[Marxism] On Argentine and its "debt negotiations"

["Nestor Gorojovsky" <nestorgoro@xxxxxxxxxxxxxxx>]

Sabri sent a hair raising piece of news to the A-list, and I thought 
it interesting to send an answer to some international correspondants 
who might find it of interest: 


"[A-List] Global Committee of Argentina Bondholders rejects Argentine 
Exchange Offer
Sabri Oncu soncu at pacbell.net"

Some comments may be helpful.

(A) All this must be taken with a grain of salt.  

What has really happened is, more or less, as follows:

To begin with, it should be clear that it is NOT our foreign debt 
what is at stake, but the "debt in the hands of private creditors".  

This implies that NOT ONLY foreign creditors, but also domestic 
creditors are players in the game.  Since during the 90s the 
overwhelming mass of money forced by neoliberal Domingo Cavallo into 
the system of pension funds had been "invested" in Arg debt bonds[1], 
some of the most important creditors of the overall "private" debt 
are Argentine-based (though foreign bank owned) pension funds.

When, after the Parliamentary Coup d'Etat which overthrew President 
Rodríguez Saá, Eduardo Duhalde and his two consecutive Ministers of 
Economy (the first one a stupid neoliberal, the second one Lavagna, 
who is still at the helm in spite of the transition from Duhalde to 
Kirchner as President) moved in order to make sure that the essential 
criminals of the murder of Argentina, the bankers and the imperialist 
finance groups, were set aside of any retaliation from the victim.  
Thus, the banks owe Duhalde and Lavagna no little favor.  The 
transfer from a fixed 1 peso 1 dollar parity to a crawling peg system 
of 3 pesos to 1 dolar was carefully engineered in order to ensure 
that the banks would lose as little as possible (and of course, their 
illegal gains during the whole period initiated in 1976 were kept in 
abeyance).  The "financial system" is now "sane", that is the banks 
are free not to lend a cent to whoever the State wants to, but they 
keep making money with the enormous rates of interests that they 
charge in a money starved economy.

However, the Pension Funds are in trouble.  Since most of their 
portfolios was nominated in Argentine debt bonds, all of them face 
bankrupcy.  The banks, who blatantly robbed millions of Argentineans 
of their savings in foreign currency and _materially_ transferred the 
money by air cargo during the closing days of December 2001, whin 
that the Pension Funds are not "solid".  This is a way to blackmail 
the government: either you save us, or we shall leave some more 
million of Argies without even a pension fund, and bye my darling.  

Now, Minister Lavagna is not what one would call a honest patriot. I 
mean, someone who moves in life according to the idea that whatever 
is against the country is bad, and will fight against it.  He is a 
"serious" man. Thus, his general view is "while we don't tread on the 
toes of the powerful in the world, and only under this condition, 
whatever is against my country is bad and I will fight against it".  
In fact, he is just another "Peronist" technician who betrayed the 
basic principles of Argentinean popular nationalism -that is, 
peronism.  

Thus, one can safely say that he is no less of a bastard and a coward 
than the Argentinean bourgeoisie (as opposed to the oligarchy) 
itself.  Nor more.  But -and on this he differs from the class- he is 
certainly no fool.  He knows that there is little that the finance 
can do to harm Argentina more than they have harmed us.  He also 
knows that Argentineans are not "tamed" any more.  Between the Scylla 
of financial blackmail and the Charybdis of popular revolts, he has 
chosen a middle path.

Under the Duhalde-Lavagna regime, banks have been offered a honorable 
alibi and have been covered up, their main interests have been left 
untouched.  Foreign "investment" in Argentinean public services (all 
of it illegitimate) has been guaranteed against any reasonable move 
of renationalization.  No serious change has been made in the pre-
2001 scenario, save for the enormous devaluation with the intention 
of "revitalizing" our economy by way of sweatshop exports (even 
though Lavagna does not ignore that this kind of "export-fueled 
reactivation" won't solve any of our country's serious problems).  

Thus, no restrictions are placed on trading of foreign currencies, no 
proactive policies are taken to promote domestic production, the 
"hidden hand" is left to act unimpeded.  

Most importantly: Rodríguez Saá had decided to send the foreign debt 
to the Parliament for discussion (a Constitutional duty that has not 
been fulfilled for decades), with the precedent of the Ballesteros 
Ruling, which demonstrates that it is (ad litteram) "the greatest 
swindle against the Argentinean people ever".  This was, potentially 
and if well managed, a deadly coup to the global system of finance.  
Cold shudders must have been quite usual at some cozy offices in 
London and New York when Rodríguez Saá implemented that resolution 
and the Argentinean parliament received it in applause.

