Part 2 - Argentina’s Long Relationship With the IMF, From 1976 to Today
The IMF has a long history of strong-arming the direction of Argentina’s policies and economy, beginning with the military junta in 1976 that tortured, killed, and disappeared 30,000 people in the span of six years. The junta largely targeted the left and the country’s poor and working class as they implemented a series of neoliberal policies, a tactic that journalist Naomi Klein discusses in depth in her book, The Shock Doctrine.
Despite the human toll of Argentina’s genocide, the IMF was willing to look the other way as long as the junta followed their policy prescriptions. As Paul Cooney explained: “just one week after the military coup of March 1976, and without having to negotiate or send a delegation, the Argentinian junta was able to obtain over US $100 million from the IMF. In addition to this show of support for a government willing to implement and impose neoliberal policies with an iron hand, the IMF came through with the largest loan ever to a Latin American country (US $260 million), just five months later.”
Meanwhile, Isabel Perón, the country’s president from 1974 to 1976 until she was ousted by the military coup, was unable to secure funds from the IMF. Her agenda, it would seem, was not to their liking. This is what Tricontinental: Institute for Social Research Director Vijay Prashad calls an investment strike; the idea that credit is only available to countries who follow neoliberal policies.
Governments that stray—or are perceived to stray—from this agenda are deprived from access to credit by the world’s financial institutions. In other words, the banks and credit lenders go on a strike of sorts, withholding funds and access to credit until their neoliberal policy prescriptions are met.
But, unlike labor strikes—where the demands are centered around conditions to improve the lives of the majority—investors, through their strikes, “insist on cuts to national budgets paid for by taxes on workers and peasants and lower living standards for workers and peasants.” They use their leverage— capital—to increase their own wealth at the expense of the people who produce it—the majority of the world’s population.
When countries faithfully go along with these conditions and implement neoliberal policies, debt is allowed to disappear from the records, and credit is extended (such as when US $10 billion disappeared from the records out of a total of US $40 billion during negotiations between the IMF and military junta, or when the IMF loans to Argentina were extended from $50 billion to $57.1 billion in September 2018 under Macri).
Should the policy direction change to show any inclination of a people-driven agenda, however, access to credit quickly disappears and a variety of tactics are used to destabilize “uncooperative” administrations—whether through the “unconventional wars” that we have seen recently in Venezuela and Brazil, or in Salvador Allende’s Chile, or through military intervention.
The IMF continued to ‘guide’ the country’s policies after the dictatorship under Carlos Menem (1989-1999). It was Menem’s neoliberal policies that led the country into the straits of the Great Depression of 1998 to 2002 when the country set a record for the largest debt default in history up to that point.
In 2001, unemployment neared 20 percent and, by 2002, 53 percent of the country was living below the poverty line. It wasn’t until the Kirchner administrations from 2003 to 2015 that Argentina began to pull back from the grip of the IMF (Nestor Kirchner, 2003-2007, and Cristina Fernández de Kirchner, 2007-2015). In these 13 years, as Mark Weisbrot of CEPR explained in a recent interview, the poverty rate was reduced by 70 percent, extreme poverty by 80 percent, and unemployment fell from 17 percent to 6.5 percent.
In contrast, in the three years since the beginning of Macri’s term, unemployment has increased to 8.5 percent. In Weisbrot’s view, the Kirchners “did very well after the terrible experience with the IMF, which was one of their worst depressions from 1998 to the beginning of 2002. That’s why they were popular, and that’s why Cristina was re-elected. If she could have run again, she would still be there.”
The sharp turn of Macri’s administration is all the more painful with the recent memory of the country’s struggles with the IMF and a glimmer of what life could be like if the country were to free itself of the shackles of neoliberalism.