[A-List] Analysis of A. Woods about Argentina

[Jorge Figueiredo <jfgf.consult@xxxxxxxxxxxxxxx>]

Argentina - The Revolution has Begun
By Alan Woods
In scenes reminiscent of the fall of Saigon, the leaders of the government
hastily packed their bags and fled by helicopter from the roof of the
Presidential palace. Only these were not foreign invaders fleeing from an army
of national liberation, but an elected President fleeing from his own people.
While the eyes of the world were diverted to the other war in Afghanistan, 
another war was raging. In the week before Christmas, Argentina was at war. Not
a war between nations, but a war between rich and poor, between haves and haves
not - a war between the classes.
For the bourgeois press, this was a sudden descent into collective madness.
"Argentina collapses into chaos" was a typical headline. Chaos there
is. It is the chaos of the capitalist system, of the so-called market economy
that was supposed to have solved all the problems of Argentina, under the
benevolent auspices of the IMF and the World Bank. More than a year ago 
observers warned that the austerity measures imposed by the government, in
obedience to IMF advice, were likely to lead to a rise in social tensions. Now
they have been proved correct.
Argentina's president Fernando de la Rua was forced to resign after thousands
of angry and impoverished protesters took to the streets of Buenos Aires in a
revolt against the government's handling of a devastating economic crisis.
Before he did so, three days of social unrest, widespread looting and police
repression left 27 people dead and more than 150 wounded - the majority, poor
people fighting for a crust of bread, shot by the police.
We received the following e-mail from a subscriber in La Plata, Argentina:
"The president of Argentina Fernando de La Rua
presented his resignation after a massive demonstration of the people that took
place in the square of the Plaza de Mayo. After a television communication on
December 19 at 11.00 p.m., the people of the city of Buenos Aires poured onto
the streets, singing and banging pots, in a spontaneous reaction against the
president's speech. By 2.00 a.m. the square was full.
"The next morning people started to get together in the same square and
outside the Congress. The police started to repress people who were showing
their disagreement by peaceful means. At 4.00 p.m., the people didn't wants to
leave the square (that is a symbol of the working class struggle in the 1940s
and 1970s). Some people began to loot stores and McDonalds, breaking all the
windows of many foreign banks. At 6.30 p.m. the president called for an 
alliance
between the two major parties (UCR and PJ), but the opposition party refused
such collaboration. The president at this moment is taping his resignation and
tonight the Argentineans will have a new president and elections in the next
months. This is a victory in the battle against neo-liberalism."
Yes, this is an important victory. But what has been won is a battle, not the
war itself.
The unrest erupted after the country's free market programme turned sour. In
the past two years Argentina, long the wealthiest nation in Latin America, has
been in the grip of a deepening political, social, and economic crisis. 
Fernando
de la Rua's government was following the standard prescription the IMF gives to
economies facing financial troubles: slash the deficit, deflate the economy and
hope that investor confidence returns. In fact, far from solving the 
problems of
the economy, these policies made them worse.
At bottom, the problem of the Argentinean ruling class is the colossal power
of the proletariat, which prevents them from carrying out the vicious austerity
policies dictated by the IMF to the end. In the past few years, general strike
after general strike has been called by Peronist labour unions, under the
pressure of the working class. This meant that the Argentine capitalists could
not stabilise the situation at the cost of the working class - although it did
carry out a series of vicious attacks on living standards. Argentina lurched
towards a default this year from its $8 billion loan as the IMF imposed
ever-tighter conditions. Unemployment soared and now stands at 18.3 percent.
The first wave of riots forced the resignation of the economy minister behind
the austerity package, Domingo Cavallo. "Cavallo resigned after he saw
5,000 people banging pots and pans outside his home," a source close to the
former minister said. The spontaneous gathering outside Mr Cavallo's flat 
in the
exclusive Palermo Chico suburb of Buenos Aires brought together people from all
social classes, who kept up a constant clatter from around 11.00 p.m. on
Wednesday until yesterday morning. The pots and pans marches had been preceded
by two days of food riots, with groups of up to 1,500 unemployed people 
breaking
into Wal-Marts and Carrefour supermarkets around the country.
