President
When Néstor Carlos Kirchner was elected president of Argentina in April of 2003, Argentina was in the depths of its worst-ever economic crisis. Kirchner, a member of the Peronist party, had previously been the Governor of Santa Cruz and campaigned against the neoliberal economic policies of former president Carlos Menem that were seen as having contributed to the economic crash. As president, Kirchner stood up to Washington-based international financial institutions, paying off the International Monetary Fund (IMF) in full and renegotiating most of the debt on which Argentina had defaulted following the economic collapse.
Kirchner decided to step down after one term, despite the possibility of running again, while his wife, Cristina Fernández de Kirchner ran instead. She was elected president in 2007 — the first woman to be directly elected president of Argentina.
Political and Economic Background
Nestor Kirchner became president following a severe economic and political crisis. Fernando de la Rua resigned in December of 2001 amidst mass rioting and looting which left some 27 people dead. In the following ten days Argentina had a succession of four different presidents as mass protests and riots forced out one president after another. The phrase “¡que se vayan todos!” (all of them must go!) became the people’s rallying cry, but the protests were more against the current economic model than any individual political party or politician. The roots of the crisis had been sown during the presidency of Carlos Menem who had left office when the crisis began. Under Menem, Argentina became the poster boy for the IMF’s policies, pursuing a stridently neoliberal agenda including privatizations of state-owned businesses and financial and trade liberalization.
The recession, which culminated in a record default and the political crisis mentioned above, began in 1998. During the four-year period from 1998-2002 Argentina lost close to 20 percent of its GDP, while the poverty rate soared from 18 percent to over 43 percent. A key problem was the pegging of the exchange rate to the dollar, which meant Argentina did not have control of monetary policy and was unable to adjust to shocks. A series of outside shocks drove interest rates up and pushed Argentina further and further into debt. Although much of the media blamed the crisis on profligate spending, the reality is that the pegged exchange rate was unsustainable. The IMF meanwhile supported the pegged exchange rate with billions of dollars in loans, which often were used just to pay increasing interest payments. This all came to a head when the country defaulted on over $80 billion dollars (plus interest), the largest sovereign debt default in history. Soon after, the country abandoned the currency peg, allowing a needed devaluation of the peso. After a brief period of adjustment (around three months), the economy began to grow again.[i]
When Nestor Kirchner became president in 2003, the economic situation was still dire and the political situation tenuous. After the election, however, both economic and political stability returned. Over Kirchner’s term the economy not only recovered, but had one of the fastest periods of growth in the hemisphere, averaging 8 percent a year. Unemployment fell from over 20 percent in 2002 to just 9 percent in 2007. Poverty, which had risen to an amazing 43 percent during the crisis, fell to 16.2 percent in 2007.[ii]
During her time in office Cristina Fernández de Kirchner has largely continued the economic policies of her husband
Fighting Against the Dictatorship
Like most other Latin American nations, Argentina’s recent history includes brutal dictatorships. A military junta took power in a coup in 1976 and ruled until relinquishing power in 1983. The period of military dictatorship was known as the “Dirty War”, where more than 30,000 people are believed to have been “disappeared”. Many of these desaparecidos were thrown from helicopters into the sea, often after being interrogated and tortured. These horrible human rights abuses gave rise to the Mothers of the Plaza de Mayo, a group of women human rights activists that lost their children during the “dirty war”.
Both Kirchners have taken unprecedented steps to reverse the years of impunity that followed the junta. The Supreme Court overturned a controversial amnesty law in 2003. In 2010 there remain numerous high profile cases ongoing against former military and police officers, who stand accused of torture, killings and kidnappings.
Cristina Fernández de Kirchner has also attempted to overturn dictatorship era media laws. While previously the media was concentrated in large private companies, the new law requires a certain portion for public use and for non-governmental community groups.
The Workers Take Back the Workplace
Starting in 2000 during the peak of the economic crisis, as factories were shuttered, employees began taking back the factories under worker control. Although they have faced seemingly insurmountable obstacles, there are currently some 200 worker-run factories in Argentina. The most well known of these is Zanon Ceramics which now has over 450 employees and is entirely managed by the workers.
Recent Developments
Although Argentina reached an agreement in 2005 with 75 percent of its bondholders, the remaining investors have held out hoping to secure a full compensation their legal action. In the U.S. these holdouts even have their own lobbying organization, the American Task Force Argentina (ATFA). Many in this group are actually “vulture” funds, which bought up Argentine debt at depressed values only to try to sue to win back full price. Of the 15 bondholders who hold more than $25 million, nine have addresses that are actually in the Cayman Islands.
On a recent trip to Argentina, U.S. Assistant Secretary of State Arturo Valenzuela caused a scandal by meeting with opposition leaders and calling on Argentina to return to an investment climate similar to what existed in 1996. As noted above, the policies in place in 1996 were largely responsible for the worst economic crash in the nation’s history. More recently, U.S. Secretary of State Hillary Clinton’s tour of the region originally planned on bypassing Argentina. Clinton changed her itinerary to include a stop in Argentina and a meeting with Cristina Fernandez after the snub was widely covered in the Argentine media.
Argentina and Britain have had a long history of controversy surrounding the Falkland Islands (known as the Malvinas in Argentina), which are currently a British territory. In 1982 Argentina invaded the islands aiming to retake a territory they view as rightfully theirs, prompting a response from Britain that led to a brief conflict. More recently a British firm has begun drilling for oil off the Falklands, prompting renewed calls from Argentina about their right to reclaim the islands. The United Nations has called for bilateral negotiations, but thus far these have not materialized.
Resources:
Online:
Reports and op-eds on Argentina from the Center for Economic and Policy Research.
Films:
“The Take”, a film by Naomi Klein and Avi Lewis.
[i] Mark Weisbrot and Dean Baker, “What Happened to Argentina?”. Center for Economic and Policy Research, January 31, 2002. Accessed April 22, 2010.
[ii] Mark Weisbrot and Luis Sandoval, “Argentina’s Economic Recovery: Policy Choices and Implications“. Center for Economic and Policy Research, October 2007, Accessed April 22, 2010.
