythof“freetrade”unfortunatelyheldswaydur-
ingthe1990sinArgentina.Therealityisthatafewlargefirms,suchasPerez
CompanyandBungeyBorn,wereabletoweatherthestormofimports,but
forthemajorityofArgentina’smanufacturingfirmsthismeanthardships,
andinsomeinstancesdisaster.Forfirmstryingtoexport,convertibility
onlyexacerbatedtheproblem.
Foraquartercentury,therehasbeenaseriousdisarticulationofArgen-
tinianindustry,increasingthedifficultyformanufacturingtocompeteinan
evermoreglobalizedworldmarket.Thisisbothreflectedinthegrowing
dependenceonconsumerandcapitalgoodsimports,andtheextentto
whichArgentina’sexportsaredominatedbyrawmaterialsandagricultural
products.
Akeyproblemwithanoverdependenceonagriculturalproductsisthey
experiencemorefrequentandgreaterpricevariations.Forexample,Argen-
tinianagriculturalexportsbenefiteduntil1996withagradualincreaseof
pricesininternationalmarkets,whichwassomecompensationfortheover-
valuedpeso.However,thistendencybegantoreversein1997,astherewasa
declineinthepricesofagriculturalproductsonworldmarkets,sincethe
23P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
globaleconomywasenteringarecession.Fromthatpointon,salesofAr-
gentinianproductsbegantostagnateinvalueterms,althoughtheycontin-
uedtogrowinphysicalterms(Rapoport,2000:999).
Inrecentyears,agriculturalproductionhasgrowningeneral,duetoa
seriesoftransformationsforvariouscrops,resultinginincreasedyieldsand
totalareacultivated.Ingeneral,thecropsthatgrewthemostweredestined
forexport,aswerethosethatintroducedtechnologicalinnovationsinpro-
duction.Suchchangeshaveoftenbeenemployedinordertomaintaincom-
petitivenessontheworldmarket.Itisworthnotingthat,asof2003,Argen-
tinawasonlysecondtotheuswithrespecttoproducinggeneticallymodified
crops,primarilycorn,cottonandsoybeans.
Sincetheearly1980s,seedoils24andcerealshavebeenthemostimpor-
tantcropsintermsoftheirvalueofproductionandexportshare.Infact,by
theendofthetwentiethcentury,theyconstitutedroughlyonequarterof
Argentina’sexports(indec,2003). Inrecentyears,wheat,corn,sorghum,
soybeansandsunflowershaveallincreasedtheiryieldsandareacultivated
significantly,thuscausingareductionintheareacultivatedforothercrops.
Thisexpansioncanbecalledthe“agriculturalization”ofArgentina,since
thisisattheexpenseoflivestockfarming.Incontrasttothegrowthand
expansioninagriculture,livestockproductionexperiencedageneralstag-
nation,withlowergrowthandareductioninthenumberofheadsofcattle
orotherlivestock.Inthecaseofbeef,therehasbeenadeclineindomestic
consumptionwhichexportshavenotbeenabletocompensate.
Anotherareathatdeservesattentionregardingtheimpactsofthesecond
waveofdeindustrializationiswithrespecttoworkers,bothinindustryas
wellasagriculture.Ratherthanconsideringtheimpactsofdeindustrializa-
tionseparately,thenextsectionwillconsiderthegeneralimpactonworkers
duetoneoliberalpoliciesinArgentinaduringthe1990s.
4. neoliberAlism’s impACt on worKers
Giventheclassbiasassociatedwithneoliberalpolicies,itisimperativeto
lookattheoverallimpactontheArgentinianworkingclass,especiallysince
Menembecamepresident.First,asmentionedearlier,thereweremajorlay-
offs,totallymorethan110,000,asaresultoftheprivatizationsthattook
place.Secondly,thedeclineinmanufacturingledtoareductionofover
24 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
369,000jobsfrom1991-2001,a33.9%lossintotalmanufacturingemploy-
ment.25Asaresultofthetwowavesofdeindustrialization,Argentinawent
fromover1.5millionmanufacturingjobsin1974downtoroughly763
thousandjobsin2001,alossof50%.Thirdly,theshifttowardmoreefficient
andtechnologicallyadvancedtechniquesinagricultureduringthe1990s
alsocontributedtoanincreaseinunemployment,althoughthiswasbal-
ancedoutinpartduetotheincreaseinagriculturalproduction.
