Commentary
Argentina: New President Embraces IMF Prescriptions
In January, when Eduardo Duhalde became Argentina's fifth president in little over a month, he moved quickly to quell the mass demonstrations and protests that had rocked the country since mid-December. A Peronist senator and former governor of Buenos Aires, Duhalde promised an end to the policies that had destroyed the Argentine economy, including pegging the value of the peso to the dollar, privatization of national industries and the failure to pay salaries for tens of thousands of civil servants.
Protests subsided for a short period of time, in large part because Duhalde moved immediately to abandon pegging the peso to the dollar. The immediate result of the devaluation of the peso, however, was an increase in the dollar debts of the majority of Argentinians - and the Duhalde administration failed to respond with the expected aid package. In addition, Duhalde's government, while reducing some of the limitations on cash withdrawals from bank accounts, actually extended the very unpopular partial freeze on withdrawals until the end of 2003, almost a year more than it was originally intended to be in place.
The IMF required the Duhalde government to commit to a balanced budget despite the severe recession: the official unemployment rate is 18 per cent, the economy is expected to shrink by five per cent this year and close to 40 per cent of the population is living in poverty. Duhalde complied; he continued a freeze on salaries and moved ahead with plans to slash spending on social services in order to meet the IMF requirements in return for a much needed $15 billion (U.S.) bailout.
Argentinians already had strong scepticism about Duhalde's ability to turn the economic crisis around. This was largely due to Duhalde's past in Argentine politics; he was a close associate of former president Carlos Menem, whose embrace of the neo-liberal policies of the IMF and the World Bank are what plunged the country into its current economic chaos.
Duhalde also, as governor of Buenos Aries, had a reputation for close connections with the state's police force, long considered a source of corruption in the country. In fact, in 1997, a Buenos Aires police officer murdered the journalist Jose Luis Cabezas, who was at the time working on uncovering links between the police to drug trafficking and money laundering. Duhalde, governor at the time, was criticized for his failure to fully investigate the killing and the charges of corruption amongst the police.
His announcements in the first few weeks of January seemed to confirm people's suspicions. A nation-wide protest was organized against Duhalde's government on January 25th - the anniversary of Cabezas' murder. Under Duhalde's orders, police moved to repress the protests as much as possible. They prevented thousands of people from reaching the Plaza de Mayo in downtown Buenos Aries, where the largest demonstration was to take place, by shutting down train service and blocking passage over bridges with infantry divisions. When tens of thousands still gathered, mainly from the areas immediately surrounding the Plaza, the police used tear gas and rubber bullets to end what was in every way a peaceful protest.
Duhalde's close relationship with the police forces, and the relationship he is building with the armed forces, may enable him to maintain his presidency where others failed. But it does not bode well for Argentinians.