Transcript Liberalism, Crises, and Structural Adjustment In Argentina

LIBERALISM, CRISES, AND
STRUCTURAL ADJUSTMENT
IN ARGENTINA
3/17/2010l
How much is a dollar worth?
Argentina: 1983 – 1994
Democracy and Neoliberalism
Washington Consensus (Williamson,
1990)
1. Reduce fiscal deficits
2. Realign public expenditure
priorities
3. Encourage broad but
moderate taxation
4. Let the market determine
interest rates
5. Achieve a competitive, exportoriented exchange rate
IMF in Argentina
1. IMF helps set overall fiscal
targets: balanced budgets or
surplus
2. Limited, targeted spending
3. Revenue-neutral (or –enhancing)
tax reform
 Eliminates 21 “distortionary”
federal taxes
 Reduce payroll taxes
 Broadens VAT, corporate, and
personal income tax bases
 Increase tax compliance –
computerization, audits,etc.
5. Control inflation: Currency
peg
Argentina: 1983 – 1994
Democracy and Neoliberalism
Washington Consensus (Williamson,
1990)
6. Implement free trade policies
7. Encourage FDI
8. Privatize enterprises
9. Deregulate industry
10. Stabilize and enforce property
rights
IMF in Argentina
7. Financial sector reform to
encourage investment
Banking supervision,
transparency, and autonomy
8. Privatization where possible, esp.
banking and public service
corporations; replace the state-run
Pay-As-You-Go system with private
pension funds
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9. Labor market reform to improve
flexibility
Some Names to Remember
 Alfonsín, President 1983-1989
 Menem, President 1989-1999
 Cavallo, Economy Minister 19911996
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decentralize collective
bargaining agreements
liberalize conditions for
temporary employment
allow more flexible working
hours.
Argentina 1995 – 1999
Argentina in the Global Economy
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Global financial crises
1995: Mexican economic collapse
 1997: East Asian financial crisis
 1999: Brazilian peso devaluation
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"The income gap between the poorest 10 per cent and
the richest 10 per cent grew 57 per cent between
1990 and 1999." (Carrera and Cotarelo, 2003)
Throughout the 1990s new forms of social organization
begin to form centered around the former middle class.
Argentina 2000-2003
The Crisis Years
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2000-2001, the de la Rua years: Renegotiation with the IMF
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IMF agrees to 3 year $7.2 billion loan, with conditionality
IMF negotiates a $40 billion loan package; in December 2001 the IMF
withholds payments and Argentina defaults
2002-2003, the Duhalde years: Moving away from the IMF
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Argentina lets its currency float; declines 70% against the dollar
Debts above $100,000 are converted to pesos
Checking (above $10,000) and savings ($3,000) accounts are
"guaranteed" but frozen; small accounts are given the option to convert
to non-frozen peso accounts. Later all accounts would be converted to
pesos at an artificial rate of 1d = 1.4p.
"But the crisis brought the state back in—as a critical protagonist and
as the only actor with the extraordinary capacity to write new rules
of the game and recover the command instruments of political
economy." (Grugel and Riggirozzi, 2007)
2001-2003: Popular Response
Spontaneous Insurrection
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Marches, Meetings, and Public demonstrations
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“Cacerolazos,” Food Riots
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Looting of supermarkets and shops
Attacks on public buildings, banks, and residences of political leaders
Street struggles against the police
Strikes
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Banging pots and pans together in the streets to emphasize that the people are hungry
Usually women; usually middle class, usually urban
Riots
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Unemployed workers movements, neighborhood assemblies, barter networks, etc.
Ollas Populares: food kitchens that often turned into political meetings
Escrache: gathering in front of a private house in order to denounce the inhabitant/s
High levels of unionization
9 strikes in the 1990s, 8 in 2000-2000
Roadblocks
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To seize/defend and occupy a position in order to make specific demands
Picketing, esp. by unemployed workers demanding greater social support – food and jobs
Argentina 2003 – 2007
“giving the Fund the kiss off”
Nestor Kirchner (President, 2003 – 2007)
 2004: Arg suspends its agreement with the IMF; brokers
new deal with fewer conditions
 2005: Debt restructuring cuts 70% of privately held
debt (v. IMF)
 2006: 3 Jan - Arg repays the remaining $9.81 billion in
IMF debt
 2006 Economic problems return
Inflation grows
 GDP growth slows
 Current account balance declines
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Argentina: 2008 – today
The new global economic decline
Cristina Fernández de Kirchner (President 2007 –
present)
 2008 US housing crisis
 2009 Argentina begins a new debt swap program
Questions
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What is the proper role of the state in the economy?
Is "money" ever national?
Chasteen: "Neoliberals had few new ideas. Everything
they recommended had already been tried in Latin
America before 1930. So where did they get their
impressive momentum?"
What is the relationship between neoliberal structural
adjustment and political regime type?
Is the IMF - or a similar major international lending
institution - a necessary feature in today's global
economy?