The fact is that Argentina can take the debt to the international 
courts if need be, and -unless the international judiciary decides to 
make their own coup d'etat, which I would certainly not rule out 
completely, but what would remain then of the already shattered 
"international system" that the financial circles need?- send the 
"creditors" to Hell.

This is basically the reason that moved Duhalde to overthrow 
Rodríguez Saá.  Among others because he, as Vice President of Menem, 
and later as Governor of the Province of Buenos Aires installed by 
Menem, would not traverse unharmed the clarification of the events 
that fell on Argentina during the 90s.   The ruling classes have 
decided to make a "one pay for all" movement, allowing María Julia 
Alsogaray, the overexposed daughter of Álvaro Alsogaray [2] to be put 
to trial and in jail.

So, Lavagna now tells the banks "Listen, children.  We are paying our 
debts with you, we have saved you from popular rage, we are trying to 
reinstate you as people worthy of confidence.  Give something for a 
change.  For example, have those Pension Funds you control accept our 
offer for the private debt".  When balancing what they have gained, 
as against what they would lose (not so much, in the end, because 
their mandatory 30% of the affiliate's funds get to their private 
pockets every month), the taming of Argentina is as worth a Pension 
Fund client's  future as Paris was worth a Mass.  And they accepted 
the in the end generous offer of the Argentinean government.

This implies that one third of the private debt will be easily turned 
into the new schema of long term bonds, with a 50% cut.  The 
financial world, most of whose main members swindled the petty 
investors of Italy and the US, is not glad, of course.  An 
Argentinean legend says that no cougar or jaguar that has tasted 
human flesh ("tigre cebado") will be contented with other foodstuff 
any more.  Don't know if this is true.  But when the financial world 
has tasted the flesh and blood of a country for long decades (at 
least since 1976) it won't relinquish the prey without the fiercest 
roars.

(B) Then, the financial world comes to the rescue of "poor First 
World retired people who have been duped by ugly Argentineans".  Ah, 
those Italian pizza parlor owners, those widows weeping in Rome on 
their useless papers!  

To begin with: what these people should do (and they would have a 
very good case in their hands) is to file a class action against the 
international banks that duped them into buying bonds that their own 
domestic regulations forbid them to sell in their home country, the 
United States of America.  The Argentinean government may even be 
smart enough to help them in their attempt.  

Secondly: nobody can purchase foreign bonds with so overwhelmingly 
high rates of return without some suspicion.  Nobody is _that_ stupid 
when it comes to one's own purse.   Moreover, these rates included 
the "country risk" toll, that is were blaringly screaming "Caution! 
Danger involved!" to whoever wanted to realize this.

Thirdly:  and this takes us to point 

(C) There is nothing the international community of financial rogues 
can do to Argentina, short of open economic warfare.  And this would 
entail an increasingly serious situation with Latin America as a 
whole, because Argentina (partly through the personal efforts of 
Duhalde, who -one has to admit- is working well on _this_ particular 
issue) is helping to generate the closest economic and financial ties 
between the South American countries, in a move that is both self-
protective and self-asserting.

(D) The private debt will be thus negotiated in a position of force 
by Argentina.  Not because we are doing our best to help ourselves 
out of our nightmare ("Our best" would have been to repudiate the 
debt altogether as a swindle, which it obviously is, and let the 
robbers scream when -or if- other victims such as Brazil or Turkey 
follow suit).  But we are in such a bad condition that there are good 
possibilities that a 50% cut is obtained, at the price of an enormous 
burden of debt for many decades ahead.

Personally, I don't believe that this is good policy.  This will 
eventually reach a dead end, but for the time being that dead end is 
relatively far away in the future.  Lavagna is both playing -firstly- 
the bankers' game (to bring Argentina back to the fold of financially 
colonized countries) and -secondly- the game of the Argentineans 
(once the bankers' interest is ensured:  that this return to 
"normalcy" is less costly than a full surrender).

Behind the "this or nothing" position of Duhalde, Kirchner, Lavagna 
and his crew lies the popular rage of December 2001, as well as the 
seven days in office of President Rodríguez Saá.  The worst scenario 
for the Cowardly Trio would be an unsustainable situation, generated 
by the rage of the financial world, coupled with the inevitable rise 
of the full spectrum alternative of a bold and sweeping patriotic 
policy such as that exposed by Rodríguez Saá.  Whether it will be 
this man or someone else (and in this case, who?  an eventual 
Bolivarian or San Martinean army officer in the worst scenario of 
all).

