Versión en español
As we enter the election campaign's final month, the economical bankruptcy is deteriorating in every aspect. The reserves' slump in the last weeks has broken every record. In August, for instance, capital flight reached 6 billion dollars, being the highest in Argentina's history. The trend is similar in September. This explains why, despite the selective default and control in dollar purchases, the government still doesn't possess the funds to fulfil its commitments until the end of its term. The Argentine Central Bank's net reserves presently amount to 13.5 billion dollars, in the face of debt maturities for this year that exceed 14.5 billion dollars. Nevertheless, these could increase if daily foreign currency purchases intensify. The short-term foresights state that the government will have to apply further restrictions, involving dollar sales and debt payments.
The default's impact affects the economy as a whole. The government has taken measures that restrict capitalist group's and provinces' capability of paying their debts. Although it sells the dollars that would cover these commitments, it doesn't authorize their remittance abroad in order to not affect the already weakened reserves. The foreign currency necessary to deal with imports is also jeopardized. As it happened during the final stage of the Kirchner administration, the economy's prices are beginning to be determined by the exchange rate that emerges from the so called "liqui" market (the price which is paid to buy dollars with public bonds or stock shares). This evidently aggravates the inflationary rise. In August the wholesale inflation rate was already of 11.4%, which foreshadows a huge effect on retail prices. Moreover, as the recession has affected fiscal revenue, the government has again fallen back on monetary issue to cover the fiscal deficit. The commitment to not widen the monetary base has been flouted. This figure has increased by 2.5%, thus fanning the flames of inflation.
The explosive cocktail that combines devaluation and monetary issue has caused several economists to warn that we are on the brink of a potential hyperinflationary outburst. We informed several weeks ago that this alternative was seen with good eyes by the economists who surround Alberto Fernández [frontrunner presidential candidate for the Frente de Todos seconded by Cristina Kirchner], who considered that a hyperinflation would help to devalue salaries and pensions even more, also settling the Central Bank's explosive liability: 1.8 billion Argentine pesos in Leliqs [Central Bank debt instruments which can only be acquired by financial entities] at an 80% annual interest rate. These economists pride themselves of defending an economic model based on a "very high dollar", which would push the current circumstances to a "rodrigazo" against the working class [Argentine government policies in 1975 named after Minister of Economy Celestino Rodrigo, which involved dramatic reductions in salaries' buying power through a 150% devaluation, 100% increase in utility and transportation prices, 180% rise in the price in fuel, rounded up by a mere 45% increase in wages].
International Montetary Fund (IMF)
In the face of the incapacity the government has in settling the debt maturities it must handle in its last months in power, President Mauricio Macri took the desperate measure of travelling to the United States to meet the IMF in the flesh. However, the answer he got wasn't unexpected: the 5.4-billion-dollar disbursement would not be transferred in the next few weeks. The IMF is keeping that ace up its sleeve to negotiate the terms of a foreseeably generalized debt renegotiation with Alberto Fernández, Argentina has become a financial colony and a battleground for an international skirmish between the world powers. Renegotiations and defaults unleash pillaging scuffles between international speculators in order to monopolize a new lucrative business move at Argentina's expense.
While a sector of economists, which surrounds Alberto Fernández, has pointed out that it was willing to make use of Chinese Yuan in order to finance the economy, another sector opposed this, defending further alignments with the United States. What is certain however, is that Alberto Fernández himself has been holding talks in person with the world's most important banks and investments funds in order to carry a renegotiation forward. Ambito Financiero newspaper has explained that these meetings, which included interviews with the Templeton and Black Rock funds, both of which did lots of business with the Mauricio Macri-Luis Caputo tandem [the latter being the former Finance Minister], began in the months of March and April, when he hadn't even been annointed as Cristina Fernández de Kirchner's candidate. Could this allow us to believe that he earned the top spot on Kircherism-Peronism's presidential ticket due to his well-oiled involvement with international vultures? For now, two plus two, still equals four. In those meetings, and others held in the last weeks before the primary elections in August, the same banks who played a leading role in the Macri administration's serial borrowing were those who approached Fernández with "plans" to refinance a debt they know all-well is unpayable. Those plans of course, are tailor-made: a renegotiation without losses for them, with longer payment deadlines, and therefore larger interests. Congress participating in this decision is not contemplated in the creditors' proposal, because there would not be new indebtedness, just a change in the repayment timeline of funds already borrowed by Macri's government. In times of drops in the international interest rate, as a symptom of worldwide recession and a retraction of the profit rate, a renegotiation of this nature would be a huge money-maker for banks and investment funds who sacked the country during the Macri administration.
