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<div class="header reader-header reader-show-element" dir="ltr"> <font
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href="https://www.counterpunch.org/2018/10/31/argentina-in-turmoil/">https://www.counterpunch.org/2018/10/31/argentina-in-turmoil/</a></font>
<h1 class="reader-title">Argentina in Turmoil</h1>
<span class="post_author_intro">by</span> <span
class="post_author" itemprop="author"><a
href="https://www.counterpunch.org/author/jerome-duval/"
rel="nofollow">Jérôme Duval</a> - October 31, 2018</span></div>
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<p>Seventeen years after the 2001 crisis in Argentina, the
Macri government, which came to power in December 2015,
is reinforcing a fierce <a
href="http://www.cadtm.org/Structural-Adjustment,1133"
name="mot1133_0"><span>structural adjustment</span></a>
plan for its population following the loan requested
from the <a
href="http://www.cadtm.org/IMF-International-Monetary-Fund,1114"
name="mot1114_1"><span>IMF</span></a>. The country,
which in 2018 holds the presidency of the <a
href="http://www.cadtm.org/G20,1176" name="mot1176_2"><span>G20</span></a>,
is one of the most affected by the rise in <a
href="http://www.cadtm.org/Interest-rates"
name="mot1116_3"><span>interest rates</span></a> in
the United States, the leakage of capital, the soaring
dollar and speculation on the stock market, as with the
crisis that is emerging in Turkey.</p>
<p>In the context of President Trump’s trade war to favour
US exports over others, the rise in <a
href="http://www.cadtm.org/Interest" name="mot1186_4"><span>interest</span></a>
rates in the United States has led to a rush on the
dollar, which is now seen as safer than ever. Dollars
are being repatriated to the United States to take
advantage of the interest rate hike, cash flows suddenly
dry up, the currencies of so-called “emerging” countries
fall sharply.</p>
<p><strong>Turbulence in Argentina</strong></p>
<p>The peso is in free fall, prices are exploding,
consumption is reduced to a minimum, the middle classes
are being squeezed, many firms and businesses are
closing, hunger is spreading in outlying areas and
speculators are panicking without knowing what to invent
to avoid the shipwreck that has been announced. However,
we could have learned from past crises not to reproduce
them: Argentina has already seen this situation before…
the people remember it, 2001; there was hunger, the
clatter of empty pots hit by hammering spoons in front
of closed banks. This was the “corralito”<span> [<a
id="nh1" title="The Spanish word corralito,
diminutive of corral, is used in Argentina to (...)"
href="http://www.cadtm.org/Argentina-in-turmoil#nb1"
rel="appendix">1</a>]</span>. On the other side,
capital flitters away discreetly to await better times.
The scenario orchestrated by the IMF all over the globe
infinitely repeats itself, which does not prevent it
from distilling its same nauseating recommendations
whatever the latitude of the country concerned.</p>
<p>“Zero poverty” Macri repeated during his election
campaign. Today his popularity is plunging, and this
slogan lies among his many election promises that will
never be fulfilled, once again the people’s trust has
been trampled on, betrayed by the power of money. At
fault, the austerity cure that only aggravates the
social situation already rolled out by more than two
years of a hard right government.</p>
<p>The first 15 billion dollars of the IMF’s 50 billion
dollar mega-loan in June does not seem to be enough to
stabilise the economy, which has been buffeted by <a
href="http://www.cadtm.org/Inflation,1115"
name="mot1115_5"><span>inflation</span></a> of around
30%, itself stimulated by a depreciation of its
currency. The Argentine peso lost nearly 20% of its
value against the dollar in two days, 29<sup>th</sup>
and 30<sup>th</sup> of August, and 98% over the last 12
months (more than 50% since the beginning of the year)
reaching an historic all-time low at over 40 pesos for a
dollar.</p>
<p>In a frenzy, the Argentine <a
href="http://www.cadtm.org/Central-Bank"
name="mot1100_6"><span>Central Bank</span></a> raised
its key rate from 45% to 60% on 30 August, one of the
highest in the world after having increased it from 40%
to 45% on 13 August, to encourage investment in local
currency<span> [<a id="nh2" title="“Chute du peso
argentin: pourquoi les marchés sont de nouveau
effrayés”, Le (...)"
href="http://www.cadtm.org/Argentina-in-turmoil#nb2"
rel="appendix">2</a>]</span>. However, this action,
like the efforts of the Central Bank of Argentina, which
has sold more than 12 billion dollars of its foreign
exchange reserves since the beginning of the year to
stabilise the peso<span> [<a id="nh3"
title="“L’Argentine demande le déblocage anticipé
des fonds du FMI”, Agence Reuters, (...)"