"We're coming back and we'll be bringing all our neighbours,"
screamed Elsa Gomez, a 45-year-old mother of six, to workers at a 
supermarket at
Buenos Aires' most exclusive shopping centre, after her group of shanty town
dwellers agreed not to storm the store in exchange for 250 bags of free food.
"The real looters are in the government," said opposition legislator
Alicia Castro, visiting the protesters at the Plaza de Mayo yesterday. (The
Guardian, December 21, 2001)
The anger of the impoverished masses finally boiled over in two days of
rioting and looting that left at least 22 dead and scores of protesters injured
in cities around the country. This was the most severe civil unrest for more
than a decade. In Buenos Aires, mounted police fought running battles with
demonstrators demanding the president's resignation. Teargas and water cannons
were deployed. Several hundred people were in a standoff with police in the
central square, Plaza de Mayo. The demonstrators included a middle-aged woman
who, despite having had one of her toes hacked off by a horse's hoof, still
railed against 'this government's starvation plan'. She was referring to a
zero-deficit austerity package imposed by the International Monetary Fund on
Argentina, which is on the verge of defaulting on its $132 billion (£90
billion) foreign debt. "'Argentina is empty,' said another protester. 'My
children want to leave this country, there is no future here, our politicians
are too corrupt.'" (The Guardian, December 21, 2001)
Among the dead was a 15-year-old boy reportedly shot during the riots in
Santa Fe province in the country's west. Other victims were thought to have 
been
shot by shopkeepers trying to deter looters by firing into the crowds. In 
Buenos
Aires, a police officer guarding the doors of the congress from demonstrators
trying to storm the building was killed by a paving stone hurled by a 
protester.
The unions called two general strikes.
The leaders of the Nation were besieged inside the congress building.
"We are bunkered in here," said a TV journalist broadcasting from
inside congress. "The legislators can't leave and nobody can get in."
(The Guardian, December 21, 2001) The president at first wanted to cling
to office and only resigned after opposition parties refused his request to 
form
a coalition. In a desperate attempt to hang onto power, Mr De la Rua had spoken
to the nation, asking the opposition Peronist party to join him in forging 
a new
economic programme to "assure social peace". He had pledged to
continue at his post. "I will carry out my duty until the end," he
said. But the terrified Peronists refused to accept the poisoned chalice. If De
la Rua had not stepped down when he did, Argentina faced revolution. 
Neither the
declaration of a state of emergency, nor the bullets and tear gas of the police
served to intimidate the masses. United in action, they developed a sense of
their own collective might. Power was slipping out of the hands of the 
state and
passing to the streets.
A global crisis of capitalism
The main fear of the bourgeois is that the crisis is unfolding simultaneously
in every sector of the world economy. The word "contagion" is being
used to describe this phenomenon. This is the other face of globalisation. In
economics, as in politics, US imperialism is faced with the equivalent of
bushfires everywhere. No sooner do they put out one fire, than another one
flares up with even greater intensity. This is in itself a graphic 
expression of
the nature of the present epoch.
The crisis in Argentina did not originate there. It reflects the global
instability of world capitalism. The collapse in Turkey at the start of 2001
immediately affected the Polish zloty and the Brazilian real, which suffered a
devaluation of about 30 percent in the course of the year. This placed
unbearable pressure on Argentina, its most important trading partner, whose
exports were rendered completely uncompetitive.
Since the Argentinean peso is tied to the US dollar, devaluation was
(theoretically) ruled out. Thus, the whole weight of the crisis was placed
firmly on the shoulders of the Argentinean workers and the middle class. This
had serious social and political repercussions. There had already been a number
of militant general strikes in the course of 2001. There was a massive 
protest vote in the general elections, and even an insurrection in the 
northern town of
General Mosconi where the unemployed and the workers took the running of all
public affairs into their own hands. This was causing concern in Washington,
where the IMF initially provided funds to help to prop up the Argentinean
economy. But now events have moved far beyond that.
The decision to introduce dramatic bank controls led to a run on the banks.
On November 30, the country's banks lost $1.3 billion. The central bank's net
reserves slumped by $1.7 billion. Overnight, the country, which was one of the
richest in the world, is bankrupt. Finance minister Domingo Cavallo once more
went with his begging bowl to the IMF but was received in Washington with stony
faces. The IMF, having already provided Argentina loan arrangements 
amounting to
$48 billion in the last year, had no intention of throwing good money after 
bad.
