Issue 259 of SOCIALIST REVIEW Published January 2002 Copyright © Socialist Review





Sparking off a chain reaction

Javier Carles reports from the streets of Argentina

Protesters built barricades in anger at the government's policies...
Protesters built barricades in anger at the government's policies...

Tuesday, 18 December
IMF and US rejects financial help to Argentinia's government. Lootings of shops and supermarkets begin in provinces such as Rosario, and quickly spread. The reaction of the De La Rua government is to deny that there is any crisis and that the situation is under control but the looting continues.

Wednesday, 19 December
Some supermarkets begin to organise food distribution in the poorest areas to avoid looting. Bags of food are thrown from the backs of trucks into the hungry crowd. In some cases the resulting chaos aggravates the situation. By the afternoon looting has spread throughout the country and has reached the outlying areas of Buenos Aires. The De La Rua government declares a 'state of emergency', giving free reign to the police to use maximum force to suppress the protests.

The first deaths are reported from Cordoba and Rosario as the police wade in. In the early evening De La Rua appears on television demanding order be restored. The reaction of the people in the capital is astonishing. No sooner has the broadcast finished than people in the many barrios across Buenos Aires begin to take to the streets, banging pots and pans in protest. Within minutes, hundreds of thousands are on the streets building burning barricades.

At 11pm the television reports that a handful of people are protesting at the Plaza de Mayo outside the presidential palace, the Casa Rosada. They call on people to join them. Within one hour thousands fill the square demanding the resignation of Domingo Cavallo, the economics minister. With the whole capital in turmoil, Cavallo's resignation is announced but the protesters are now demanding the whole government goes. The police use rubber bullets and tear gas to disperse the demonstrators but while they succeed in clearing the Plazo de Mayo, the demonstrators head for the Congreso, the huge square outside the country's parliament building. The demonstration completely fills the square and all the surrounding streets. People are chanting now for De La Rua's resignation. At 3am the police charge into the square, beginning what the Argentinian media call the worst repression since the military dictatorship.

Thursday, 20 December
People again begin to gather at the Plaza de Mayo, while others, together with the political parties of the left, meet at the Congreso. The police attempt to repeat the tactics of the night before by launching a completely unprovoked attack on the protesters. What follows is called by the press the 'battle for the Plaza de Mayo'.

This time, instead of retreating, the people stand their ground. The police use huge volleys of tear gas and rubber bullets together with horses and armoured water cannons to push people back from the square. It often appears they have succeeded only for tens of thousands to flood back. In the surrounding streets the battles grow bloodier and the first deaths of protesters are reported. All of this is being shown live on television.

At 3pm the Mothers of the Plaza de Mayo, renowned for their defiance under the military dictatorshop, arrive for their weekly march at the square. They are soon joined by other protesters. After a few minutes, they too come under attack from clapping pots and pans in protest at the robbery the police. Despite the repression, the battles go on all day. By early evening five demonstrators are reported dead but still running battles with the police are taking place. There is talk of an indefinite general strike being called for the following day. But before this can happen the government collapses. De La Rua appears on television offering the opposition Partido Justicalista (PJ) a government of national unity. With an eye to the protests on the streets, they turn this down and within an hour De La Rua too has resigned. Protesters are greeted by the spectacle of De La Rua being lifted by helicopter from the roof of the Casa Rosada. In the two days of these mass protests, the official figures list 22 dead although the real figure is undoubtedly higher.

22 December
PJ proposes Rodriguez Saá for presidency

28 December
Thousands of people march through the capital back on the streets and the Plaza de Mayo, clapping pots and pans in protest at the robbery--'They rob our wages and they rob our savings!' The masses chanted 'Thieves! Thieves!'

Night 28 to 29 December
Spontaneously people made their way to the Plaza de Mayo and the Congreso. They stormed both Casa Rosada and Congreso, looted Congreso and started fires until they were driven out by police.

29 December
All ministers put their resignation on the table but these are rejected by President Saá the following day. Some local neighbourhoods begin to organise themselves holding local meetings in the barrios. Such self organisation is currently spreading from barrio to barrio.