Throughoutthedecadeofthe1990s,asmanufacturingjobsweredeclin-
ing,thegrowthofinformaljobsgrewsignificantly.Forexample,informal
workinBuenosAiresandsurroundings(Gran Buenos Aires)grewtoreach
38%ofallemploymentby1999,andsuchjobsareestimatedtohavein-
comes45%lowerthanformalemployment(Rapoport,2000:1,021).Asin-
creasednumbersofpeoplecompetedforfewerjobsandthebetter-paid
manufacturingjobswerebeinglost,thegrowthoftheinformalsectorre-
sultedinadeclineinrealwagesforthemajorityoftheArgentinian“work-
ing”class.Theclearlynegativeimpactonindustrialrealwagesoverthelast
40yearscanbeseeninfigure2.Nevertheless,theleveltowhichrealwages
overallhavedeclinedhasbeenevenmoresignificantforthereasonsjust
mentioned.
Forthedecadeofthe90sasawhole,unemploymentgrewfrom6%in
1991toalmost14%in1999,accordingtothegovernment’sdefinition,and
28%whencombinedwithunderemployment(Basualdo,2003:14).Between
realwagesdroppingsignificantlyduringthedictatorship,followedbystag-
nationanddeclineinthe1990s,asof2001theywerenoteven84%ofthe
leveltheyhadreachedin1976.Atthenadirofthedepression,unemploy-
mentwasmorethan20%,andcombinedwithunderemployment,almost
40%(SvampaandPereyra,2004:90),andrealwageshaddeclinedatleast
another18%through2002.Accordingtoofficialstatistics,over53%ofthe
populationwasbelowthepovertyline,andthelevelofindigencewasmore
thanaquarterofthepopulation(indec,2003).Suchstatisticsprovide
somesenseofjusthowbadthingswereinArgentina,buttheystilldon’t
capturethesufferingexperiencedbythepeoplelivingthroughthisdepres-
sion.ThesestatisticsareallthemoreshockingifoneisfamiliarwithArgen-
tina,havinghadoneofthehigheststandardsoflivingwithintheThird
World.Unfortunately,oneofthecharacteristicsofmanyThirdWorldcoun-
25P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
triesisthateconomiccrisesthatleadtodepressions,notjustrecessions,are
alltoocommon.26Althoughtheunderlyingcauseofsucheconomiccrises
isrootedinthecapitalistsystem,themoreimmediateproblemhasbeenthe
growthofforeigndebt.Beforeturningtoanexaminationofthegrowthof
theforeigndebtandthespecificroleoftheimf,adetailedpresentationof
theeventsleadinguptothecrisisin2001followsbelow.
5. ArgentinA At the Abyss
WhenFernandoDelaRúatookofficeaspresidentinDecember1999,Ar-
gentinahadalreadybeenexperiencingarecessionformorethanayear.
Withinhisfirstyear,hewasconfrontedwithanevenmoredifficulttaskof
stavingofftheimpendingeconomiccrisisduetoarangeoffactorsinclud-
ingagrowingtradedeficit,inpartcausedbythecurrencyboard,27butalso
thedecliningpricesinworldmarketsforagriculturalgoods,andtheforeign
debtwhichwasspiralingoutofcontrol.
Therehadbeenproblemsinthethirdquarterof2000,asbondrates
soared.Forbetterorforworse,theimfsteppedinwithanaidpackage.In
early2001,PresidentDelaRúareshuffledhiscabinet,bringingbackDo-
mingoCavallo28asEconomicsMinister.ThearrivalofMr.Cavalloatfirst
cheeredinvestors,givenhispro-businessstance.However,hetriedarange
Figure 2: industrial real wages 1960-2002 (1960=100)
Source: Iñigo Carrera, 2000.Year
Dictatorship began
Democracyreturns
(Alfonsín)
Period ofHiperinflation
Menem govt.
160 –
140 –
120 –
100 –
80 –
60 –
40 –
20 –
0 – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000
26 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
ofbothorthodoxandheterodoxpoliciestonoavail.Through2001,Argen-
tina’sreservescontinuedtodeclineastherecessionreacheditsthirdyear.
