Argentina: New austerity, old neoliberalism

Police face off with protesters opposing pension reforms, in the Plaza del Congreso, Buenos Aires, on December 18.

Mass mobilisations broke out in Argentina over the last two weeks of 2017 following the government’s attempt to cut pension benefits. Unions, political parties and student organisations took to the streets to protest the austerity measures and resist the battering of the police.

The bill, presented in Congress by Argentina’s ruling coalition Cambiemos (Let’s Change), seeks to reduce spending on social security by $3.4 billion. This will mean reducing benefits for 17 million retirees, people with disabilities, and families receiving welfare.

Cambiemos obtained 41% of the popular vote in October 22 national congressional elections. Formed in 2015, Cambiemos is a political alliance led by President Mauricio Macri’s Republican Proposal party (PRO), and including the Civic Coalition and the Civic Radical Union (UCR), historically one of two main parties of government in Argentina.

Cambiemos’ successes have undercut Peronism, the main ruling party since the end of the military dictatorship in 1983. Peronism encompasses a wide spectrum of politicians (from right-wing to centre-left), including the previous administrations of Nestor Kirchner (2003-07) and Cristina Fernandez de Kirchner (2007-15).

The Peronist movement went into the congressional elections fragmented and weakened, and suffered unambiguous defeat throughout the country, including losing to Cambiemos in the so-called “mother of all battles” – the elections in the Province of Buenos Aires.

Cristina Kirchner came in second in the race for senator for the Province of Buenos Aires. Her aspirations to unite the different wings of Peronism behind her leadership floundered with her lacklustre performance.

After the electoral boost in legitimacy for Cambiemos, and with Peronism in disarray, Macri has moved to advance certain reforms he deems necessary to reinvigorate the economy.

His government has enjoyed a tenuous economic recovery this year, though it has been heavily dependent on increasing foreign debt. A recent report by the Economic Commission for Latin America and the Caribbean (ECLAC) shows a spike in public debt issued across Latin America in 2017, with Argentina topping the list with 28% of the total region-wide debt.

According to Macri’s business-oriented perspective, Argentina needs to reduce its labour costs to recover “competitiveness”, cut public spending and lower taxes on businesses, thereby allowing the government to cease its reliance on foreign debt.

These were among the policies recommended by the International Monetary Fund (IMF) during its last visit to Argentina, only a week after the congressional elections.

The administration proposed a labour reform on October 30 that sparked a hefty opposition not only from the more militant unions, but also from a wing within the thoroughly bureaucratic General Labour Federation (CGT), the largest labour federation in Argentina with more than 2 million members.

The disagreement within the labour federation jeopardised the bill, and debate in Congress has been tabled until later this year.

Preying on the weak

It seems that Macri’s government seeks to follow the IMF’s agenda to the letter.

One such measure, approved on December 19, seeks to cut government spending on social security. The constituencies affected by the pension reform do not have the same mobilisation capacity that organised labour can boast.

In effect, this strategy preys on the weakest communities of Argentina.

The pension reform affects 17 million retirees and beneficiaries of the family welfare program Asignacion Universal por Hijo, a conditional cash transfer program for low-income families with children.

The bill puts in place a new method to adjust pensions for inflation, which substantially reduced the final income its beneficiaries receive. This formula would reduce biannual pension increases from 12% to 5.7%. The inflation rate has risen more than 20% annually for the past 7 years, reaching 40% in 2016.

This pension reform will reduce the minimum income for retired people, which is currently US$404 a month.

The pension bill was approved by the Senate on November 29 and moved to the lower house. Since Cambiemos does not have a majority in either of the houses in Congress, the vote of 25 Peronist senators in favour of the bill proved key to its passage.

Cambiemos had ostensibly garnered the support of enough Peronists in the lower House of Deputies to convert the bill into law, before things took an unexpected turn.

When the bill was brought to the floor of the lower house on December 14, support for it withered drastically.

Popular dissent mobilises

Mass mobilisations by unions, student organisations and political forces descended upon the session. A simmering tension became outright scandal when a heavily militarised police force attacked the protesters with rubber bullets and tear gas: the Plaza del Congreso turned into a battlefield.

Due to this interruption, the session was postponed for the following week.

On December 18, tens of thousands gathered again to protest the passage of the bill. Several unions rallied in front of Congress, while the CGT called a general strike — although they announced the strike only one hour in advance and discouraged their members from mobilising.

Around noon, several thousand people packed the Plaza del Congreso and overflowed the Avenida de Mayo and other streets adjacent to the square.

The police cracked down on protesters, leaving dozens injured and arresting more than 60 people. Protesters responded hurling stones at the cops, and a battle on the streets ensued again.

In the evening, groups of people spontaneously took to the streets throughout the city to express discontent, banging pots and pans. These cacerolazos, a typical protest in Argentina, mushroomed across neighbourhoods in several cities in the country, including La Plata, Rosario, and Cordoba.

Despite this, the bill passed in the early morning of December 19, when most of the country was asleep.

Leaders of the ruling coalition justified the passing of the immensely unpopular bill by claiming the protests outside Congress were tied to a conspiracy of a minority against a democratic process. Elisa Carrio, a prominent Cambiemos congressperson in Buenos Aires, even talked about a coup.

The mainstream media readily joined in the chorus against violent protesters.

Opposition in Congress

Representatives in the House of Deputies belonging to the Frente Para la Victoria (Victory Front, FPV), the Peronist bloc founded by the Kirchners, opposed the bill en bloc.

However, this opposition rang hollow after several FPV senators voted for the bill in the Senate.

Left and Workers Front (FIT) congressperson Nicolas del Cano denounced the repression on the streets, calling the bill a “pillage” on retirees and the poor.

As the main political force opposing the bill both in Congress and on the streets, del Cano challenged Cambiemos representatives to hold a referendum to assess popular support for the pension reform. His strategy was clear: the very few surveys on the issue have shown 82-85% opposition to the pension reform.

In August, Macri’s Chief of Ministers, Marcos Pena, aware of the unpopularity of the measure, had publicly denied the possibility of implementing any sort of pension reform. Even when the proposal was put to Congress, government spokespeople made an effort to conceal the real effect of the measure: the reduction in pension benefits.

Cambiemos officials know they need to sugarcoat their regressive policies if they want to remain in power.

A new brand of neoliberalism?

After the congressional election primaries last August, political analysts of various political leanings tried to make sense of the unexpectedly solid victory of the ruling Cambiemos.

Le Monde Diplomatique editor Jose Natanson argued that Macri’s brand of neoliberalism is of a new kind: democratic, renewed and committed to maintaining the pension and welfare benefits expanded under the Kirchners.

Natanson claimed that Cambiemos represents a “powerful force in transition to building a new hegemony.” Macri’s gradualist economic policy, he asserted, provides solid ground for governability.

In spite of its rhetoric, the material dimension of Cambiemos’ political project is no softer than any other form of neoliberal economic policy.

As political analyst Fernando Rosso pointed out in La Izquierda Diario, Macri’s program demands a frontal attack on the working class, including its economically inactive components, the lower strata and the reserve army—retirees, unemployed, poor families on welfare, etc.

When it came to pension reform, this seemingly gentler mask was removed.

The popular backlash in the wake of the reform bill laid bare the narrow social base for Macri’s political project.

The battle around the pension reform precipitated many political realignments, including a splintering of the CGT.

Cambiemos’ short-lived “hegemony” has given way to blunt repression in the streets and an anti-democratic Congress voting against its people.

[A longer version of this article was first published at NACLA.]

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