In the hands of the oligopoly of foreign capital

Centro de Estudios Legales y Sociales (CELS) – Programa de Derechos Económicos, Sociales y Culturales

During the 1990s, economic policies were characterised by a strengthening of the neo-liberal model, promoted by multilateral credit institutions. Thus the public and financial services, following a process of privatisations, were monopolised by an oligarchy of private companies with foreign capital. Devaluation was mainly due to the “Convertibility Law”, which was supported until the bitter end by the IMF and the “financial community”. The massive capital flight during 2001 sealed Argentina's fate.

Institutionalcrisis and foreign-controlled economy

During2002, the situation of human rights in Argentina returns repeatedly to theevents of December 2001. The unprecedented economic, political and social crisisthat the country was undergoing at that time gave rise to a social outbreakleading to the end of the consensus over the neo-liberal policies implementedduring the 1990s. Over a period of fifteen days, five presidents succeeded eachother, leaving the country in a state of institutional instability, the worstsince the return to democracy in 1983.

Duringthe 1990s, economic policies in Argentina were characterised by a strengtheningof the neo-liberal model, promoted by multilateral credit institutions. Throughout this period, the Argentine State guaranteed maintenance overtime of an extremely high rate of foreign exchange, largely financed by the highlevel of indebtedness and with no relation whatsoever to the country’sproductive structure.[1]

Thusthe public and financial services obtained high profitability and, following aprocess of privatisations, were monopolised by an oligarchy of private companieswith foreign capital. This process included the privatisation of most of theessential public services, such as electric energy, gas, telephones and oil. Themassive transfer of public companies to private hands coincided with anincreasingly-foreign-controlled economy, which, combined with the completeliberalisation of the capital account, allowed for currency to be sent abroadwithout restriction. In turn, this has caused an amount of Argentine capitalequal to the country’s foreign debt to be located abroad.[2]Thesituation became increasingly unsustainable and by the end of the year 2001,resulted in a devaluation of almost 75% of the peso vis-à-vis the US dollar.[3]

Argentina'sdevaluation was caused in large part by the “Convertibility Law”, whichpegged the peso to the US dollar. Initially launched to reduce high inflation,the inflexible exchange rate was supported until the bitter end by the IMF andthe “financial community” as a key to stability. Yet the peso's value rosealong with the dollar's, making imports artificially cheap and increasingdeficits in the balance of payments that investors eventually concluded wereunsustainable. The massive capital flight during 2001 sealed Argentina's fate.

Thedemands for change so dramatically expressed by society have remained unalteredin the framework of the transitional government headed by Eduardo Duhalde, whohas limited himself to managing the crisis, without implementing alternativesolutions to the erosion of the social rights of increasingly wider sectors ofthe population.

Thesocial variables became totally out of control as a logical consequence of aprocess characterised by concentration of wealth and an unprecedented increasein poverty. As a result, the strengthening of the neo-liberal, socio-economicmodel launched by the military dictatorship installed in 1976, with the supportand promotion of multilateral credit institutions, has caused Argentina toexperience currently the worst crisis in its history as a nation.

Inturn, the maintenance of social protests within peaceful terms, perhaps the onlyachievement that the transitional government could show, was totally demolishedon 26 June 2002. During a demonstration of the most impoverished sectors in thesouth of Greater Buenos Aires, security forces launched a brutal repression,qualified by the president himself as a virtual “hunt”. Its most tragicresult was the murder of two demonstrators by members of the repressive groups.

Forits part, the transitional agenda has limited itself to discussions about theperpetuation of the present political-economic model of organisation, withoutsocial issues occupying any leading place. Civil society is distant from thefora where the dominant groups struggle against each other to avoid taking onresponsibility for the costs of the crisis, leading to a clear degradation inthe quality of the democratic system.

Alongthese same lines, another manifestation of the institutional crisis is reflectedin the impeachment proceedings launched against the Supreme Court of Justice ofthe Nation. At the beginning, promotion of the proceedings was in the hands ofthe Executive Power; however, following a series of sentences contrary to itsinterests (qualified as extortionate by the President of the Nation),impeachment proceedings became diluted, and finally, in October 2002, they wererejected. This dispute among the State powers reached levels beyond the boundsthat a constitutional process of such institutional importance can take and onlydiminished the State power’s already weakened credibility, perhaps to a pointof no return.

