International

By Jokin Mendizabal

On March 1 of each year, the legislative year begins in Argentina with the president’s speech before the two legislative chambers. This year we had to endure an undignified spectacle for any society that with more or less democratic enthusiasm expects from its president some measure that will help alleviate the terrible effects that the economic crisis is unleashing on the weakest and most vulnerable sectors of society: workers, retirees, marginalised sectors, in short, of the immense social majority of any country.

President Javier Milei has been in government for two years and three months and has caused more damage in these two years than the government of Mauricio Macri in the four years that he also did his own thing. In this time, 30,000 small, medium and large companies have closed, many of them international companies that have left the country.

At least 16 multinationals have confirmed their exit from Argentina through the sale of their shares or divestment processes, companies like Telefónica, HSBC, Procter & Gamble, Burger King, Carrefour, Paramount. The phenomenon is not new, but it did accelerate with the management of Javier Milei, in a context of falling consumption, high operating costs and uncertainty. 

Today you can read in the press that another important multinational is also leaving. They have about 3,500 workers in Argentina. This is the waste management company Urbaser, a company of Spanish origin, and which is said in the press to be one of the largest waste management operators in the world, and has just begun the process of selling its subsidiary in Argentina, valued at €350mn.

Milei, the great paradox

At the beginning of his term and especially in his electoral campaign, Milei proposed a number of solutions that should have already yielded results. He presented himself as an expert in economic growth with and without money.

But it has already traveled a path in which growth has been limited to a few economic sectors chosen very purposely: the financial sector, the energy sector, the extractive or mining sector and the agricultural sector. These four sectors are today the only ones that are growing, and in some cases a lot.

The worst of the case is that all the profits of these sectors end up fleeing to bank accounts in other countries, leaving the economy permanently dry of foreign currency.

While economists and consultants discuss whether the country has entered a phase of stagflation, the hard data show a more complex situation, certain sectors of activity grow and exports reach record levels, but wages ran out of purchasing power. Mass consumption sank for 80% of the population and the sectors that historically supported social integration implode. This contradiction is not statistical but structural.

What emerges from all of this is not a stagnant economy or a dragging recovery. The economy is advancing, but it is doing so supported by an export model that restructures relative prices, wages and investment around the sector that produces dollars.

What is happening is not new in Argentina or in Latin America. When capital accumulation comes from the comparative advantages of the primary sector, growth coexists with social disintegration. That is to say, the sectors that are growing the most do not generate employment growth and those that do generate employment are being destroyed because they are not being privileged by Milei. His policy favours only the most concentrated sectors of the economy such as the financial sector. the agro-export, energy and mining sectors.

When we look at the macroeconomic numbers separately, we see growth by sector. Agriculture, livestock and forestry reached 32.2% annually, thanks to a record harvest. Financial intermediation grew by 14.1%, leveraged on very high real rates and a recomposition of the banking business.

Mining and quarrying grew by almost 9%, increasing the importance of lithium. Electricity, gas and water increased by more than 10%, reflecting the new energy export axis. But only between agriculture and finance they accounted for 2.4 points of growth. Almost 70% of the total.

On the other side appear the other sectors of the economy: Manufacturing fell 3.9% year-on-year and trade fell 1.3%. The sectors that generate massive and quality employment are not participating in the expansion.

In short, the problem is not that the economy is not growing, but which sectors are growing and which are not. And the point is that those that do not grow and still regress are the ones that need more labour. By not growing they destroy hundreds of thousands of jobs.

In official employment, 300,000 jobs have already been destroyed and this means that in the ‘informal sector’ another 300,000 or more will have been destroyed, although it is very difficult to quantify the effect on the latter sector.

The economic sector that dominates

In capitalist society there are not only contradictions between workers and entrepreneurs, there are also contradictions between workers and between employers. A car brand competes against the rest of the world’s brands and although they belong to the same social class, their interest in competing and surviving in that competition confronts them to the death.

In the same way, there are sectors of the capitalist class that fight for one type of economic policy and others for another. In Argentina, the sector that has taken over the political power and that governs today has been mainly the financial sector and in particular that represented by the financial colossus of Wall Street’s JP Morgan.

There are seven former senior executives of this bank in key government positions, starting with the Minister of Economy, Luis Caputo, who is not only Milei’s Minister of Economy, but was also Minister of Economy of Mauricio Macri, right-wing president between 2015 and 2019. Caputo was also a senior executive at JP Morgan.

Luis Caputo was Argentina’s ‘debt’ minister during Macri’s government, taking on a loan of $44bn that fled in its entirety: the investigation into what happened to that loan money has not yet been concluded. Milei allowed himself the luxury of calling Caputo a “chorro” (thief) during his election campaign, but later, when he took him into his government, he said that he was the best minister of economy in Argentine history.

Recently, on February 5, Milei gave Macri a gift of incalculable value: the State stopped suing for the IMF debt contracted under his government – those responsible, in addition to Macri, were Caputo and Sturzanegger [Minister of Deregulation]. There was enough evidence that the $44bn dollars were taken out of the country by large companies whose names had already been discovered by the investigations. But today these two characters are Milei’s ministers and a government decree has saved them from an end that was very clear.