  • The contract to process television licence fees has been awarded to Capita, the support services group. However Capita lost its contract with Lambeth council because of its failure to run the housing benefit scheme. Residents in both Lambeth and Westminster have lost their homes because of Capita's inefficiency, and Westminster still has a huge backlog of unprocessed claims.
  • Consumer and health activists in the US have launched a campaign to stop Coca-Cola from using Harry Potter for marketing purposes.
    Harry Potter
    Coke has reportedly paid Time Warner $150 million for marketing rights to the Harry Potter movies. Campaigners argue that excessive intake of sugar is causing a 'epidemic of tooth decay, obesity and diabetes in the US.
  • Boeing, Raytheon, Lockheed Martin and Northrop Grunman are set to be the biggest recipients of military spending since 11 September. Once emergency anti-terror funding and other appropriations to finance the war in Afghanistan are taken into account, the Pentagon's budget in 2001 was $375 billion, a $66 billion increase on the previous year.

    The masses rise, a government collapses

    ...and faced severe beatings by the police
    ...and faced severe beatings by the police

    Protests, strikes and demonstrations by Argentina's workers against cuts and austerity forced the appointment of the fifth president in two weeks, Eduardo Duhalde, at the start of January.

    Duhalde replaced Aldolfo Rodriguez Saá who took over at the end of December. Saá was unable to stop the country descending into further crisis. First he announced the government would cease payments on its £106 billion of public debt. This was the largest debt default by any country in history. He maintained a near total freeze on bank withdrawals to prevent a run on the banks by depositors. He also announced the creation 0f a 'third currency'--the argentino--that would float alongside the pesos and US dollars already in circulation. Yet these measures only made matters worse and caused the resignation of the Saá government. The interim economic plan, including the third currency, was dead before it was born. It is against this background that Duhalde took over.

    Behind the deepening political crisis lie long term economic problems. The economy is in recession because the government slashed public spending in order to keep up repayments on its growing debt problem. Now there are record levels of unemployment of over 18 percent, more than 45 percent of the population live below the official poverty line and the health system is in a state of collapse.

    The recent protests have shown that millions of people are desperate for change. There have been calls for a nationalist or Peronist solution for the economy. This is a term used to define the political current that dominated the workers' movement after the army officer Juan Peron took power in the 1940s.

    He argued that there was a national solution to the problems of Argentina, which was in the interests of workers and 'patriotic' employers. This involved greater state intervention and setting up large state run enterprises. Yet it was precisely these policies in the late 1970s and early 1980s that led to the four digit hyperinflation in the late 1980s forcing the government to peg their currency to the dollar--this was the forerunner to today's problems.

    There is little agreement within the IMF or the wider financial markets about what to do. The IMF organised two bailout packages last year but in November, following pressure from the more ideologically right wing Treasury in the Bush administration, it took a more hard line approach. This was intended to be a signal not just to Argentina but to other countries as well that the IMF would not just come and bail them out when they hit difficulties. The result, however, has been to make matters worse. The IMF is now worried that Argentina's default on their debt could set a dangerous precedent.

    Neither neo-liberalism nor state intervention offers an alternative for Argentina's workers. The new government will carry on with further austerity measures to try and solve the crisis.

    Yet the protests that have erupted over the last few weeks show another outcome is possible. Workers and the poor have shown that they are capable of overturning a hated and corrupt government. The hope is that this will give them further confidence to raise demands against Argentina's bosses, posing an alternative to the capitalist system itself.
    Peter Morgan


    The market abandons New Labour

    Britain's rail network is once again on the verge of collapse
    Britain's rail network is once again on the verge of collapse

    Alan Milburn's plan to hand NHS patients to Bupa adds a new intensity to Labour's privatisation plans. However, his party's other market-driven flagships are sinking, stuck in the doldrums or simply failing to leave the dock. The government has reversed its strategy on university fees, student loans, Railtrack and Education Action Zones. The 'Public-Private Partnerships' for London Underground and British Nuclear Fuels are near to collapse. The same scheme took flight in air traffic control but is currently in slow spiral descent. Adding this to Blunkett's downgrade of cannabis from class B to class C, and his announcement that the hated asylum vouchers are to be scrapped has led many commentators to talk about 'U-turns', and a newer, bolder and more progressive New Labour.

