Argentina: Is the 'miracle' fading?

By Francisco Sobrino

BUENOS AIRES — On July 13, 1992, Time proclaimed "Menem's miracle" and showed the Argentine president as a shining sun.

Time was not alone: the entire imperialist media have been very satisfied with the way Carlos Menem rules the country. He accepted the "Brady Plan" for repaying the huge external debt; he sold the big (as well as the not-so-big) state-owned entities, including Entel, the national telephone company, and Aerolineas Argentinas, the national flag carrier; he has kept wages frozen, despite an inflation rate of 60% in the last two years; he has made drastic cuts in education, health care and social security spending.

After decades of extreme inflation (hyperinflation in some cases), Argentina discovered what monetary stability meant. So far, the convertibility plan (legislation prohibits the treasury from printing money not backed by hard-currency reserves or gold, and the new unit of currency, the peso, is pegged at par with the US dollar) is the most successful of all the economic plans applied in Argentina.

Following the severe crisis in the late '80s, GNP grew 9% in 1991, a further 9% in 1992, and an estimated 6% in 1993. This growth was obtained with fewer workers. In May 1993, unemployment rose to 9.9%, a record by Argentine standards. A growing share of workers are casual workers, deprived of benefits other workers enjoy. This explains the enthusiastic support for the Menem government by the corporate establishment.

Stability has made life better for a large minority. Many middle class people, thanks to the "cheap dollar" (for them), spend their holidays in foreign countries.

In this beautiful setting, Menem's goal of reforming the constitution (in order to let him be re-elected)) was going according to plan. On Monday, December 13, Menem signed a final version of his constitutional reform pact with his Radical predecessor, Raul Alfonsin. On Tuesday, he was off to Rome for a papal blessing and title. On Wednesday, Argentina won 2-1 in a soccer match with defending World Cup champions Germany. It seemed that this triumph would alleviate life for the Argentines. But when you have no bread, sometimes the circus is not enough.

On Thursday, Santiago del Estero (capital of a very poor province with 672,000 inhabitants) went up in flames as unpaid provincial workers ran riot, breaking into and burning Government House as well as attacking and looting or sacking the houses of politicians of all parties (especially the two major parties, the Peronist and the Radical).

A week before, in La Rioja, Menem's native province, there were troubles too. But the government backed down and announced that budget cuts and other harsh measures would be postponed. So, as Government House went up in flames in Santiago del Estero, the growing army of outcasts living below the line of "convertibility" thrust itself into the public eye.

The mob, in its harsh way, said that exploitation has its limits. The huge profits big business is getting, as the country is increasingly colonised, have limits too. Is Argentina reaching the limits? It is too early to claim that. But the blow that came from Santiago del Estero was not slight, and to those favoured by the neo-liberal policy, was ominous.

From GLW issue 128