Welcome to BASE21

By Andy McInerney

The image splashed across business pages around the world on Dec. 1 was enough to send a shiver down the backs of big business financiers. Thousands of Argentineans were lined up at banks across that South American country to withdraw their savings.

It was a classic run on the banks--a sign of desperate weakness in Argentina's financial sector.

One retired textile worker, 67-year-old Ramona Ruiz, expressed the sentiments of those trying to withdraw their funds. "That is my money inside that bank, mine! I was being patriotic by not removing my savings earlier," she told the Washington Post, as reported in a Dec. 2 article.

While politicians pleaded for calm, the actions they took showed their alarm. Finance Minister Domingo Cavallo announced limits on withdrawals, after financial analysts warned of a complete financial collapse within 10 days.

He also offered to convert bank accounts from the peso, the Argentinean national currency, to the U.S. dollar. Banks would no longer be able to make loans in pesos, but only in dollars based on the banks' supply of the U.S. currency. These moves together led many to accuse Cavallo of an attempt to "dollarize" the economy--making the U.S. dollar the national currency of Argentina, thus giving up all financial controls to the U.S. treasury.

These desperate signs came the very weekend that officials from the International Monetary Fund were in Argentina to discuss a new loan bailout. The IMF has demanded severe austerity measures from the government of President Fernando de la R?, which the president has been unable to fulfill so far because of resistance from political opponents and from the working class.

The financial crisis in Argentina has riveted the attention of Wall Street sharks thousands of miles away for several reasons. First, in the words of the Dec. 2 Washington Post, Argentina's financial system is "dominated by local subsidiaries" of U.S., French and Spanish banks. So the crisis in Argentina is not really an "Argentinean" crisis at all--but rather a crisis for the imperialist banks.

Second, these same U.S. and European banks are the ones holding the IOUs for Argentina's $130 billion in foreign debt. Should Argentina's government default, it would send a tremor through the financial accounts of Citibank, Chase and their European counterparts.

A crisis of production

Third, "emerging market" stock speculators have additional billions riding on the fate of Argentina's debt. This is reflected in the extreme sensitivity of U.S. stock markets to the events thousands of miles away in Buenos Aires.

Beneath the bank crisis is a far deeper crisis in Argentina--the fundamental problem, in fact, facing the capitalist class of bankers and bosses in both Argentina and the United States. The bank crisis is a reflection of a crisis in production, both in Argentina and across Latin America.

Argentina's economy has been in a depression for the past four years. Unemployment is officially running at 18 percent, although unions charge that half the population is either unemployed or underemployed.

This is a symptom of the economic crisis that is raging across Latin America. Brazil suffered a financial meltdown in 1999, and is verging on another. Colombia has been in a depression for the past two years.

All these countries, acting under the whip of the IMF, have responded in the same way: cut the public sector, throwing millions out of work, and imposing austerity measures that cut any benefits to the very sectors hardest hit by the job cuts.

In Brazil, Argentina and Colombia--South America's three largest economies--this has also led to a pauperization of significant sectors of the middle classes.

Protests continue

The crisis in Argentina has generated passionate protests. On Nov. 20, for instance, thousands of trade unionists marched on government offices demanding an end to the austerity measures. The unions charged that "deficit reduction was being carried out on the back of struggling Argentineans," according to an AP report.

"They want to take away the little that Argentineans, that the people still have," said union leader Hugo Moyano. "We are not going to accept this."

Moyano threatened that the unions would wage a civil disobedience campaign to roll back the reforms.

Another new focus of struggle has been the piqueteros, organized groups of unemployed workers who have been staging militant road blockades. On Nov. 19, on the eve of the union protests, thousands of piqueteros blocked major highways across Argentina.

On Nov. 25, police broke up a protest of families of disabled people in Buenos Aires, according to Inter Press Services.

IPS reports that 8,500 people risk losing their pension benefits if de la Rua's reforms are passed.

Unions have also called a series of strikes for the week following Finance Minister Cavallo's announcements on bank withdrawals.

The task of channeling the rising tide of protests into a mighty torrent that can challenge the imperialist bankers and their lackeys is becoming more vital as millions of workers face losing their jobs, their benefits, and their social gains in what is already the most severe capitalist crisis in Latin America since the Great Depression of the 1930s.

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