Bymid2001,unemploymentwasapproaching20%,andthiswasama-
jorfactorinthecontinuedexpansionofthemovementofunemployed
workersorpiqueteros,29intheprovincesandalsoinBuenosAires.Thepi-
queteroswereblockinghighwaysinordertopreventgoodsfromgettingto
BuenosAires,beitforlocalconsumptionorexports.Theyweredemanding
jobs,asmanyhadbeenlaidoffduetoprivatizations,butalsoduetoseveral
yearsofrecession.Therehadevenbeenseveralincidentsofgovernmentof-
ficebuildingsbeingburneddowninprovinceswherepublicemployeeshad
beenlaidoffornotpaidformonths.Astheyearadvanced,thepending
crisisloomed,muchofindustrywasshutdown,andunemploymentand
povertycontinuedtoincrease.Thencamearunonthebanks,thedeclining
reservestookanotherdrop,andsoCavallobecamedesperateandinstituted
thecorralito,30restrictingpeople’saccesstotheirbankaccountsandthus
alienatingalmosteveryone,butespeciallytheArgentinianmiddleclass.The
laststrawwaswhentheimfrenegedonapaymenttoArgentinaofus$1.3
billionatthebeginningofDecember2001.Thisstateofaffairsledtothe
spontaneousstreetprotestsofthecacerolazos(thebangingofpotsandpans)
andanincreaseinthehighwayblockadesofthepiqueteromovementin
BuenosAiresandacrossthecountry.BymidDecember,therehadbeena
generalstrikeandriotinghadoccurredthroughoutArgentina,aspopular
angermountedagainstbothEconomicsMinisterCavalloandPresidentDe
laRúa.OnDecember19th,inspiteofthedeclaredstateofsiege,thePlazade
MayoinBuenosAireswastheculminationofthepopularinsurrection,and
afterjusttenhoursbothCavalloandDelaRúawereforcedtoresign,escap-
inginahelicopterintheweehoursofDecember20th.
Thefirstinterimpresident,RodriguezSaa,triedtogobackonapromise
thathewouldnotruninthenextpresidentialelection,thusalienatingmany
inthePeronistparty.Thecombinationofstreetprotestsandinfighting
withinthePeronistpartyledtohisquickdemise.Afteracrazytwoweeksof
rioting,lootingandprotests,therewereatotalof32peoplekilled,andfive
differentpresidents.
Whenthedustcleared,EduardoDuhaldewastheprovisionalpresident,
anddespitesomeinitialpopulistpromisesaboutbreakingfromtheneolib-
2�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
eralmodel,heeffectivelyservedasthecaretakerwhileArgentinadefaulted
onitsforeigndebt,devaluedthepesotoafourthofitspreviousvalueand
enteredintoafull-fledgeddepression.
TheprimaryeconomicmechanismthatcausedArgentina’smultiyear
recessiontoturnintoadepressionwasageneralizedlackofconfidence,
causingfirms,bothArgentinianandforeign,toholdofffrominvestment.
Theincreasedconcernforacomingdevaluationreducedtheconfidenceof
bothinvestorsandconsumers.Inthecaseofconsumers,noonewaswilling
tobuydurablegoods,ahouse,oracar,fearingthelossofajobinthenear
future,andthisexacerbatedanalreadydecliningdemand.Thecrucialstep
orcatalystshiftingfromrecessionintoadepressioncamefromtheimf’s
refusaltoprovideapreviouslyarrangedpayment,followedbythedesperate
attemptbyCavallotolimitarunonthebankswiththecorralito, whichwas
aclearsignaltoArgentiniansofanimpendingdevaluation.
During2002,gnpdeclinedby11%(IñigoCarrera,2004:65),andatone
pointmorethanhalfofthepopulationwaslivingbelowtheofficialpoverty
line(indec,2003).Duhaldesucceededinweatheringthestormandpre-
ventinganotheracutesocialcrisis,thuskeepingthepeaceuntilArgentina
signedan“interim” agreementwiththeimfinJanuary2003,andlasted
untilNestorKirchnerbecamepresidentinMay2003.
Thishasbeenabriefsummaryoftheunfoldingofeventsduringthe
periodleadinguptothecrisisofDecember2001andthedepressionthat
ensuedin2002.Thenextsectionpresentsthecasethattheexplosionof
foreigndebtduringthe1990swasthemostsignificantfactorleadingupto
thecrisisof2001,andthatboththeArgentinianeliteandimfdeservethe
blameforthecrisis.
6. Foreign Debt AnD the role oF the imF
ForeigndebtisthecomponentofArgentina’sfiscalbudgetthathasbeenthe
mostoutofcontrol,andtheimmediatecauseoftheeconomiccrisisin2001.
Itgrewatanincrediblerate,havingbeenlessthanus$10billionin1976
(figure1)andthenballooningtous$146billionin2000.Mostsignificantly,
itmorethandoubledfrom1993to2000,goingfromus$72billiontous$
146billion(figure3).Theextenttowhichthiswasagrowingproblemfor
2� R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
Argentinaisfurtherillustratedbyconsideringtheforeigndebtasapercent-
ageofgdp,whichgrewfrom30.5%to52%,between1993and2001,also
showninfigure3.