There are many questions about this, but the main one is – why did Milei incorporate Caputo into his government after having criticised him to the point of insult. The answer is very brief and also has the name of the same bank that flies over all the big businesses in Argentina: JP Morgan Chase & Co.

Argentina taken over by US financial interests

Argentina is the third biggest Latin American economy after Brazil and Mexico, with a GDP of approximately $600bn. Its total public debt, although it is difficult to collect all the data, is around $450bn dollars. How is it that the IMF and other international credit organisations continue to lend money to Argentina; with what guarantees?

It is an open secret that the guarantees are Argentina’s reserves of oil, lithium and other metals and minerals, rare earths, territories, military bases in the Argentine South and of course a government that genuflects to the interests of US capital, investing and lending to the country.

By the way, everyone knows, the lenders and borrowers, that such a debt is unpayable with what results from national production. So what does the IMF and the others intend to collect? The answer is so clear that it jumps out at you on its own. A government attack on 80% of the population.

Milei won the mid-term elections despite himself

It is still being discussed at different levels of Argentine society how it was possible that after Milei lost by 14 points in the September elections in the province of Buenos Aires – which has 40% of the Argentine population – and a month later won the general elections including the province of Buenos Aires itself.

In those mid-term national elections, Milei’s lists included some accused of drug trafficking. The government was being accused of many corruption cases, including by Milei himself, such as the case of the Libra cryptocurrency, and bribery (illegal commissions denounced by one of Milei’s lawyers) charged by his sister Karina. There was scandal after scandal, and yet Milei won the elections.

The truth of the milanesa is a popular Argentine expression that means “to reveal the absolute reality, the best kept secret or the true essence of the matter”. It amounts to “the plain truth“. The truth of the Milanese It will never be known. But the truth is that in those last few days of the campaign there was a very strange atmosphere in the political and social environment.

No one from the Mileista side thought they were getting more than 35% of the vote and many would have signalled beforehand such a result as good. But something happened.

On the one hand, Trump appeared declaring: “The election that is coming is very important and the whole world is looking at it.” Then he said: “If he (Milei) loses, we are not going to be generous with Argentina.” He had also called Axel Kiccilof, a communist just after he won the elections in his province of Buenos Aires.

Many attribute decisive weight to these statements in Milei’s victory, and it is very possible that a certain percentage of people voted for Milei despite the fact that things were already looking very bad in the economic field for the workers. In my opinion, there was a conjunction of factors that had more to do with the enormous fear of a government debacle without an opposition – in this case the Peronists – prepared to govern.

The internal confrontations that had been taking place in Peronism had alienated its traditional base which had been demanding an end to such a lot of empty discussion, devoid of political content. What has really been discussed in Peronism, by the way, as in almost all Argentine politics, are the positions that have to be elected now and in 2027 when there will be presidential elections.

It seems unbelievable, but at times it is like the ,spirit of 2001, flies over. What happened in 2001 was a great explosion without political direction. The thousands of people who participated in that movement were without leadership despite the fact that, as it was clearly seen, they were willing to fight hard.

Workers and militant youth do not want a repeat of 2001. Therefore Trump’s words contributed to the vote seeking to avoid social volatility that was with an uncertain end, and was full of dangers.

The constant and brutal repression that is exercised every week in Argentina is not a small matter. To this day, there is still a lack of political leadership in the trade union and political spheres capable of leading the struggles that are needed to change the course of the country.

Workers pushed to a pre-Peronist situation, without rights

In a kind of triumphal march, the government continues, without deviating a millimeter, in its attack on 80% of the population. It has just approved a law that is a “labour counter-reform”. It facilitates easy dismissal, flexible working hours up to 12 hours, at the employer’s discretion, discontinuous vacations or in sections of up to seven days in a row, at any time of the year that suits the employer and only every three years in summer, the reduction of salary during sick leave due to accident or illness. etc.

It is impossible to analyse here a law that covers as many as 218 articles and none of them that favours workers.

The economy for 80% of the population continues to decline and it can be said that for this sector we are indeed in stagflation. Argentina is the only country in the world where we all see how prices are constantly rising, but nevertheless, in the government’s discourse, inflation is going down.

The most popular item in the shopping basket in Argentina, which used to be beef, has dropped to the consumption levels of 1920, when the Argentine working population lived without rights and everything had to be achieved through strikes repressed with live fire.

This new anti-labour law has pushed the labour movement into a pre-Peronist situation, that is, without rights. This, together with a crisis that does not stop deepening, leads us to a new situation that no one foresees will have a peaceful solution.

Next year there will be general elections, but it is a long time away and there are still many layoffs and many conflicts developing today, such as those taking place in some companies which are becoming the centres of struggle for the rest of the labuor movement. We will deal with this situation in a future article.

This article is translated and edited from the Spanish socialist website, porelsocialismo, and the original can be found here.

Feature picture of Milei and Donald Trump, from Wikimedia Commons, here.