Argentina was left to sink under the weight of its own debts.
The economy was now in a state resembling a dying man with a high fever.
Interbank interest rates were pushed up to 1,000 percent. High interest rates
helped to plunge the economy further into a slump that already had all the
hallmarks of a deep depression. The country was in a fatal downward spiral,
where cause becomes effect, and vice-versa. A shrinking economy means falling
tax revenues, which means both a further curtailment of public spending and
higher interest rates, and so on, until the bottom is reached. Unfortunately,
the bottom is nowhere in sight yet.
Exchange markets were closed on the orders of the central bank to prevent a
collapse of the financial system. Even if Argentina were to attempt to pay its
debts by surrendering its reserves, it would only have enough to last until
"the middle of the next quarter", according to a report by Suisse
Credit First Boston investment bank. Probably even this estimate is too
optimistic. But in reality, there is no possibility of Argentina paying its
debts. The Argentine economy stands on the brink of a horrendous collapse and
default, which can have serious effects throughout Latin America, and on a 
world
scale.
The crisis in Argentina has sent tremors through the international markets.
Markets across the world are watching to see whether the crisis would have a
domino effect in other economies in Latin America and further afield. The
initial reaction of the economists, especially in the USA, were predictable.
They claim that the crisis in Argentina is a purely local affair which will 
have
no discernable effect elsewhere.
In Washington the White House said it saw few signs of financial contagion
from the crisis. It reiterated its position that the new authorities should 
work
with the International Monetary Fund to develop a sustainable economic
programme. But it was the IMF and its policies that brought about the present
crisis. Fears that the economic crisis could spread have been dismissed by the
White House, which displays the same staggering ignorance of world economics as
it does in the field of world politics.
"It does look like it's isolated to Argentina, and that's a helpful
fact," said the White House spokesman, Ari Fleischer.
However, such a complacent view does not conform to the facts. So far, there
have been few signs of the contagion that shook markets after the default and
devaluation crises of Mexico, Russia and Brazil in the 1990s. But a default by
Argentina would be the biggest in history.
Abandonment of the currency board system is also likely to have uncertain
consequences. A severe devaluation of the Argentine peso will harm Brazil -
Argentina's main trading partner. And the effects of this instability will 
hit other so-called emerging markets. Already it has caused a sharp decline 
of the
South African rand, and the tremors are reaching Hong Kong. The Guardian 
(December
22, 2001) warned: "Wall Street has so far largely ignored events in its own 
economic backyard. But Argentina is not an inconsequential economy. It is
inconceivable, in a global economy, that its effective bankruptcy will not have
knock-on effects. As ever, the most painful of these will come from unexpected
directions."
Latin America is now in the deepest economic crisis since the war. There is
not a single stable bourgeois regime from Tierra del Fuego to the Rio Grande.
The objective conditions for socialist revolution have been ripe in the
ex-colonial countries for at least half a century. In fact, they are 
rotten-ripe
for revolution. Decaying capitalism threatens to plunge one country after
another into barbarism. There is no way the imperialists can stop this, no
matter how many bombs they drop. The reason why the revolution has not 
succeeded
so far is not the strength of imperialism but the weakness of the subjective
factor: the absence of a real revolutionary party and a leadership.
This can be seen clearly in the mass revolutionary movements which have
already taken place in a number of countries in the last few years, for 
example:
Indonesia 1998, the Ecuadorian revolutions of 2000 and 2001, the movement
against water privatisation in Cochabamba, Bolivia, in 2000, the uprising in
General Mosconi, Argentina, in 2001, and the more recent Algerian insurrection.
A common feature in most of these movements have been the setting up of popular
committees representing the different sections of the oppressed which have
challenged state power and started to replace it. In the case of the Ecuadorian
revolution, the People's Parliaments won over a section of the Army to their
side (including some officers) and actually took power for a few hours. 
Only the
lack of leadership prevented the extension and generalisation of this 
movement and thus frustrated the revolution.