In a negotiation of this type the IMF's role will still be key in ensuring the protection of international usurers. To assure the possibility of a debt repayment a package of austerity measures is being cooked up. This will be followed by a probable further devaluation. Alberto Fernández's wants these policies to come into effect during the transition period, once the October elections have occurred, so that Macri's government does the dirty work on its way out. The primary elections' winner was clear in this regard when he prided himself as a defender of fiscal and commercial surplus. For the first, new restrictions on state spending would have to be enforced, beginning by the biggest expense: pensions. For the latter, Alberto Fernandez's plans involve Vaca Muerta oilfield, large scale mining and agribusiness. This is what the league of governors who answer to mining companies and oil/gas monopolies are calling for. For the time being, the governor of Tucumán Juan Manzur [rightwing member of the peronist PJ, whom Alberto Fernández has made a spokesperson of his] has just been touring the US making assurances to that effect. Policies of this nature would mean a further primarization of the national economy, i.e.: backwardness and dependency. In recent history, oil monopolies have been key elements in transforming nationalist movements into agents of imperialism. For example, the Gaddafi experience is quite illustrative in this sense.
The United States' alignment would also have precise political demands. Clarín newspaper has disclosed them meticulously: for the CIA to be authorized to operate in the Triple Border between Argentina, Paraguay and Brazil, for the DEA to intervene in Argentina and for a definitive condemnation of Venezuela. The latter is already underway. Lest we forget that Sergio Massa [once opposition to kirchnerismo leading his Frente Renovador] recognized Juan Guaidó as president of Venezuela and for that was awarded the spot of first candidate on Frente de Todos' Buenos Aires Province deputies’ ticket. The other two demands would also signify "a return to Nestor's Kirchnerism" [in reference to the deceased Néstor Kirchner, president between 2003 and 2007], which was always characterized by an alignment with Yankee imperialism in security matters.
The working class
These plans which are being cooked up in the campaign office's backroom can only move forward if there is a strengthening in the offensive against the working class. For this, Peronism/Kirchnerism has announced a "social pact" which would have the CGT [ General Confederation of Labor, the main trade union federation in Argentina] and the Argentine Industrial Union (UIA) as cornerstones. The first steps in that direction were already taken in Tucumán province just days past, sponsored by Manzur, just before his trip to the United States. The "social pact" would make its debut with a pay freeze lasting six months, which would have a counterpart in a price freeze. But as it tends to happen in these cases, the capitalists jump the gun and raise products' prices before the pact comes into effect, while workers' salaries remain the same. The bonus announced in the last few days is a resource in order to make this pay freeze viable. Despite the fact that it's a miserable one-time 5000-peso sum [83 dollars at today's exchange rate], the capitalists are already saying that many of them won't be able to pay it. Ready on its feet, the government has already authorized them to fraction it into five instalments, thus dragging it out until February with 1000 pesos a month. It goes without saying that this doesn't even come close to covering what people have lost to inflation, also considering that it excludes rural workers, house cleaners, provincial and county workers, and teachers and staff who are employed by national universities.
A problem that Alberto Fernández must face is that the union bureaucracy who must make the social pact viable has become greatly discredited among workers, due to its long-standing submission and the more recent surrender to the Macri administration. The announcement of a possible reunification of the CGT is aimed at salvaging this bureaucracy, its more collaborationist wing above all, by means of a pact with Moyano's sector [former Secretary General of the Confederation, today aligned with kirchnerismo] and even with the CTA [Argentine Workers' Confederation, center-left union central], which could in turn extinguish the latter's experience as an alternative union central, as they would be coming together with those who defend Moyano's rule. What this movement pre-empts is a crossover of the CTA's political representatives, such as Claudio Lozano and Degennaro, and other sectors of the centre-left, to the ranks of the Partido Justicialista (Peronism).
In light of this situation, the initiatives that have been taken by the PSC [Combative Union Plenary], such as meeting in a national summit, voting a program and a plan of action, gather strength. In this way not only are Macri's government and the capitalist offensive confronted, but also the two pacts to come: the so called "social pact" and the "pact with the vulture funds". The "sedition" qualifier used by the Minister for Justice Germán Garavano against the roadblocks and the rallies of workers and jobless people on the 24th of September isn't fortuitous in this context. This runs in the same vein as Hebe de Bonafini's [President of the Madres de Plaza de Mayo association, aligned with Alberto Fernández and Cristina Kirchner] calls for political repression to the left: national unity starts to show its repressive facet. The class struggle will be the main battlefield to determine the nature of the times to come, and will depend on the capacity of the vanguard of the working class and the revolutionary left to mobilize the masses against this attempt to dump the weight of the crisis upon their shoulders.
The FIT-U's [Left Front-Unity] campaign also has this strategic objective. A larger percentage of the ballot cast for its candidates and the attainment of a more numerous representation in Congress and state legislatures, will be of great use to collaborate with an independent and extra-parliamentary action by the working class. FIT-U's program has an important preparatory value, as it includes issues such as the crisis being paid for by the capitalists, the non-payment of the foreign debt, the nationalization of the banking system, the reopening of wage discussions, the prohibition of lay-offs and suspensions and the fulfilment of immediate demands which the piquetero [unemployed workers] movement has. With these propositions, we call on working class activism to come to FIT-U's rally on October 5th at the Obelisk [main landmark in Buenos Aires], with simultaneous rallies all over Argentina.