Argentina in Crisis

Leadership Vacuum in an Economic Black Hole

Argentina Protests
Unemployed youth protest the state of Argentina's economy in Buenos Aires, Jan. 15, 2002 (Photo: AFP).

This crisis is "economic, political, social, moral, and cultural," stammered Elsa, the wife of a philandering husband, in a recent broadcast of the highly rated TV serial drama "The Soda Man."

Staring straight into the cameras, Elsa, played by actress Rita Cortese, was expressing her bitter frustration at the ruses devised by her husband, Hipólito, to cover up an unending series of love affairs carried out right under her nose.

Many viewers no doubt sensed a double message in Elsa’s angry reproach and might well have replaced the image of her husband with that of the nation’s rulers. Wherever one goes here, one hears Argentines expressing similar frustrations about the ruses of politicians.

Thousands have taken to the streets, beating pots and pans and demanding justice, an end to corruption, and the right to freely dispose of savings locked up in the banks. These demonstrations and a rash of lootings brought down the government of President Fernando Dela Rúa last December, tumbled that of caretaker President Adolfo Rodriquez Sáa barely a week later, and now have Interim President Eduardo Duhalde scrambling for rapid solutions.

He faces seemingly unsurmountable problems. Argentina is unable to pay its US$140 billion in foreign debt. Twenty percent of the population is unemployed. Unable to withdraw money from the banks, which claim to have only 15 percent of the cash needed to return the deposits, almost half of the population now lives in temporary poverty. Already disgruntled by the apparent disappearance of their savings, Argentines, who have sworn in five presidents in less than a month, are now ruminating over the bloody police crackdown on protesters.

The broken window panes of numerous downtown banks still wear the scars of the most recent protests. The city’s very walls bear witnesses to the recent turmoil: "My pots are not bulletproof," scribbled one protester, alluding to the response of police wearing bulletproof vests.

"…In that metalic sound," wrote Sandra Russo in the Jan. 6 issue of Página 12, "Is the sound that breaks the silence of [the middle] class… after having believed in good manners and the value of work and study. It is a sound that has come to cover up the grief of mourners."

The pot-banging rebellion is not supported by any visible political organization. It rather reflects the cross-cutting crisis to which Elsa referred in "The Soda Man," and demands changes which the country’s political and business leaders find difficult to accept, and which international organizations find difficult to impose. It has given Argentines a measure of their own potential power.

"This new awareness is a way of putting limits on our rulers," says Fátima Salinas, one of many neighborhood pan bangers, "But we must be careful not to let opportunists and agitators take advantage of the people’s authentic grievances."

A less cautious voice indignantly echoed a frequently heard view: "The real looters are not those who ripped off the supermarkets, but those in power." Talk shows are filled with callers from all sectors of society who unanimously lambast the traditional political establishment.

"What they [the politicians that make up the government] don’t realize is that we have the real power," said Raúl, who described himself as an ex-Peronist. But this "real" power is nameless, amorphous, still without any visible structure except the determination to prevent abuse of citizens. This anonymous, anarchic opponent concerns the government more than any possible coalition of political parties. For the pot bangers do not allow protesters to carry banners or pamphlets advertising a political party: the protesters have been careful not to turn the protests into political rallies.

"Today it’s the pot and pan bangers and tomorrow who knows," Lito Borello, who runs a soup kithcen for children in the poor Buenos Aires neighborhood of La Boca and who actively participated in the protests. "The majority of the protesters have never been involved in politics, but we are all involved in a process."

Now President Eduardo Duhalde, the fifth in the chain of caretaker presidents named by Congress to finish Dela Rúa’s term, has inaugurated 2002 with a promise to change what he described as the decade long alliance with finance for one with production. To bring about that change he decided to devalue the peso and to avoid popular ire by converting dollar debts into pesos. Most private and corporate debts are in dollars. Almost two thirds of fixed term deposits are also in dollars. Since the banks say they have barely 15 percent of the deposits left, the government has proposed freezing fixed-term accounts until as late as 2005. The proposal has not gone over well with Argentines, who have lost confidence in the banking system. Nor has it gone over well with many economists, who worry that keeping this much money out of the economy will make it even more difficult for it to recover. The Jan. 9 edition of Buenos Aires’ left-wing Clárin estimated the amount of money currently locked in Argentine banks at more than US$64.5 billion. Individuals and businesses alike have placed their savings in fixed term accounts to take advantage of high interest rates.

Even before the government announced it would devalue the peso by 40 percent in the first week in January, many retailers raised their prices sharply, despite pleas from the government not do so. Conservative politicians and the International Monetary Fund consider any attempts to control prices to be "populist" measures, but price increases are a matter of life and death for many for many Argentines and raise the specter of further unrest. Equis, an international consulting firm, has estimated that a 10-percent rise in the cost of living in Argentina will increase poverty from its present level of 44.2 percent of the population to 49.1 percent; a 20-percent increase would put 54.1 percent below the poverty line. The lack of a solid industrial base in the country—a consequence of mismanaged privatization under the 10-year administration of Carlos Menem in the 1990s—now obliges the country to import drugs and other key industrial products at increased rates.

Adding fuel to the fire, former President Menem—one of the chief proponents of dollarizing Argentina’s economy—has charged Duhalde, Buenos Aires Province Governor Carlos Ruckauf (who is now Foreign Minister), and former President Raúl Alfonsín with a sort of conspiracy to use the disturbances to take power. This has opened a wound in the already-divided ruling Peronist party, because Menem is clearly siding with the privatized state companies currently lobbying against the government’s attempt to remove utility rates from their peg against the dollar. Most of the utility companies are in Spanish hands, as are many of the country’s private banks. On Jan. 14, Buenos Aires’ Channel 13 TV news charged that Menem is apparently not having any trouble with the banking restraints, since he is paying US$1000 nightly for his seaside hotel room in Mexico.

"Who do they [the Spaniards] think they are?" a teacher asked. "First they conquered America and now they’re trying to squeeze as much as they can out of us."

Argentines are devising new forms of protest every day. Many are boycotting Spanish firms. Others are leaving their telephones off the hook to make life difficult for the phone company. Others are threatening to organize pan-beating protests in front of the stores of merchants that have raised their prices.

"Last night, as always, I was in Plaza de Mayo [Buenos Aires’ central square, where many of the protests have taken place]," says theater director Javier Margulis. "It is stimulating to see that we are many and that we are willing to struggle against injustice." He mentioned the possibility of extending the protests abroad, pounding pots and pans at the doors of Argentine embassies around the world, demanding the banks return creditors’ savings, and that politicians perform physical labor as community service to "compensate for the abuse to which they have subjected us all these years."

Although the U.S. government has repeatedly attempted to calm fears of an economic or political "contagion" spreading from Argentina to neighboring countries, the IMF’s traditional remedies appear difficult or impossible to impose for the time being.

The "carnal" relations which Menem established with the United States have been replaced by what Foreign Minister Carlos Ruckauf has described as "polygamous" ties with the United States, Brazil, and Mercosur. For the moment, Washington appears hesitant to comment on the crisis at length, and has only expressed its hope for a sustainable economic policy in Argentina.

Many Argentines are excitedly talking about the precedent they have set, raising the question of a political contagion spreading beyond Argentina’s borders. The protesters have no leaders. They are not organized according to conventional political structures. Their membership transcends distinctions of social class. The movement propagates itself rapidly from house to house by phone or by e-mail. "Now everyone is involved," murmurred one housewife, "So I don’t foresee the possibility of a return to the repressive tactics of [Argentine military dictator Jorge Rafael] Videla."