href="http://www.cadtm.org/Argentina-in-turmoil#nb3"
rel="appendix">3</a>]</span>, failed to contain
investors’ fear of default, or to mitigate falling
prices. As if provocatively, on 31 August, the day after
the spectacular rise in central bank rates, the US <a
href="http://www.cadtm.org/Rating-agency-Rating-agencies"
name="mot1217_7"><span>rating agency</span></a>,
Standard & Poor’s, placed the note of the Argentine
debt “under negative watch”.</p>
<p><strong>IMF austerity</strong></p>
<p>Argentine President Mauricio Macri <a
href="https://www.youtube.com/watch?v=sIoo6zKjX6A"
rel="external">announced, on 3<sup>rd</sup> September,
a brutal austerity plan</a> under IMF supervision.
This included the introduction of a tax on agricultural
exports of 4 pesos per dollar exported<span> [<a
id="nh4" title="At the current rate of Argentine
money this equates to about 10% on wheat, (...)"
href="http://www.cadtm.org/Argentina-in-turmoil#nb4"
rel="appendix">4</a>]</span>, which Macri himself
acknowledged were “very bad taxes”, but the level of the
budget deficit required emergency action. After so much
austerity applied to the poor, this measure may not
appeal to the producers of soybeans and maize, the
largest purveyors of foreign exchange of the state, hard
hit by a record drought early this year. In addition,
Macri announced the removal of 12 out of 22 ministries!
Mr Macri is claiming to eliminate the ministries of
Culture, Labour, Science and Technology, Energy,
Agribusiness, Health, Tourism and the Environment to
convert them into State secretariats under the dome of
other ministries: Culture and Science and Technology
pass for example under the mandate of the Ministry of
Education, Work under the orbit of the Ministry of
Production, Health is absorbed by that of Social
Development and Agro-industry moves to the Treasury
Department while dismissing 600 workers. So far, only
the dictators Pedro Eugenio Aramburu and Juan Carlos
Onganía had ventured to eliminate the Ministry of
Health.</p>
<p>On 4 September, Argentine Economy Minister Nicolas
Dujovne and Central Bank Vice President Gustavo Cañonero
went to the IMF in Washington to negotiate a revision of
the agreement signed in June and speed up payments.
Argentina is sorely lacking in cash. At the same time,
the prosecutor Jorge Di Lello indicted President
Mauricio Macri for abuse of authority and violation of
the duties of a public official for signing the
agreement with the IMF on 7 June, without submitting it
to Parliament, thus violating the Constitution. For his
part, President Macri is unable to calm the growing
discontent. He has said on TV and keeps repeating, “This
crisis is not just another crisis, it must be the last
(…) the worst is behind us.<span> [<a id="nh5"
title="”Richard Partington, “Argentina launches
fresh austerity measures to stem (...)"
href="http://www.cadtm.org/Argentina-in-turmoil#nb5"
rel="appendix">5</a>]</span> However, the same
mistakes produce the same effects and history repeats
itself…</p>
<p>In the street, soaring prices are resurging popular
discontent. In Buenos Aires, La Plata, Rosario, Mar del
Plata, or in other cities of the country, the people
express their anger at the rise in prices or the budget
cuts imposed on the public administration in exchange
for the IMF loan, like those applied to public
universities. On strike for more than a month, the
professors of the fifty-seven public universities are
demanding pay rises. Awakening the tragic memories of
the financial collapse of 2001, soup kitchens are again
overwhelmed, not only with children but entire families…
Galloping inflation is reducing margins on falling
consumption and the US supermarket giant, Walmart, has
sold a dozen hypermarkets. The price of bread has
increased by more than 20% in a few days<span> [<a
id="nh6" title="“La crisis del pan”, Página 12, 6
September, 2018. “El precio del kilo de pan (...)"
href="http://www.cadtm.org/Argentina-in-turmoil#nb6"
rel="appendix">6</a>]</span>. As in 2001, the people
are hungry, for social justice and bread.</p>
<p><em>This article was originally published on the French
blog <a
href="https://www.politis.fr/blogs/2018/09/largentine-dans-la-tourmente-34320/"
rel="external"><strong>Un monde sans dette </strong></a>from
the journal <a href="https://www.politis.fr/"
rel="external">Politis</a>.</em><br>
<em>English translation by Jenny Bright.</em></p>
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