Thisdebtspiralwascausedinpartbytheincreaseinusinterestrates,
especiallyaftertheusFederalReserveraisedshort-termratesinFebruary
1994,whichdoubledfrom3to6%duringthefollowingyear.Thisalsoaf-
fectedArgentina’sriskpremium,exacerbatingtheimpactoftheincreasein
interestrates.Asecondmajorfactorinincreasinginterestratesworldwide
andsubsequentlyArgentina’sdebtwastheresultoftheimpactoftheMexi-
can,Asian,RussianandBrazilianfinancialcrisesbetween1995and1999
(Cibilsetal.,2002:1-2).Infact,theinterestpaymentsthatArgentinamade
duringthe1990stotaloverus$60billion,andin2000alonewerealmost
us$10billion(WeisbrotandBaker,2002:4).Asseeninfigure4,interest
paymentsasashareofthegdpmorethandoubled,growingfrom1.23%in
1993to3.4%in2000.Incontrast,governmentprimaryspendingexcluding
interestpaymentsasashareofthegdptendedtodeclineorstaysteady
throughthe1990s,oscillatingaround18.5%(figure5).
Source: Ministerio de Economia.
Year
Total debt
Debt as % of gdp
Figure 3: Argentina’s foreign debt (1993-2001)D
ebt
(bill
ion
s o
f cu
rren
t u
s$)
Deb
t as
% o
f g
dp
160 –
150 –
140 –
130 –
120 –
110 –
100 –
90 –
80 –
70 –
60 –
– 55.0%
– 50.0%
– 45.0%
– 40.0%
– 35.0%
– 30.0%
– 25.0%| 1993
| 1994
| 1995
| 1996
| 1997
| 1998
| 1999
| 2000
| 2001
|
2�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
Figure 4: interest payments as % of gdp (1993-2001)
Sources: Ministerio de Economía – Secretaria de Hacienda.
Year
% o
f g
dp
4.0% –
3.5% –
3.0% –
2.5% –
2.0% –
1.5% –
1.0% –
0.5% –
0.0% –
| 1993
| 1994
| 1995
| 1996
| 1997
| 1998
| 1999
| 2000
| 2001
|
Figure 5: government spending as % of gdp (1993-2001)
Sources: Ministerio de Economía – Secretaria de Hacienda.
Year
Total spending as % of gdp
Primary spending as % of gdp
% o
f g
dp
23.0% –
22.0% –
21.0% –
20.0% –
19.0% –
18.0% –
17.0% –
16.0% –
15.0% – | | | | | | | | |
1993 1994 1995 1996 1997 1998 1999 2000 2001
30 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
ThustheimfargumentthatArgentinawasbeingfiscallyirresponsibleis
notsupportedbythefacts,unlessfiscallyirresponsiblecorrespondstomak-
inggoodonitsdebtpaymentsfortheimf.ConsidertheclaimonApril10,
2002byimf’sAnoopSingh:31“Inourview,failuresinfiscalpolicyconsti-
tutetherootcauseofthecurrentcrisis.”(Cibilsetal.,2002:3).Consider
figure5,whereonecanseethatprimaryspendingisgoingupanddownat
theendofthe1990s,comparedtototalspending,whichhasaclearupward
trend.Thegapthatisgrowingbetweenprimaryspendingandtotalspend-
ingisbydefinitionduetoincreasesininterestpaymentsonthedebt,which
hasaverymarkedincreasethroughoutthe1990s,asseeninfigure4.Itis
ratheramazinghowtheimfportraysthesituationdespitesuchclearevi-
dencetothecontrary.
Insection2above,itwasseenhowtheimf,bynotcomingthroughfor
IsabelPerón,playedakeyroleinbringingabouttheendofheradministra-
tion.Themilitaryjuntahadtostrugglelesswiththeimfbecausetheywere
stronglycommittedtoimplementingneoliberalpoliciessupportedbythe
imf,andtheyhadnoproblemusingrepressiontodoso.However,once
Alfonsínwaspresidentin1983,theimfexpresseddispleasurewithregards
tohiseconomicstrategies,whichwereintroducingsomevariantsonthe
orthodoxneoliberalmodel.OnceAlfonsíndidtheunthinkableandsus-
pendedallpaymentsonthedebtprincipal,theimfflexeditsmusclesand
wasabletoforceArgentinato“returntoitssenses”andgetbackontheneo-
liberaltrack.Atthepointwhenhyperinflationwaspeakingatalmost5,000%
andthecountrywasenvelopedinacrisis,theimfwasoneofthestrongest
advocatesforAlfonsíntoresignandletMenemtakeover.Theydidnottry
toaccommodateArgentinawithan interim loanandwaitacoupleof
monthssoastohaveasmoothdemocratictransitiontothenextpresident.
Instead,theyplayedaclearroleinassistingthosefomentingchaosandfear
toforcetheArgentinianpeopletosupportMenem’sorthodoxneoliberal
approach.TheimfalsogavefullsupportfortheMenemadministration
andthecurrencyboardthrough2001,despitetheirattempttodenyany
responsibilityforthecurrentcrisis(Cibilsetal.,2002:6).