    The policy changes are real, although Blunkett's 'anti-terror' laws, Milburn's Bupa plan and Patricia Hewitt's planned Post Office privatisation show that the government is still ready to slash and burn state services and civil liberties. Most commentators believed the 11 September attacks lay behind the change of heart. Will Hutton claimed, 'The "war" against terrorism... is generating a culture in which public action has again become respectable.' Somehow the need to mobilise armed public sector workers--the army--means Labour will now be nice to unarmed public sector workers in health or education. Other Fleet Street wise heads see a new 'boldness' in the government brought about by military success. Peter Kilfoyle, who represents the 'Old Labour' right wing worried about Blairite excess, believes that the military action in Afghanistan 'helped create a more radical second term administration and undermined the influence of control freaks who had attempted to enforce a presidential system on British politics'.

    The traditional social democratic left are unhappy with the relentless pro-market policies of the current government, but are scared to align themselves with any genuine opposition. Desperately they hope the Afghan adventure might add a few Keynesian soft touches to the regime. It's a miserable prospect, implying equitable funding for British higher education must be paid for with Afghan blood, and a half-decent British transport policy will grow from cluster bombing the east. Strangely, no establishment commentator acknowledged the traditional and obvious link between war and reform. As cabinet ministers built support for bombing, they wanted to close 'second fronts' at home by ditching or modifying some of their more unpopular policies. The build-up to war began during Labour conference, where ministers were exposed to activists deeply unhappy about policies on rail, student loans and other issues. At fringe meeting after fringe meeting members of the party's rank and file showed they were willing to give the leadership support for military action, but that this support was qualified. Giving these people some good news on home policy in return held together Labour's fragile pro-war alliance and helped insulate the party from some of the very widespread opposition to the war.

    However, the main reasons for Labour's U-turns have nothing to do with 11 September. Nor, sadly, are they due to overwhelming campaigns against Labour's pro-market policies, although the general distaste these have created has helped. The main reason for the changes is that Labour's policies have simply and absolutely failed in their own terms. Labour shifted on student fees and loans because they made the party's target to increase student participation impossible because the financial burden on young people was deterring huge numbers of potential students.

    On rail, Labour did not abandon the market-driven solution--rather, the market abandoned Labour. Prescott and then Byers forced the party to stick with the Tory privatisation, only to find that the share price collapse meant Railtrack could no longer raise capital in the city. The widespread popular disgust with Railtrack post-Hatfield certainly hurried the firm's demise, but in the end Railtrack wasn't killed by a popular campaign--it committed suicide.

    Similarly, Education Action Zones self destructed. Businesses were supposed to step forward with donations in return for control of the curriculum in selected local education authorities--the money didn't arrive, and test results in the zones actually declined. A few corporations got to buy a few favours from the government, but the schemes had largely collapsed by the time they were killed off.

    More market-driven schemes seem set to fail even before they are launched. The London Underground PPP is shaky. The British Nuclear Fuels sell-off is only still afloat because Patricia Hewitt promised the firm could leave behind all its liabilities with the state--a new nationalised nuclear clean-up authority to carry the dirty can while BNFL floats freely away. Similarly, the new private air traffic control system has only been kept flying by giving the private operators breaks on charges and pension payments.

    Public hostility to these schemes hurried their deaths, and the failures give hope to those fighting the privatisers. Labour's confusion also opens possibilities. While some high profile projects have been killed off, in the main the government has no idea how to replace them. Byers wants a halfway house between privatisation and nationalisation to take over rail. However, his 'company limited by guarantee' does not exist and will have to compete against private asset-stripping bids for the tracks. While Ford boss Ian McAllister has 18 months to dream up a new scheme, one train executive noted that the track is 'going down the toilet'. Similarly, the government has fallen into confusion and infighting over the replacement for student loans, alternately proposing and rejecting speculative 'graduate taxes'. The government's shaky grasp on events makes the task of opposing it that little bit easier.
    Solomon Hughes

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