[News] These Dark Times Are Also Filled with Light - Argentina
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Thu Apr 21 10:27:18 EDT 2022
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*These Dark Times Are Also Filled with Light: The Sixteenth Newsletter
(2022)*
Shengtian Zheng and Jinbo Sun, /Winds of Fusang/, 2017. ‘Fusang’ is an
ancient Chinese word referring to what some believe to be the shores of
Mexico. The work is an homage to Latin America’s influence on China,
particularly that of Mexican artists on the development of modern
Chinese art.
Dear friends,
Greetings from the desk of Tricontinental: Institute for Social Research
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In early March, Argentina’s government came to an agreement
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with the International Monetary Fund (IMF) on a $45 billion deal to
shore up its shaky finances. This deal was motivated by the government’s
need to pay a $2.8 billion instalment on a $57 billion IMF stand-by loan
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taken out under former President Mauricio Macri in 2018. This loan – the
largest loan in the financial institution’s history – sharpened divides
in Argentinian society. The following year, the Macri administration was
ousted in elections by the centre-left Frente de Todos coalition which
campaigned on a sharp anti-austerity, anti-IMF programme.
When President Alberto Fernández took office in December 2019, he
refused the final $13 billion tranche of the IMF’s loan package, a move
applauded by large sections of Argentinian society. The next year,
Fernández’s government was able to restructure the $66 billion debt held
by wealthy bondholders and open discussions with the IMF to delay
repayment of the debt incurred by Macri’s government. But the IMF was
rigid – it insisted on repayment. Neither the Macri loan nor the new
deal under President Fernández settles Argentina’s long-term struggle
with its public finances.
Carlos Alonso (Argentina), /La oreja/, 1972.
The term ‘odious debt’ is used to describe the money owed by societies
whose governments have been undemocratic. The concept was crafted by
Alexander Nahum Sack in his book /The Effects of State Transformations
on Their Public Debts and Other Financial Obligations/ (1927). ‘If a
despotic power incurs a debt not for the needs or in the interests of
the State, but to strengthen its despotic regime, to repress its
population that fights against it, etc.’, Sack wrote
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‘this debt is odious for the population of the State’. When that
despotic regime falls, then the debt falls.
When Argentina’s military ruled the country (1976–83), the IMF
generously lent it money, ballooning the country’s debt from $7 billion
at the time the military took power to $42 billion when the military was
ousted. Plainly, the IMF’s provision of funds to the Argentinian
military junta – which killed, tortured, and disappeared 30,000 people –
set in motion the ugly cycle of debt and despair that continues till
today. That those ‘odious debts’ were not annulled – just as the
apartheid debt was not annulled in South Africa – tells us a great deal
about the ugly reality of international finance.
Gracia Barrios (Chile), /Desaparecidos/, 1973.
The deal cut by the IMF with the Fernández government is exactly like
other deals that the IMF has made with fragile countries. During the
pandemic, 85% of the IMF’s loans to developing countries came
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with austerity conditions that sharpened their social crises. Three of
the most common conditions of these IMF loans are cuts and freezes to
public sector wages, the increase and introduction of value-added taxes,
and deep cuts to public expenditure (notably for consumer subsidies).
Through its new deal with Argentina, the IMF will inspect the operations
of the government four times per year, effectively becoming an overseer
of the Argentinian economy. The government has agreed to reduce the
budget deficit from 3% (2021) to 0.9% (2024) to 0% (2025); to accomplish
this, it will have to cut large areas of social spending, including
subsidies for a range of consumer goods.
After reaching the agreement, IMF Managing Director Kristalina Georgieva
pointed out the great difficulties faced by Argentina, though these
difficulties will not be ameliorated by the IMF plan. ‘Argentina
continues to face exceptional economic and social challenges, including
depressed per capita income, elevated poverty levels, persistent high
inflation, a heavy debt burden, and low external buffers’, she said
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Consequently, Georgieva noted, ‘Risks to the program are exceptionally
high’, meaning that further default is all but certain.
Shengtian Zheng and Jinbo Sun, /Winds of Fusang/ (close up), 2017.
A few weeks before Argentina came to terms with the IMF, President
Fernández and China’s President Xi Jinping held a bilateral meeting in
Beijing at which Argentina signed
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onto the Chinese-led Belt and Road Initiative (BRI). Argentina is the
twenty-first country from Latin America to join the BRI. It is also the
largest economy from the region to join, pending applications from
Brazil and Mexico. Expectations rose amongst sections in Argentina that
the BRI would provide a pathway to exit the grip of the IMF. This
remains a possibility even as President Fernández returned to the IMF.