But this is the worst scenario for imperialism, too.

Thus, blank eyes, invective worthy of Cotton Mather, screams and 
tears.  But no serious action at all.  This debt negotiation will end 
up succesfully, Lavagna will be certainly proposed as future 
President of the US-led Interamerican Development Bank, and 
Argentineans will be left to our wits in order to make the square peg 
of the renewed burden of debt fit the round hole of popular hunger, 
unemployment and rage.

All that has been obtained both by Argentinean ruling classes and the 
roguish underworld of high finance is time: it remains to be seen who 
(and  how) will make best use of it.

N O T E S

[1] The whole thing was, as many others during these years, a 
swindle.  Argentina had a normal system of state-guaranteed pension 
funds, that had been destroyed from within by the Quisling groups 
that had put themselves at the head of the state in 1955.  Once the 
system was left on the verge of collapse (together with the State as 
a whole), the neoliberals destroyed it completely during the 90s by 
creating a set of "private owned" (basically, imperialist-bank-owned) 
Pension Funds.  This system, from the very beginning, deprived the 
old one, state owned, of any financing.  The problem was that pension 
fund collection (even though systematically eluded by employers) had 
become one of the basic sources of finance for the State.  Now, this 
money flowed into the Private Pension Funds (and absurdly high 
honoraries, of around 30% of the money paid by workers, were charged: 
today, after more than ten years of payments, no worker in a Private 
Pension Fund can expect the fund to pay her or him a pension for more 
than two years after retirement!).

So, here you have an interesting equation:  the State has lost one of 
its main sources of finance.  This money is now in the hands of the 
foreign banks and their Pension Funds.  The State emits bonds.  The 
Pension Funds purchase them, thus charging interest rates (sometimes 
astronomically high) for the money that the State had put in their 
very dirty hands.

I guess that elsewhere this is called "swindle".  In Argentina, it 
was called "privatization"  and "efficiency".

[2]  "Engineer" Álvaro Alsogaray, a former gorilla Navy officer of 
the technical branch and oligarchic origin, had resigned during the 
age of Perón to "attend private business" (in fact, because he 
attempted to rob an Argentinean miner of his titles to the largest 
iron ore finding in Patagonia, and Perón did not allow him to do so). 

As such, he became, during the second half of the 20th Century, the 
main defender of American imperialism in Argentina.  Although the 
1955 coup was ideologically a pro-British rather than pro-American 
coup, he managed to sneak into the structures of the regime as 
Minister of Finance of Argentina.  President Aramburu himself, the 
head of the "pro American" fraction in the coup, recognized that 
"nobody knew him, and he suddenly appeared there"

As such, Alsogaray signed the agreements that forced our country into 
the IMF in 1956. Perón had kept us out of this that he considered a 
"putative institution of world imperialism".  

Alsogaray was, for decade after decade afterwards, the most vocal 
(and active) defender of the most obvious antinational interest, and 
become one of the most hated politicians in Argentina.  He always 
returned to public posts with the backing of the gorilla military 
command (after 1956, patriotic and Peronist officers were either 
purged, murdered or held in strict silence by the Military Party, the 
actual mainstay of imperialism in Argentina between 1955 and 1982). 
He thus appeared as Minister of Economy of the "developmentist" 
Arturo Frondizi in the 1960s (Frondizi allowed the gorilla high 
command to impose Alsogaray as a move to avoid a coup, which 
eventually took place any way a few months later).  From that post, 
he managed to rob Argentineans of about one quarter to one third of 
their income by issuing Government Bonds (the "9th. of July" -
independence day- bonds which were incorporated to wages but were not 
accepted as normal currency;  thus, workers had to exchange them at 
their market price.  

Since the 1955 coup and Frondizi afterwards, betraying all his 
electoral promises, had already imposed a policy of monetary 
starvation (which Alsogaray had reinforced), the bonds fell to 
between 2/3 to 3/4 of their value.  Those who had enough property to 
keep the bonds, or those who purchased them, made a great profit 
because the bonds were nominated in gold.  But this was nothing else 
than a generalized robbery to the benefit of a financial oligarchy.

After the 1966 coup, Alsogaray appeared again on the political 
scenario, as the Argentinean Ambassador to Washington.  This was the 
first time that María Julia, his daughter who would be one of the 
shining stars in the corrupted sky of Menem, was known by our people. 
During the second half of the sixties, and since she was "sulky" at 
Washington, D.C., she had Daddy Ambassador to build a Hundred Nights 
swimming pool built in the Argentinean Embassy for her --of course 
with public monies!)

