Posted on 19-3-2002

(Going) To Hell With The IMF
by Naomi Klein (Published on Saturday, March 16, 2002 in the Toronto Globe
& Mail)

On Tuesday in Buenos Aires, only a few blocks from where Argentine
President Eduardo Duhalde was negotiating with the International Monetary
Fund, a group of residents were going through a negotiation of a different
kind. They were trying to save their home.

In order to protect themselves from an eviction order, the residents of 335
Ayacucho, including 19 children, barricaded themselves inside and refused
to leave. On the concrete facade of the house, a hand-printed sign said:
IMF Go To Hell. What does the IMF, in town to set conditions for releasing
$9-billion in promised funds, have to do with the fate of these people?
Well, here in a country where half the population now lives below the
poverty line, it's hard to find a single sector of society whose fate does
not somehow hinge on the decisions made by the international lender.

Librarians, teachers and other public sector workers, who have been getting
paid in hastily-printed provincial currencies (sort of government IOUs),
won't get paid at all if the provinces agree to IMF demands to stop
printing this money. And if deeper cuts are made to the public sector, as
the IMF also is insisting, unemployed workers who account for between 20
and 30 per cent of the population, will have even less protection from the
homelessness and hunger that has led tens of thousands to storm
supermarkets demanding food. And if a solution isn't found to the "medical
state of emergency" declared this week, it will certainly affect an elderly
woman I met recently on the outskirts of Buenos Aires. In a fit of shame
and desperation, she pulled up her blouse and showed a group of foreigners
the open wound and hanging tubes from a stomach operation that her doctor
was not able to stitch up or dress due to lack of medical supplies. Maybe
it seems rude to talk about such matters in the context of the IMF's visit.
Economic analysis is supposed to be about the peg to the dollar,
"peso-ification," and the dangers of "stagflation" -- not families losing
homes and gaping wounds.

Yet reading the reckless advice that the international business community
is hurling at the IMF and Argentina's government, perhaps a little
personalising is in order. For weeks, Argentina has been scolded like a
small child that shouldn't get desert until it finishes dinner. Despite a
commitment to slash 60 per cent from provincial deficits, Argentina
apparently hasn't done enough to "deserve" a loan. "The news is all on the
surface," sniffs an economist from Credit Suisse First Boston. President
Duhalde warns that Argentina's desperate population cannot support deeper
cuts -- but some, such as the National Post, call this procrastination. The
international consensus is that the IMF should see Argentina's crisis not
as an obstacle but as an opportunity: The country is so desperate for cash,
it will do whatever the IMF wants, the reasoning goes. "During a crisis is
when . . . Congress is most receptive," explains Winston Fritsch, chairman
of Dresdner Bank AG's Brazilian unit. Rocardo Cabellero and Rudiger
Dornbusch, a pair of MIT economists writing in the Financial Times, go
further. "It's time to get radical," they say. Argentina "must temporarily
surrender its sovereignty on all financial issues . . . give up much of its
monetary, fiscal, regulatory and asset-management sovereignty for an
extended period, say five years." The country's spending, money-printing
and tax administration should be controlled by "foreign agents," they say,
including "a board of experienced foreign central bankers."

In a nation still scarred by the "disappearance" of 30,000 people during
the 1976-1983 military dictatorship, only a "foreign agent" would have the
nerve to say, as the MIT team does, that "somebody has to run the country
with a tight grip." And that, with the Argentineans out of way, the country
could be saved by prying open markets, introducing deep spending cuts, and,
of course, a "massive privatisation campaign." It's obvious to anyone who
has been paying attention to Argentina's social upheavals that such an
economic dictatorship could only be enforced through terrifying state
repression and bloodshed. But there's another hitch: Argentina has already
done it all.

As the IMF's model student throughout the 1990s, the country flung open its
economy (that's why it's been so easy for capital to flee since the crisis
began). As far as Argentina's supposedly wild public spending goes, a full
third goes directly to servicing the external debt. Another third goes to
pension funds, which have already been privatised. The remaining third
alone covers health, education and social assistance. Far from spiralling
out of control, these expenditures have fallen far behind population
growth, which is why shipments of donated food and medicine are arriving by
boat from Spain. As for "massive privatisation," Argentina has dutifully
sold off so many of its services, from trains to phones, that the only
examples of further assets Mr. Cabellero and Mr. Dornbusch can think of
privatising are the country's ports and customs offices.

No wonder economists and bankers are in such a rush to blame the victims of
this crisis, to claim that Argentineans overspent, were greedy, corrupt. Of
course, it's true that the political system here is contaminated with
cultures of both payola and impunity. But the same financiers that happily
lined the pockets of politicians and army generals in exchange for local
contracts are hardly the ones who should be trusted to do Argentina's house
cleaning.

Argentina's housewives have a better idea. Last week, on International
Women's Day, hundreds took to the streets with brooms in hand and announced
that they wouldn't clean their homes until they had swept the corruption
out of Congress. Their protest was one tiny wave in a massive tide of
grassroots mobilisation that has already brought down successive
governments and now is threatening to do something far more radical: bring
in real democracy. Following the model started by the Piqueteros,
Argentina's militant unemployed, tens of thousands of residents are
organising themselves into neighbourhood assemblies, connected to each
other at the city and national levels. In town squares, parks and on street
corners, neighbours discuss ways of making their democracies more
accountable and filling in where government has failed. They are talking
about creating a "citizen's congress" to demand transparency and
accountability from politicians. They are discussing participatory budgets
and shorter political terms, while organising communal kitchens for the
unemployed and planning film festivals in the streets. The President, who
was appointed when his elected predecessors resigned from the position, is
scared enough of this growing political force that he has begun calling
these asambleas "antidemocratic."

But there is reason to pay attention. The asambleas are also talking about
how to kick-start local industries and denationalise assets. And they could
go even further. Argentina, as the obedient pupil for decades, miserably
failed by its IMF professors, shouldn't be begging for loans; it should be
demanding reparations.

The IMF had its chance to run Argentina. Now, it's the people's turn.