By Gino Brunswijck, Maria Jose Romero and Bodo Ellmers, The European Network on Debt and Development (Eurodad)
Argentinians are experiencing deja-vu this month as the government announces massive layoffs and a hiring freeze as part of an adjustment package attached to a loan from the International Monetary Fund (IMF). Thousands of public servants are being forced yet again to swallow the bitter pill of austerity, which the IMF programme – published last Friday – aims to patch up through increased targeted social assistance.
For many Argentinians the financial crisis gripping the country, and the return to the Fund, brings back bad memories of 2001. Then, IMF-induced policies triggered the worst economic meltdown in Argentinian history. A cocktail of austerity measures contributed to the contraction of economic activity with a loss of 20 % of GDP between 1998 and 2002. They also compromised the government’s ability to provide essential services; unemployment soared above 20 % while real wages dropped by 18%; and poverty affected more than half of all Argentinians. Children were most affected, with seven out of 10 falling below the poverty line.
To appease popular discontent, the government and IMF officials have emphasised that this time the Fund has changed its ways. However, a comparison between previous and current agreements points to business as usual, focusing on traditional austerity with a few cosmetic tweaks.
By John Weeks
There seems some disagreement as to whether Nero played the violin or the harp as Rome burned in AD 64. Whatever happened 1,954 years ago, there was considerable complacent fiddling in Brussels after the 4 March Italian election. To replace the centrist government of neoliberal Matteo Renzi Italian voters cast 60% of their ballots for two anti-EU parties, the aggressively xenophobic coalition of Lega neo-fascists and the anti-immigrant 5 Star Movement (Movimento 5 Stelle, M5S).
Confounding the hope and expectation of the EU elite, this pair formed their misbegotten government in Rome in April. The anti-EU rhetoric of these two parties, plus their promise to breech EU budget rules – end fiscal austerity – ended the fiddling and set off alarm bells.
The EU elite quickly moved to prevent this anti-establishment government from rocking the Brussels neoliberal consensus. The nominally neutral Italian president refused to accept the first proposed coalition government of the Lega-M5S. The refusal did refer to thee proposed racist immigration policies, nor to its aggressively anti-Roma policies. Unacceptable to the president that the person nominated for finance minister, who had long standing opposition to the euro (see commentary by Yanis Varoufakis).
Should anyone miss the implied priories of the Italian establishment, the president sought to form an interim government that would continue Brussels-designed austerity policies. To lead that government the president chose a former functionary of the International Monetary Fund. This affront to the electoral process proved short-lived. Soon the far right Lega and eclectic right M5S were back in government with a different, but no less anti-austerity, finance minister.
By Timothy A. Wise
The victory of Andrés Manuel López Obrador and his Morena party in Sunday’s Mexican elections has stunned international observers. The center-left insurgency received an estimated double the votes of its nearest rival in a multi-party presidential race, winning more than 50 percent of the vote, several important governorships including the first woman to run Mexico City, and an absolute majority in the House of Representatives and the Senate. However the final tally ends up, López Obrador has a resounding mandate for change.
Many observers have interpreted the results as a vote against rampant corruption; given the pervasive graft and influence-peddling in Mexico, López Obrador’s clean, austere reputation was certainly a factor for voters. But economic factors also motivated many voters, especially farmers. The majority of Mexicans have been left behind in a failing strategy to hitch the country’s fortunes to open trade with the United States under the North American Free Trade Agreement (NAFTA).
As one recent report summarized, “Poverty is worse than a quarter century ago, real wages are lower than in 1980, inequality is worsening, and Mexico ranks 18th of 20 Latin American countries in terms of income growth per person in 21st century.” It is hard to imagine worse outcomes in a country with privileged and historic access to the largest capital and consumer markets in the world—the U.S.
Among those rejoicing now over López Obrador’s victory are Mexico’s farmers, who have been largely abandoned by the government while unregulated imports of below-cost maize, wheat, pork, and other agricultural goods flooded Mexican markets under NAFTA. (See my report.) After the agreement took effect in 1994, maize farmers endured a 400-percent increase in imports of U.S. maize priced 19-percent below its costs of production, resulting in a punishing 66-percent drop in producer prices. Producers of other farm goods faced similar pressures, forcing many to become migrant workers in the strawberry fields of multinational growers or migrate to the U.S. without documentation.