The early 1970s were hard times for Alsogaray.  Not only he had to 
see how the Argentineans rejected in massive uprisings the economic 
wisdom that had been forced into their throats for fifteen years 
since 1955, he also saw how these uprisings forced the hand of his 
military friends and brought the country to free elections again, a 
process which eventually ended with Juan Perón back as President 
after the September, 1973, elections.

Alsogaray, a specialist in creating little manned but heavily funded 
"liberal" (that is, free trade antinational) political parties of the 
extreme right -for example, the Unión de Centro Independiente of the 
1960s:  it is very telling of Argentinean history to realize that no 
right wing or conservative politician has ever attempted to call 
herself or himself "right wing" or "conservative" after the age of 
Perón, but "center"- had attempted a programmatical presidential bid 
with a party which he called "Nueva Fuerza" (New Force), and which 
made the saddest performance in the elections.  He however managed to 
obtain a seat as Representative in Parliament.

As a Representative, he made a dual politics.  He supported some of 
the laws proposed by the Peronist government, but in essence he tried 
to become the head of the reactionary forces, particularly to keep in 
good relations with the Army officers.  These, that had been partly 
gained by the general mood of popular patriotism that was sweeping 
the country, had failed however to rise against the military regime 
in November 1972, when Perón came to Argentina for the first time, 
expecting among other things that his arrival would unleash such a 
military revolt (which _could_ have happened, in fact).  The stupid 
and criminal policies followed by the self-appointed "guerrillas" 
(Montoneros and ERP) did not help too much to change the mood of the 
officers towards Perón.  The reactionary command kept the reins 
firmly, and the divorce between the people and the Armed Forces 
remained such as it was.

Alsogaray saw it very clearly that in order to make the gap between 
people and officers serious and wide, he _had_ to equate the attacks 
by the "guerrillas" and the popular hatred against the post-1955 
regime.  Thus, he soon became one of the most vocal defenders of 
military action against the "guerrilla", not because it was hampering 
the normal development of Argentinean politics but _because it was an 
attempt to impose a "Communist" regime, that is a popular democracy_.

As such, he and his followers established the closest links with the 
officers of the 1976 regime, and emerged from it as the most 
consequent defenders of all that had been obtained during those 
years, and as subdued (not to alienate the military) but firm 
regretters of the 1982 Malvinas "adventure".  During the period of 
Raúl Alfonsín (1983-1989), his political party (now "UCeDé", that is 
"Unión de Centro Democrático", Union of the Democratic Center), were 
suddenly reinforced by an injection of young blood.

There was a revival of the worst tendencies in the propertied petty 
bourgeoisie, and this was clearest in the Universities, where his 
followers even reached the command of some Student Centrals (for 
example, the traditional carreers of Engineering, Right and Economics 
in Buenos Aires).  Among the new leadership of the UCeDé, two women, 
Adelina D'Alessio de Viola (a typical petty bourgeois upstart) and 
María Julia Alsogaray, Álvaro's beloved daughter, were particularly 
provocative and expletive in their political opinions.

When the Peronist Carlos Menem reached power and betrayed his voters 
by adopting the antinational economic programme of his opponent in 
the 1989 elections, Alsogaray was the one who anointed him.  "He is 
not a Peronist", explained.  And since that year of 1989 up to 1999, 
the alliance between Alsogaray's killers and Menem's traitors was one 
of the mainstays of Argentinean politics.  

The personification of that alliance was the incorporation of María 
Julia Alsogaray to the Menem cabinet.  As such, she led the process 
of final destruction of the Argentinean state owned utilities and 
their transfer to imperialist ownership ("privatization").  And she 
was one of the few members of the Argentinean traditional oligarchy 
who actually wallowed in the Menemist pigsty of fake glamour and 
seemingly endless enrichment through corrupt practices.

When, in December 2001, the neoliberal (thus essentially Alsogarayan) 
dictatorship fell to the rage of the Argentinean masses, someone had 
to be taken to sacrifice by the class.  It was María Julia, the 
sultry girl who in the late 1960s had got the Argentineans to pay for 
a swimming pool in Washington.

Néstor Miguel Gorojovsky
nestorgoro@xxxxxxxxxxxxxxx

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 
"Sí, una sola debe ser la patria de los sudamericanos".
Simón Bolívar al gobierno secesionista y disgregador de 
Buenos Aires, 1822
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 



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