Alarmingindicators: poverty and extreme poverty

Thedevelopment of social variables during 2002 showed that the economic policiesimplemented over the past years have only raised poverty and extreme povertyindexes to levels that are incompatible with a democratic system. In May 2002,approximately 18.5 million people (53% of the total population) were under thepoverty line,[4] while 8.7 millions (24.8% of the total) wereconsidered to be in extreme poverty.[5]The latter variable underwent a 135% increase over the period between October2000 and May 2002.[6]

Thesituation is different in the various regions of the country, as in many urbanareas in the country the number of poor people has reached even more scandalousfigures, with a peak of 78.3% in the province of Formosa. The situation is evenmore dramatic taking into account that out of the total number of poor people,8.32 million are children and young people; this means that 70% of the childrenand young people under 18 years of age live in poor homes. In turn, 4.14 millionlive in extreme poverty.

Again,the most serious situation is to be found up country, especially in the Northernprovinces, where the proportion of poor children reaches 80% and 87.7% inFormosa. There are another eleven urban centres where poverty in children under14 years of age is greater than 70%.[7]Furthermore, in Formosa, Corrientes, Posadas and Concordia, in May 2002 over 50%of the population of children under 14 years of age was extremely poor.[8]

Itis incomprehensible to observe that in a country where food production couldcover the needs of 330 million people, about one quarter of the population(almost 9 million people) go hungry.[9]With regard to the mortality rate of children under one year of age, accordingto figures of the Argentine Paediatrics Society, 11,000 deaths take place peryear: one baby every 48 minutes.[10]Out of this total, 60% of the deaths are due to preventable causes.

Inthis context of poverty and extreme poverty, the significance of the increase inthe population with employment problems must also be addressed. Presently,according to recent data from the National Institute of Statistics and Census(INDEC) corresponding to the survey made in May 2002, the unemployment ratereached a historic record. In fact, presently in Argentina there are 3.04million unemployed recorded, 21.5% of the EAP. Under-employment reached 18.6%,that is to say, 2.63 million people. The highest levels of unemployment are tobe found in Greater Catamarca (25.5%), Greater Cordoba (25.3%), Greater Rosario(24.3%) and Greater Buenos Aires (22%). In one year, there were 755,000 moreunemployed people, according to the Permanent Household Survey undertaken in May2002 in 28 urban centres of the country.

Consideringthe exceptional levels of poverty and extreme poverty, being employed does notimply access to a decent life. INDEC data indicate that the income of 25.7% ofthose employed is not enough to cover the basic food and service basket requiredby an adult to be above the poverty line. Furthermore, while the great majorityof Argentines becomes poorer, a small fraction becomes increasingly wealthy,continuing the process of concentration of wealth and radically transforming thesocial structure existing in the country.

Consequently,on comparing the income of the poorest 10% and the richest, the latter is today33.6 times greater than the former. That is, while the poorest 10% in Argentinacollects 1.1% of income, the richest 10% keeps 37.6%.[11]This gap is probably the widest in the history of Argentina and largely explainsthe social disintegration our country is presently facing.

Thecrisis in the health system

Duringthe last months of 2001, a health care crisis was triggered that had noprecedent in our country, becoming more serious during 2002. This tragicallycomplemented the situation of malnutrition mainly affecting children and oldpeople.

Thelack of social security and access to medication and the shortage of basicmaterial in the public hospitals were perhaps the most important and notoriouselements showing up in the socio-economic crisis Argentina is facing. To themshould be added the reappearance of poverty-related diseases that had beeneradicated years ago.

Thefirst symptom of this deep crisis became visible when a great number of citizenswere unable to obtain medication essential to treat their illnesses. On the onehand, the impossibility of the most important social services to repay debts totheir lenders caused the suspension of care to their members by the pharmacies.On the other, the devaluation of the peso vis-à-vis the dollar and uncertaintyabout its value generated speculation on the part of the laboratories, drugcompanies and pharmacies, causing an exorbitant increase in the price of drugs.

Inaddition, the already deteriorated health care system in the public hospitals– which over the past years has had to face an increase in demand due to thehigher levels of poverty and extreme poverty – collapsed, due to the shortagein their reserves of antibiotics, corticoids and essential drugs for thetreatment of patients with transplants, cancer and those suffering fromHIV/AIDS, etc. The reserves of all kinds of basic material, from rubber glovesand sterilisation materials to oxygen refills, were also exhausted. Thesituation is so serious that many hospitals have implemented a system ofexchange of materials to ensure their operation. Additionally, legal action hasbeen taken by many people, aimed at returning to a normal provision of drugs andcontinuity of treatment.