Despitehiscampaignclaimsadvocatingashiftfromneoliberalpolicies,
DelaRúafollowedanorthodoxeconomicplanaswellfromthetimehe
tookofficein1999.EventhoughtheDelaRúa’sgovernmentbroughtback
31P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
theneoliberalguru,DomingoCavallo,theimfstillletthemdownatthe
endof2001,byrenegingonapaymentandthusforcingtheimmanentcri-
sis.AsArgentinawasattheabyss,readytofallintoanevendeepercrisisand
depression,thelenderoflastresort,namely,theIMF,insteadofofferinga
hand,gaveArgentinaapush.
AsArgentina’sforeigndebtwasspiralingoutofcontrol,shouldn’tthe
imfhavebeensayingnotofurtherloansorsuggestingsomeotherpolicies
sothattheydidn’thavetokeepcomingupwithbailouts?Itappearsthatthe
imf,justlikeagoodloanshark,isquitecontenttojustkeepcollectingthe
interest,evenifnoneoftheprincipalevergetspaidoff.Theimfwascon-
ceivedasthelenderoflastresort,tohelpcountriesavoidfinancialcrises.
Basedonthiscriterion,inrecentyears,theimfhashadapoortrackrecord
—astringoffinancialcrises,whichtheyhavenotbeenabletoprevent.
Mexicohaditsworsteconomiccrisisin1994-1995,followedbySoutheast
Asia’sfinancialcrisisof1996-1997,thenRussiain1998,Brazilin1999,Ec-
uadorin2000,andnowArgentinain2001-2002—thelargestdebtdefault
inworldhistory!
Thisdemonstratesthattheimfmodelisnotworkingforthecountries
thatdependonitforfinancialsupportandthatsomethingneedstochange
internationally.Evidently,despitetherhetoricoftheimftoimprovethe
livesofthemajorityoftheworld’spopulation,itoperatesintheinterestof
globalcapital,predominantlyFirstWorldbanksandmultinationalcorpora-
tions,andinthatregardtheimfmodelisworking.Unfortunately,forthe
restoftheworld,thismodelisnotworking,andasArgentinahasgonefrom
adictatorshiptoadepression,itisaclearexamplethattheneoliberalmod-
elhasbeenafailure.
7. ConClusions
TheeconomicandsocialcrisisthatArgentinahasexperiencedhasanum-
berofcauses.Mostsignificanthasbeenthepursuitofneoliberaleconomic
policiesforoveraquartercentury,combinedwiththeimpactofglobaliza-
tion.Throughoutthisperiod,theArgentinianeliteandtheimfhavebeen
proactiveinpushingthisprojectandthusbearthegreatestresponsibility
forthenegativeimpactscausedbyit.Itwasduringthedictatorshipofthe
late1970sthatArgentinabeganaprocessofdeindustrializationduetoboth
32 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
theneoliberaleconomicprogramandtheclearshiftawayfrommanufac-
turingtowardagro-industry.ItisevidentthatArgentinahasbecomemuch
morevulnerabletothethreatofglobalcompetitionandtheoscillationsof
worldmarketprices,havingeliminatedthemajorityofitscontrolsfortrade.
Similarly,financialderegulation,combinedwiththepeggingofthepesoto
thedollar,ledtoawaveofforeigninvestment,capitalflightandanincreas-
inglyspeculativeandunstableenvironment.ThesechangescausedArgen-
tinatobemoresusceptibletotherippleeffectsoffinancialshocks,suchas
theMexicanpesocrisis,andmorepronetowardfinancialcrisesitself.
Theimpactofdeindustrializationover25years,combinedwiththemore
recentagriculturization,wasseenascontributingtoaworseningtradebal-
anceasimportsweregrowingincreasinglymorethanexports.Bythemidto
late1990s,thegrowingtradedeficithadbeenidentifiedassignificantlycon-
tributingtoproblemswiththebalanceofpayments.Inordertomaintain
reservesandkeeppayingtheinterestonforeigndebt,loansfromtheimf
wereincreasing,andcombinedwithUSinterestratehikes,resultedinAr-
gentina’sdebtdoublingfromus$72billiontous$146billionbetween1993
and2000.32
DespitetherebeingotherfactorsthanthetradedeficitwhichcausedAr-
gentinatoborrowmore,aswellasothercausesofthetradedeficit,many
emphasizedthecurrencyboardastheprinciplecauseofthecrisis.Ithas
beenarguedthatArgentinashouldhavedelinkedthepesofromthedollar
yearsearlier,butthisismoreeasilysaidthandonegiventhememoryand
fearofhyperinflationandalackofconfidenceinthenationalcurrency.Me-
nemdidnotwishtodelinkthedollarfromthepesobecausethefearofde-
valuationwouldhaveproducedapoliticalcrisiswhilehewasstillinpower.