Peronists powerless
De la Rua was forced to resign halfway through his term of office. Arriving
in office in 1999 on a campaign based around the slogan "I know I'm
boring", Mr De la Rua had promised to end the corruption under his Peronist
predecessor, Carlos Menem, who drove a red Ferrari and was reputed to have 
had a
string of affairs with Argentine starlets. But Mr De la Rua's own government
soon became bogged down in corruption charges similar to those once made 
against
Mr Menem, and his abrupt end in office came with his popularity rating at 4
percent in the polls.
The Peronist party, which controls both houses of congress, began
deliberations to work out how to pick the country's next president. Under the
rules, an assembly of federal congressmen and provincial governors should pick
one of their own to serve out the remaining two years of the presidential term.
But many Peronist leaders believe a general election must be called within 90
days to give the next president enough authority to deal with the crisis.
De la Rua will be replaced provisionally by Ramon Puerta, the Peronist
president of the senate, until the national congress chooses a successor to 
rule
the nation until elections are called. But these manoeuvres at the top will
solve nothing. The people are demanding bread and work. But none of this is
possible without a fundamental change in society. The economic crisis 
worsens by
the hour, and the helpless Peronists can do nothing to halt it. What is 
required
is the transference of economic power from the big banks and monopolies - both
foreign and Argentinean - to the people.
The Peronists will rule until early presidential elections are held, probably
in March. But they have no answers. The leaders of the country are disoriented
and do not know what to do: "Convertibility no longer exists," said
Rosendo Fraga, a political analyst in Buenos Aires. "But there is no
consensus yet on what to replace it with." In the end, the Peronists will
have no alternative but to carry out a default - or, as they put it more
delicately - a foreign debt moratorium and a "controlled devaluation"
that are expected to become the cornerstones of the interim administration's
economic programme.
The interim government is also expected to unhook the Argentine peso from its
10-year-old one-to-one parity with the US dollar, a "convertibility"
that temporarily solved the problem of high inflation, but which has made
agricultural and industrial exports highly uncompetitive. There have been
suggestions that Argentina could announce a one-year freeze on payments of 
its crippling $132 billion (£90 billion) foreign debt. Peronists blame the 
dollar
parity for massive layoffs that sent unemployment to nearly 20 percent in 
recent
years. There is no doubt that it has seriously aggravated the crisis. The
servicing of its debt has been costing Argentina some $8 billion a year, and
some leading Peronists have long been demanding a moratorium to make that money
available for attending the country's social ills.
Investors are preparing for the worst. "Devaluation looks like a
foregone conclusion and a complete cessation of debt payments for a lengthy
period now looks inevitable," said Neil Dougall, Latin America economist at
Dresdner Kleinwort Wasserstein. All understand that devaluation is now
inevitable - as is default. But on a capitalist basis, such measures will solve
nothing. Argentina will still remain under the pressure of US imperialism. 
And a
devaluation of the peso will mean a return to inflation, which will destroy the
savings of the middle class and erode the value of wages and pensions, plunging
the population into even greater poverty, and preparing new social explosions.
The Peronist movement is riven with contradictions, which will soon come to
the fore. Already a battle is opening up on the issue of finding a permanent
successor to Fernando de la Rua. As it becomes obvious that the Peronists have
no answer to their problems, pressure will build up for the Peronist unions to
call a general strike.
What next?
After the disturbances, most Argentines are returning to their routines - or
trying to do so. Slowly, the streets of Buenos Aires are returning to some
semblance of normality. But no genuine equilibrium can be reached. The
Guardian's correspondent reported on Saturday, December 22: "An eerie
calm hung over the devastated shopping districts of Buenos Aires last 
night, as the promise of a change in leadership appeared to deflate the 
popular rage
prompted by the outgoing administration's austerity measures. As relative calm
returned, the state of emergency was lifted."
People are blaming the riot police for overreacting to what were at first
peaceful demonstrations. The army is silent; the political establishment in a
state of shock. The atmosphere remains tense, the masses sullen and 
distrustful.
The people have immediately realised that the change at the top will solve
nothing: "If the Peronists return, then we're back where we started,"
said a woman cheering the president's resignation. "Menem, De la Rua, they
all drink from the same glass of wine," said a neighbour. "Nothing is
going to change."
For a time, the masses will watch and wait. The first wave of anger has
probably exhausted itself. But what we have here is not peace but only a
temporary and uneasy truce. The same distrustful mood exists in the middle
class. The same article reports: "Some shopkeepers were too scared to
reopen yesterday. 'Many of the looters were our regular customers,' said one
shocked grocery store owner. 'This is total anarchy.'"
