Raul Bassi
On December 18 Argentine President Nestor Kirchner announced that his government would be paying in full, and up-front, its debt to the International Monetary Fund (IMF) — US$9.8 billion. "We have decided to finish with the 50-year-old debt", he said. "We are telling the IMF, no more external debt."
Kirchner's decision was supported by Brazilian President Ignacio Lula da Silva who, two days before, did the same.
Surprisingly, Venezuelan President Hugo Chavez also supported Kirchner's decision by offering to buy some of Argentina's foreign debt. Venezuela had already bought US$1 billion and Chavez said he was ready to buy an additional $3 billion.
Buying these titles is not an act of solidarity with the Argentinean people; it is compensation to the Argentine government for the money sent to the IMF. In this instance, Venezuela has become a part of the recycling of Argentina's general debt.
The value of the titles Chavez bought depends on Argentina's budget continuing to be in surplus. But unlike the IMF, Venezuela will not place economic conditions on the Argentine government.
But if this money is not used for the benefit of the working people in Argentina, Venezuela will have to answer some big questions. Does such a move help the Bolivarian revolution's social and political changes? Rather than helping build opposition to such neoliberal international financial institutions, Chavez has legitimised the IMF's fraud by helping Argentina honour its debt payments.
In his December 18 statement, Kirchner claimed that paying off the country's debt to the IMF will give Argentina "political sovereignty and economic independence". But will it?
Ending payments to the IMF does not avoid the organisation's annual review which sets out its neoliberal economic plan for the country. The Argentinian government was suspended two years ago, even when the IMF received its dues on time. Payments to the IMF in part or in full do nothing to advance autonomy from this corporate globalisation institution.
By paying in full and ahead of time, Kirchner is giving the IMF privileged treatment. But by attempting to appear progressive, Kirchner is hiding a very regressive policy — the payment of debt that many believe to be illegitimate.
What has been paid represents just 9% of Argentina's total external debt, and excludes other compromises with the Inter-American Development Bank and the World Bank. Argentina still owes about US$139 billion in external debt, which will oblige the government to impose neoliberal policies — with or without IMF reviews.
The government's decision clearly favours one class over another. The high economic growth has meant big profits for 91×ÔÅÄÂÛ̳ of big business. Kirchner's policies have favoured those capitalists involved in the export industry, national industries and local banks rather than external creditors and privatised enterprises.
On these issues the IMF was a lobbyist for the latter and there has been much dispute over the value of the Argentine peso to the US dollar following the latter's devaluation in late 2001, which caused the peso to plummet to a third of its previous value. Many lost most of their savings, the key spark for the "Argentinazo".
Exporters and national industries prefer a devalued peso, while the IMF has demanded a decrease in the gap in value of the two currencies to ease overseas payments.
In this dispute, there is no popular interest involved.
Many centre-left groups, which Kirchner has attempted to co-opt, have always said there are only two choices: pay the IMF or pay the people.
Even the government has pointed out that the IMF debt was illegitimate. First, the loans were used to falsely inflate the value of the peso and, secondly, to hide the flight overseas of large sums of capital once the rich got a whiff of the economic and social crisis that was to explode at the end of 2001.
Instead of covering the debt, the government should have investigated how it was created and where the money went.
Kirchner said that the IMF was responsible for the 1990s neoliberal model and yet he is rewarding the offender by honouring the debt.
Kirchner has made it clear where the money to repay the debt will come from. The 2006 budget does not allow for wage increases for state employees, pensions or welfare for the unemployed, who are receiving the equivalent of $45 per month. This is in the context of higher than expected inflation.
With a huge chunk of the savings from the central reserves going to the IMF, the government now has to repay it. This is likely to come from halting public works plans.
The $9.8 billion could have been used to double pensioners' monthly payments (to benefit 3.5 million people), tripled the unemployed benefit payment (2.5 million people), given public servants an extra months' pay, and only have used up $3.5 billion pesos leaving $26 billion pesos to invest in housing, public works, economy activation, health improvements and education improvements.
From 91×ÔÅÄÂÛ̳ Weekly, February 15, 2006.
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