Insteadhewasabletopostponetheinevitableandthecrisishitwhenthe
opposition,theRadicales,wereinpower.ThisreflectsMenem’ssupportin-
sideandoutsidethecountry,ashewasabletoshifttheburdentothenext
administration,andtherestishistory.
TherebellionofDecember19-20th,2001reflectedageneraldissatisfac-
tionwithalmostallestablishedpoliticalparties,asexpressedinthepopular
slogan:“GetRidofthemall!”(¡Que se Vayan Todos!).During2002therewas
hopeforsignificantpoliticalchangeintheair,betweenthestreetprotestsof
thecacerolazos,theorganizedunemployedworkersorpiqueteros,andthe
33P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
birthofpopularassembliesseekingtoredefinepoliticsinanewway.There
wasanincreasinglevelofeconomicautonomy—betweenthewaveofoc-
cupiedfactories,thegrowthofbarterclubsandtheincreasedroleoflocal
andregionalcurrencies—nottomention,atthenationallevel,thefactthat
Argentinahadbrokenitspactwiththeimf.
Nevertheless,Argentinacameoutofdefaultbysigninganinterimagree-
mentwiththeimfinJanuary2003,despiteabriefdefault(roughly9hours)
inSeptember2003.Havinghitbottomin2002,Argentina’seconomyinevi-
tablysawimprovementsthereafter,achieving9%gnpgrowthin2003.The
growththathasoccurredsincethenadirofthedepressionisstillnotenough
toresolvetheseriousproblemsofunemploymentandpoverty,astheyare
onlyimprovingslowly,andtheArgentinianmiddleclassappearsperma-
nentlyreduced.
AlthoughKirchnerhasprovidedacertainamountofhopeforArgentin-
ians,hissetofeconomicpolicieshasbeenamixedbag.Inhisdiscourse,
Kirchnerhasbeenquiteconfrontationalwiththeimfattimesandalsowith
certaintncs,butwhenitcomestoeconomicfundamentals,hehasaccom-
modatedtheimfbyagreeingtoa3%orgreaterbudgetsurplus.AsArgen-
tinaiscomingoutofadepression,itmakesnosensetogenerateabudget
surplus;instead,itisthetimethatyouexpecttohaveabudgetdeficitin
ordertobolstertheeconomythroughgovernmentspending.NoFirstWorld
countrywouldagreetohaveabudgetsurplusinsuchaperiod.Thisisnot
justanissueorproblemforArgentina,itisaninternationalissue,andif
othercountriesweremoresupportive,theimf’shandcouldbeforced.There
hadbeenmuchhopethattheLulaadministrationwouldbeaclearallyin
challengingtheimf,butitisevidentthatBrazildoesnotwanttorockthe
boatandisstayingontheneoliberaltrack.
Inthepoliticalarena,Kirchnerhasmadeseveralpositivechangesreflect-
ingthesentimentofthepopulation,inregardstothemilitaryandpolice
abuses.However,onewouldhopethatthefailuresofaquartercenturyof
theneoliberalmodelwouldresonateamongleadersingovernment,notjust
amongpiqueteros.Unfortunately,theroleoftheArgentinianeliteandthe
imfisstillactiveinattemptingtokeepthisfailedmodelgoing.Thepossibil-
ityofchangeresidesinthecontinuedstrengtheningofthenewmovements
ofthesociallyexcludedinArgentina,andprobablyseriousmobilizationsin
34 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
thestreetwillberequiredinordertobringaproperendtoafailedquarter
centuryexperiment,withaneoliberalismthathasenrichedthefew,both
foreignanddomesticelites,attheexpenseofthemajorityofArgentinians.
reFerenCes
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tina:¿“erroresdediseño”ofuncionalidadfrentealosinteresesdelpodereconómico?”.
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institucionalistas y regulacionistas. BuenosAires:MiñoyDávila.
BAKER,D.,WEISBROT,M.(2002)“TheRoleofSocialSecurityPrivatizationinArgentina’s
EconomicCrisis”.Center for Economic and Policy Research,April16,2002,Washington,
D.C.
BASUALDO,E.M.(2001)Sistema político y modelo de acumulación en la Argentina.Buenos
Aires:UniversidadNacionaldeQuilmes.
———(2003)“Historiaeconómica:lasreformasestructuralesyelplandeconvertibilidad
duranteladécadadelosnoventa,elaugeylacrisisdelavalorizaciónfinanciera”.Revista
Realidad Económica, n.200,16denoviembre–31dediciembre2003,BuenosAires.
CIBILSA,WEISBROT,M.,KAR,D.(2002)“Argentinasincedefault.TheIMFandtheDepres-
sion”.Center for Economic and Policy Research.Briefingpaper,September3,2002,Wash-
ington,D.C.