Thegovernment’s relief assistance as response

Inresponse to this most serious social situation, the government has implemented aseries of social programmes repeating the assistance-type approach guidingpublic policies over the past decade. How to fight poverty is not discussed,only how to contain the poor; therefore, redistribution of income and strictrespect for social rights are issues missing from official discourse.

Underthese terms, and in order to guarantee the “right to family inclusion”(sic), during April 2002 a Programme for Heads of Households was launched, withcoverage consisting of payment of ARS 150 (approximately USD 40) under certainconditions.

Itshould be noted that this programme established a deadline for the registrationof candidates, which prevented many individuals from having access to its benefits. Furthermore, the term of this programme onlyextends to 31 December 2002, generating great uncertainty over its continuity.

Thesocial plan designed by the National Government does not cover even half thebasic food needs of a typical family. According to official surveys, the valueof the basic food basket corresponding to two adults and two children, inSeptember 2002, amounted to ARS 324.06 (USD 86).

Itmay therefore be concluded that the programme implemented on a national level isnot aimed at fighting poverty by means of a strategy that seriously aims at anequitable distribution of income, but one that can only be considered aspalliative assistance, aimed at lessening the magnitude of the social conflict.

Finally,the intervention of the National Government to palliate the deficit in thehealth care system has been, to all intents and purposes, insufficient. Thehealth care crisis is another sample of the weakness and incapacity of Argentineinstitutions to face violation of basic human rights, such as life and health.

Drugshave been stripped of their social nature and have become simple commodities,subject to the laws of supply and demand, while those politically responsiblefor guaranteeing health to the whole population have only succeeded in takingisolated measures that usually become – at the most and so far – a decalogueof good intentions.

Summingup, the Argentine government omits the definition of lasting and responsibleeconomic policies giving priority to substantial equality and the fullaccomplishment of social rights, the only way of reconstructing a truedemocracy. Under these terms, 2002 has witnessed an advance of the socialdisintegration process, placing at serious risk the viability of Argentina as anation, both at present and in the future.

[1] In 1991, the Argentine public sector’s foreign debt was USD 58,588 million. Ten years later, this debt amounted to over USD 144 billion.
[2] In this respect, a commission of the Nation’s Chamber of Deputies, pointed out that in December 2001, money abroad (financial and non-financial assets) belonging to Argentine residents, amounted to some USD 127,074 million, placed in deposits, shares, goods, currency, etc. This is not a new phenomenon, as according to the deputies the variation in assets abroad between 1992 and 2001, was USD 73,332 million. Julio Gambina, Seis meses en picada: datos de la crisis económica, FJA Centre for Studies, Training and Information, June, 2002.
[3] Following the December 2001 crisis, the Argentine peso devalued vis-à-vis the US dollar, going from a parity of ARS 1= USD 1, to ARS 3.60 = USD 1 in October 2002.
[4] According to the methodology used by the National Institute for Statistics and Census (INDEC), in the Permanent Survey on Households (EPH), poverty is measured with the “poverty line” method, consisting of establishing, on the basis of household income, if there is the capacity to satisfy – by means of the purchase of goods and services – a set of food and non-food requirements, considered as essential.
[5] The concept of the “extreme poverty line” used by INDEC endeavours to establish whether the households have sufficient income to cover a food basket, able to satisfy a minimum threshold of protein and energy requirements. In this way, households going beyond this threshold or line are considered to be in extreme poverty.
[6] Source: SIEMPRO, based on EPH and CNPV 2001 data.
[7] We are dealing with San Luis – El Chorrillo, San Juan, Jujuy – Palpalá, La Rioja, Salta, Santiago del Estero, Tucumán, Córdoba, Paraná, Rosario and Santa Fe.
[8] EPH, INDEC, May, 2002.
[9] According to data from the Secretariat of Agriculture and the Agronomy Faculty of the UBA, published by the Cash Supplement of the Pagina 12 newspaper on 31 March 2002, in the year 2002, 99 million tons of food will be produced, enough to feed 330 million people.
[10] “Muere un bebé cada 48 minutos”, La Nación, 27 July 2001.
[11] As a point of comparison, in 1974 the gap between the first and the tenth income decil was 12.3 times, while in 1989 with hyperinflation in full swing, this reached 23.1 times. Equis, based on the INDEC EPH index, May, 2002.