Our team in Buenos Aires has been looking carefully at China’s growing
ties with the Caribbean and Latin America. These studies resulted in our
most recent dossier
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no. 51, /Looking Towards China: Multipolarity as an Opportunity for the
Latin American People/ (April 2022). The main argument of the dossier is
that the emergence of programmes such as the BRI offers countries such
as Argentina choices for development finance. If Argentina has more
latitude in choosing its avenues for finance, then it will be better
positioned to reject harsh offers of stand-by assistance from the IMF
which come with conditions of austerity. The possibility of these
choices opens the door for countries such as Argentina to develop an
authentic national and regional development strategy that is not written
by the IMF staff in Washington, DC.
The dossier is quite clear that the mere entry of the BRI into the
Caribbean and Latin America is not sufficient. Deeper projects are
necessary:
It is possible for Chinese integration to further the ‘development of
underdevelopment’ if the Latin American state projects produce a new
relationship of dependency on China by merely exporting primary
products. On the other hand, it will be far better for the region’s
peoples if the relationship is based on equality (multipolarity) as well
as the transfer of technology, the upscaling of production processes,
and regional integration (national and regional sovereignty).
Josefina Robirosa (Argentina), /Bosque azul /(‘Blue Forest’), 1993-94.
The BRI’s annual disbursement of funds is around $50 billion, with
projections
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suggesting that, by 2027, total BRI spending will be about $1.3
trillion. These capital flows primarily focus on long-term investments
in infrastructure rather than short-term bailouts, although new studies
suggest that China has offered short-term liquidity to several
countries. Between 2009 and 2020, the People’s Bank of China entered
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into bilateral currency swap arrangements with at least 41 countries.
These currency swaps take place between the local currency (the
Argentinian peso, for instance) and China’s renminbi (RMB), with the
local currency as collateral and the RMB used either to buy goods or to
acquire dollars. The combination of BRI investments and RMB currency
swaps provide countries with immediate alternatives to the IMF and its
austerity demands. In January 2022, Argentina’s government asked China
to increase its 130-billion-yuan swap ($20.6 billion) by an additional
20 billion yuan ($3.14 billion) to cover the IMF payment. A few weeks
later, the People’s Bank of China provided
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the necessary swap to Argentina’s Central Bank. Despite this infusion of
cash, Argentina still went to the IMF.
The answer to why Argentina took that decision can perhaps be found in
the letter
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written by Martín Guzman (minister of the economy) and Miguel Pesce
(president of the Central Bank) to the IMF’s Georgieva on 3 March 2022.
In the communication, Argentina promises to ‘improve public finances’
and to restrain inflation, which are straightforward orthodox positions.
But then there is an interesting obligation: that Argentina will expand
exports and draw in foreign direct investment to ‘pave the way to an
eventual re-entry into international capital markets’. Rather than use
the opportunity afforded by BRI-currency swaps to develop its own
national and regional agenda, the government seems eager to use whatever
platform possible to return to the status quo of integration into the
capitalist marketplace for finance dominated by Wall Street and the City
of London.
On 12 April 2022, the Committee of Creditors of Internal Debt (CADI)
announced
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that the people of Argentina refuse to shoulder the burden of the IMF
debt. The people should not pay a single peso: those who squirrelled
away the billions that Macri borrowed from the IMF should be the ones
who pay the price. Banking secrecy laws need to be suspended in order to
draw up a list of those who took that money and hid it in tax havens.
The hashtag of CADI’s campaign is #LaDeudaEsConElPueblo – the debt is
with the people. It should be paid /to/ the people, not drawn from them.
As the Argentinian poet Juan Gelman (1930–2014) wrote during the reign
of the military junta, these are ‘dark times, filled with light’. This
phrase resonates even now:
dark times/filled with light/the sun/
pours sunlight onto the city/ torn
by sudden sirens/the police on the hunt/night falls and we/ make love
under this roof
Gelman, a communist, fought the dictatorship, which killed his son and
daughter-in-law and damaged the spine of his country. Even the dark
times, he wrote, echoing Brecht, are filled with light. These are tough
moments in world history, but even now there remain possibilities, there
remain people gathered on the streets of Buenos Aires and Rosario, La
Plata and Córdoba. Their slogan is clear: /no to the pact with the IMF/.
But theirs is not only a politics of ‘no’. It is also a politics of
‘yes’. Yes to taking advantage of the new openings to shape an agenda
for the well-being of the Argentinian people. Yes, also yes.
Warmly,
Vijay
Website <www.eltricontinental.org>
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