DAMILL,M.,FRENKEL,R.,JUVENAL,L.(2004)“Lascuentaspúblicasylacrisisdelaconvert-
ibilidadenlaArgentina”.In:R.BoyerandJ.C.Neffa(eds.),La economía argentina y su
crisis (1976-2001): visiones institucionalistas y regulacionistas. BuenosAires:Miñoy
Dávila.
DINERSTEIN,A.(2003a)“ThebattleofBuenosAires.Crisis,insurrectionandthereinvention
ofpoliticsinArgentina”.Historical Materialism,v.10,Issue4,London.
———(2003b)“PowerorCounterPower?ThedilemmaofthePiqueteroMovementin
Argentinapostcrisis”.Capital & Class,81,London.
DUARTE,M.(2002)“Losimpactosdelasprivatizacionessobreelmercadodetrabajo:deso-
cupaciónycrecienteprecarizaciónlaboral”.In:D.Azpiazu(ed.),Privatizaciones y Poder
Económico.BuenosAires:UniversidadNacionaldeQuilmes.
INDEC(2003-2005)www.indec.gov.ar/.
INTERNATIONALMONETARYFUND(1998)“Argentina:RecentEconomicDevelopments”.
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cidaddelaacumulacióndecapitalenlaArgentina”.Ciclos en la historia, la economía y la
sociedad,n.23,BuenosAires.
———(2004)“Lacrisisdelarepresentaciónpolíticacomoformaconcretadereproducirse
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Brasileira de Economia Política,n.27,RiodeJaneiro.
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KATZ,J.,KOSACOFF,B.(1989)El proceso de industrialización en la Argentina: evolución, retro-ceso y prospective.BuenosAires:CentroEditordeAméricaLatina.
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MINSBURG,N.(2001)La economía posmenemista– ¿atrapada sin salida?.BuenosAires:Eu-deba.
RAPOPORT,M.etal.(2000)Historia económica, política y social de la Argentina (1880-2000).BuenosAires:EdicionesMacchi.
ROCK,D.(2002)“RackingArgentina”.New Left Review,n.17,Sep./Oct.2002,London.
SCHVARZER,J.(1986)La política económica de Martinez de Hoz.BuenosAires:HyspamericaEdiciones.
SEVARES,J.(2002)Por qué cayó la Argentina: imposición, crisis y reciclaje del orden neoliberal.BuenosAires:GrupoEditorialNorma.
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SVAMPA,M.,PEREYRA,S.(2004)“Laexperienciapiquetera:dimensionesydesafíosdelasor-ganizacionesdedesocupadosenArgentina”.Revista da Sociedade Brasileira de Economia Política,n.27,RiodeJaneiro.
WEISBROT,M.,BAKER,D.(2002)“WhathappenedtoArgentina?”.Center for Economic and Policy Research,January31,2002,Washington,D.C.
notes
1. ItisinterestingtonotethatthisisnotthefirsttimethatArgentinasuspendedpaymentonitsforeigndebt.Thefirsttimewasin1891,duringanotherperiodofglobalization(seefootnote12below).
2. AlthoughArgentina’sgnpper capitahasbeenindeclinesinceroughly1914,itwasstillfaraheadofotherLatinAmericancountriespriortothedictatorshipof1976.
3. GiventhepoliticalinstabilityinArgentina,IsabelPerón’sgovernmentlackedacleareconomicapproach,attemptingbothorthodoxandheterodoxpolicies.
4. AlthoughthereisastrongerassociationofChilewiththeUniversityofChicagoandtheinfamous“Chicagoboys”,theshiftthattookplaceinArgentinawasalsoclearlyinflu-encedbyChicago’sconservativeeconomistsandadvocatesofthefreemarketandaminimalroleforgovernments.
5. TheCordobazowasaweeklongworkingclass-ledrebellioninthemajorcityofCordo-ba.
6. ExamplesoftncsproducinginArgentinaduringthisperiodareFord,Renault,WarnerLambert,Philips,SiemensandBrownBoveri.
7. Forexample,MartinezdeHozwasamemberofmorethan10directoratesofagrobusi-nessandindustry,andheputintoplacetheplanwhichhadbeendevisedbymajorcompaniesmonthsbefore,inplanningforthecoup(Sevares,2002:32).
36 R. Econ. contemp., Rio de Janeiro, 11(1): �-3�, jan./abr. 200�
8. Patria financiera (literallytranslatedasfinancialfatherland)representsthesignificant
linksbetweenthegraingiantsandfinancialinterests.
9. Thisinterestrate“shock”wasassociatedwiththe180degreeturnwhichtheimftook
withrespecttolendingtoThirdWorldcountries,andwasclearlylinkedtothedebt
crisiswhichbeganwithMexicoin1982.
