Paul Martin praises nightmare

Years after the Argentine free trade miracle was revealed to be a horrific nightmare, Canadian PM Martin is still pressing for more hemispheric free trade

by Michael Nenonen <mnenonen@republic-news.org>

Addressing the Summit of the Americas on November 4, 2005, Prime Minister Paul Martin said, "A Free Trade Agreement of the Americas is not about making the hemisphere safe for capitalists. It is about providing opportunities for our workers, and better goods and services for our consumers, from the bottom rung of the income ladder to the top. . . . Freer and fairer trade will lift more human beings out of poverty than all the assistance programs in the world combined." 

Surely he knows better than this. After all, he made this statement in Argentina, a country that "free trade" has nearly destroyed.

To fully grasp the ethical bankruptcy of Martin’s declaration, it’s useful to spend an evening watching Fernando Solanas’ latest documentary, Memoria Del Saqueo (A Social Genocide, 2004). It's required viewing for anyone interested in understanding the human consequences of “free trade.”

Solanas' first film, La Hora De Los Hornos (The Hour of the Furnaces, 1967) set a new standard for political documentaries. This early film focused on economic and political injustices in Argentina, issues that Solanas would draw attention to again and again in subsequent years, often at his own peril. In 1991, for example, an assassination attempt planted six bullets in Solanas' legs after he filed charges against President Carlos Menem for privatizing Argentina’s publicly-owned oil company.

If Michael Moore was "brave" for producing Fairenheit 9-11, then Solanos was heroic for producing Memoria Del Saqueo.   

Memoria Del Saqueo meticulously examines Argentina’s experience with neo-liberalism, beginning with the dictatorship of the late seventies and early eighties. During these years the government, guided by neo-liberal economic theory, accumulated a public debt of $22 billion. This was an “odious debt,” in that its proceeds never benefited the public; indeed, since by definition a “public” can’t exist in a dictatorship, all the debt accumulated by a dictatorial government should be considered a private debt, for which the people should never be made responsible. Another 23 billion dollars was owed by subsidiaries of multinationals operating in Argentina to their parent companies. These multinationals included Citibank, First Boston, Esso, IBM, Ford, and many others.

Following the dictatorship, successive democratically-elected governments embraced the neo-liberal agenda, betraying the constituencies that elected them on populist platforms. Widespread government corruption led to the transformation of the $23 billion of private corporate debt into $23 billion of public foreign debt. As part of an austerity program designed to deal with the debt, government ministries were given the power to privatize state enterprises without having to complete inventories or balance sheets, and without having to determine whether these enterprises were making profits or running at losses.

Vital state industries responsible for oil, gas, water, communications, and roads were purchased by foreign corporations for fractions of their actual worth. While the corporations stripped the industries of all their assets, the state lost the revenue these industries had previously generated, revenues needed to maintain the nation’s infrastructure. The multinationals acquired protected markets and billions of dollars in subsidies. They engaged in rate-overcharging and failed to honour their contracts with the state. Thanks again to governmental corruption, they were exonerated for non-performance of work, they received extensions of concessions, and they were allowed to convert into pesos debts accumulated in dollars.

The political parties, having divested themselves of any ideological substance, became organizations designed for doling out public appointments. The political class became in essence a single corporation of professionals “whose only loyalty [was] to their own privilege.” It’s estimated that politicians received between $5 and $10 billion in illegal kickbacks for passing the legislation that allowed this privatization to occur. Unfortunately, due to corruption in the judicial system, for decades no important bureaucrat who committed an offense against the state has ever been sentenced.

To fight hyperinflation, the government abandoned the gold standard and pegged the peso to the American dollar. Henceforth, a peso was considered identical in value to the greenback. Simultaneously, financial institutions began lending at usurious rates. While credit unions and banks were lending at 7% interest in Europe and the United States, in Argentina they were lending at 50%. This brought inflation down to zero, but it ruined domestic industries. Prior to the convertibility plan, Argentina produced 95% of what it consumed, and exported numerous manufactured items. Convertibility resulted in nation-wide de-industrialization as Argentina’s manufacturing industries collapsed and the nation became dependent upon foreign producers.

Argentina soon became thoroughly integrated into the US economy, to the point where the country’s budget had to be approved by Washington before it was approved by Argentina’s congress. International financial institutions and the US government applauded the country’s policies, referring to them as the “Argentinean miracle.” Argentina’s media concurred, promoting the policies with sycophantic abandon. Given that President Carlos Menem’s banker, Raul Monette, owned 60% of Argentina’s media, this isn’t surprising.

While a small segment of the population grew fat on neo-liberalism’s illicit proceeds, for most Argentineans the miracle has been ruinous. In 2001, in order to stop escalating capital flight, legislation was passed preventing people from withdrawing their savings, robbing working-class Argentineans of their life’s labour. By 2004 the debt had increased to $170 billion. Unemployment had risen from 11% to 20%. Wages had plummeted, and workers had lost all their social benefits, their unemployment insurance, and their accident and sickness coverage. Of a population of just under 37 million, Argentina had 18 million poverty-stricken people and 9 million paupers. Violence and organized crime were omnipresent, while economic growth was nonexistent. Argentina was disintegrating beneath the rule of what Solanos calls a “mafiocracy.”

With the rise to power of Nestor Kirschner’s left-wing government in 2005, Argentina’s situation has begun to improve, but only because Kirschner has taken a decisive stand against neo-liberalism. Whether Argentina will continue to defy the neo-liberal agenda is anyone’s guess, but one thing is clear. If Paul Martin had his way, Argentina would remain forever bound by the mafiocracy’s shackles. If that’s what Martin wants for the people of Latin America, one has to wonder: is this what he wants for us, too?

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