With the police absent from the streets, neighbours took the law into their
own hands, beating looters with sticks. There is a need for order, but on the
present basis, no order is possible, only new shocks, crises and chaos. The 
only
lasting order that is possible in Argentina is a revolutionary order, based on
the assumption of power by the working class, in alliance with the small 
businessmen, the small farmers, the unemployed, the women and the youth.
The central slogan of this new power is the general strike. But the general
strike must be organised and prepared. The only way to guarantee that the
movement will take place in an organised manner, with no rioting and 
looting, is
through the creation of action committees, elected committees of the workers,
which must be broadened to include the elected representatives of the 
unemployed, the small shopkeepers, the students, and all elements of the
population except the exploiters.
The committees should organise transportation and the distribution of food
and other necessities of life to the poorest sections of the population. They
must control prices and patrol the streets to maintain order and fight 
reaction.
In order to fulfil these functions, they will need to acquire arms. An appeal
should be made to the soldiers and police to set up elected committees, purge
their ranks of fascists and other reactionaries and link up with the workers'
committees. Finally, it is necessary to link up the revolutionary committees on
a local, regional and national basis, preparing the way for a national congress
of revolutionary committees, which is capable of taking power into its own
hands.
Argentina has decisively entered the road of revolution. Over the next decade
or so, the central contradiction will have to be resolved. The present
"transitional" regime will solve none of the fundamental problems, but
only lend them a more feverish and explosive character. For the working class
and the other oppressed masses, the choice between deflation and inflation 
is no choice at all. It is the choice between death by hanging and death by
slow-roasting over a fire. One way or another, the central contradiction 
must be
removed. No halfway solutions are possible. Both monetarism and Keynesian
policies have failed. The policy of dollarisation is now being advocated by
bourgeois economists as a possible solution. But the events of the past few 
months have demonstrated the dangers of fixing the exchange rate. Dollarisation
would mean a policy of deflation, with even more unemployment, bankruptcies and
misery. On the other hand, a large devaluation would push up inflation, and 
thus
slash living standards through price rises.
Lenin explained the conditions for revolution. The first condition was that
the ruling class should be divided and in crisis, and unable to govern in the
same way as in the past. This condition now exits in Argentina. The second
condition was that the middle class should be in a state of ferment, 
vacillating
between the proletariat and the ruling class. In the recent street 
demonstrations, many of the participants were middle-class Argentines, who see
themselves threatened with ruin. The third condition is that the working class
should be prepared to fight and make the greatest sacrifices to change society.
The recent street battles showed that the workers and youth had lost all 
fear of
the police and the state and prepared to fight and die if necessary, to defend
their just cause.
The final condition was the existence of a genuine Marxist party and
leadership, ready to lead the movement and provide it with a perspective and
programme. If such a party existed, with serious roots in the working class and
above all in the unions, the movement towards socialist revolution could be
accomplished quickly and with a minimum of violence. In the absence of such 
a party, the crisis will assume a more long drawn out and convulsive character,
extending over a decade or more, with ebbs and flows, until matters are
resolved, either through the victory of the working class, or else a new and
even bloodier military dictatorship. However, after the last experience, it is
unlikely that a new junta could come to power without a civil war. That is why
the generals are keeping quiet - for the time being. The first act of the drama
has been played out. But new and stormy events are being prepared.
The Argentinean working class is the most powerful in Latin America after the
Brazilian working class. It has a tremendous revolutionary tradition. Armed 
with
a real revolutionary programme, it could easily take power and commence the
socialist transformation of society. Such a development would instantly
transform the situation in the whole of Latin America. It would have an even
greater effect than the Bolshevik revolution in 1917. Its repercussions 
would be
felt in the USA, and on a world scale. Instead of preparing new military
interventions against the peoples of Asia, Africa and Latin America, but would
be faced with revolutions everywhere. Only a radical reconstruction of society
from top to bottom can show a way out of the impasse. In the coming period, the
question will be posed bluntly: either the greatest of victories or the most
terrible of defeats. That is the choice before the working class and the people
of Argentina.
London,
December 23, 2001