10. sra(Sociedad Rural Argentina),uia(Union Industrial Argentina)andthecgt(Confed-
eración General de Trabajadores,GeneralWorkers’Federation).
11. Alfonsín’spushforthedemocratizationofthePeronist-dominatedcgtreflectedapo-
liticalrivalryandnotjustaconcernfortransparencywithinthecgt,whichwasandstill
issomethingnecessaryforArgentinianworkers’interests.
12. Thetermglobalizationreferstothecurrenthistoricalprocess,moreaptlytermedneo-
liberalglobalization,inwhichinvestmentandtradeareconductedinanincreasingly
pro-capitalandlaissez-faireatmosphere,resultinginamoreintenselevelofglobalcom-
petition,suchthattheFirstWorldtncsgainanevengreateradvantagecompeting
againstThirdWorldfirms,despitetherhetoricaboutanevenplayingfield.Afullerand
necessarydiscussionofglobalization,imperialismanddevelopmentliesoutsidethe
scopeofthispaper.
13. Itshouldnotbesuchasurprise,giventhefactthatDomingoCavallowasthepresident
oftheCentralBankduringthelateryearsofthedictatorship.
14. AstheeconomicpolicieslaidoutbytheMenemadministrationwerepracticallyidenti-
caltotheeconomicpoliciespursuedbythedictatorship,theinfluenceofMiltonFried-
manandothers,suchasLucas,fromtheUniversityofChicago,wasreflectedinthe
policiespursuedbyArgentina.
15. Initially10,000australes=1dollar,andafterArgentinachangeditscurrency,1peso=
1dollar.
16. ypf–Yacimientos Petroleros Fiscales;“NationalOilCompany”.
17. Althoughitcanbearguedthattaxespaidbytheprivatizedcompaniesprovideasource
ofrevenue,itisalmostcertainlyasmalleramountthanthepotentialnetrevenuegener-
atedbyapublicenterprise.
18. Evenin2005,weseethepressurebyRodrigoRatooftheimfontheKirchnergovern-
mentregardingprivatizedfirmsandtncsoperatinginArgentina.
19. AccordingtoRock(2002:71),“InthepoorestpartsofArgentina—thenorthernprov-
incesofSalta,JujuyandFormosa—per capitaincomeamongthepoorhadfallentothe
levelsofBangladeshandNepalbythelate1990s.”
20. Usingtheestimationofpercentagesintable1ofBakerandWeisbrot,2002andtheseries
forgdpfromindec,anestimatejustoverus$18billionwasgenerated.
21. gatt–GeneralAgreementonTradeandTariffs.
22. Therewerealsootherfactorsrelatedtoregionalindustrialstrategywithinthecontextof
Mercosur.
3�P. Cooney – Argentina‘s Quarter Century Experiment with Neoliberalism...
23. Duringthe1990s,between24-31%ofArgentina’sexportsweregoingtoBrazil,andthe
overvaluationoftherealbetween1994and1998didplayaroleinthegrowthofArgen-
tina’sexports.
24. Seedoils(oleaginosas)includecorn,sorghum,soybean,andsunfloweroils.
25. Thisisbasedonacalculationusingdatafromindec,2005andBasualdo,2003.
26. Thetermdepressionisoftenavoidedbymainstreameconomists,andunfortunately
manyprogressivesfollowsuit;however,itisadistortionofthefactstodescribewhat
tookplaceinArgentinabetween2001-2003asmerelyarecession.
27. Acurrencyboardreferstopeggingalocalcurrency,suchastheArgentinianpeso,tothe
usdollar,whichwasone-to-oneformostofthe1990s.
28. DomingoCavalloservedaspresidentoftheCentralBankunderthedictatorshipinthe
early1980sandasEconomicsMinisterthroughmostofthe1990swhenMenemwasin
power,andbrieflywithDelaRúa.
29. Thereareseveraldifferentpiquetero organizations,buttheyprefertobereferredtoas
unemployedworkersratherthanjustareferencetoaspecificstrategytheyemploy,
namely,picketingorblockadingofhighways.Formoreinformationonthedifferent
organizations,seeDinerstein(2003a,2003b)orSvampaandPereyra(2004).
30. Thecorralitowasameasurewhichpreventedpeoplefromwithdrawingmorethan$250
aweekor$1000amonthfromtheirbankaccounts.
31. AnoopSinghistheimfDirectorofSpecialOperationsinBuenosAires.
32. Asreferredtoabove,increasesinusinterestrateswerealsoduetothefinancialcrisesin
Mexico,Asia,RussiaandBrazil,andsecondly,Argentina’scountryriskwassubsequent-
lyimpacted,furtherexacerbatingthegrowthofArgentina’sdebt.
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