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On the eve of a free trade summit in Quebec last Spring,
President George W. Bush sanctimoniously declared that open trade
would spread democratic values. A free trade regime engulfing the
entire Western Hemisphere would help millions of poor and reduce
government corruption (CNN, April 17, 2001).
But as the fifth president in two weeks takes the reins in an
economically ravaged Argentina, Bush’s prophecy is deeply
mistaken. Until recently, economists lauded Argentina as the poster
child for open market reforms. But the country’s recent
economic downfall and outburst of popular demonstrations show that
despite rhetoric seeking to link economic liberalization with
democracy, the two are often mutually exclusive.
Democracy is a form of government in which the sovereign power
resides in the people as a whole, who have equal rights without
differences of rank or privilege. These rights include access to
food, clean water, health care, education and a direct voice in
political and economic decisions.
Economic policies, like those imposed on Argentina by the
International Monetary Fund, threaten these very rights. By
slashing social spending and stifling public participation, such
“reforms” are an obstacle rather than a vehicle for
democracy.
 Illustration by notlisted Advocates of free trade
identify corruption as the virus that caused Argentina’s
disease (New York Times, Jan. 8, 2001). While mismanagement and
corrupt politicians undoubtedly played a role in the economic
catastrophe, the IMF’s austerity measures must take most of
the blame.
The IMF is theoretically designed to promote exchange stability,
economic growth and employment by providing temporary financial
assistance, primarily in the form of loans. However,
Argentina’s case demonstrates how such economic restructuring
barricades the road to democracy.
The IMF prescribed a deadly remedy to a sick economy ““
providing loan after loan to help bolster a currency overvalued to
match the dollar. Pinning the peso to the dollar fastens the
economy to the flux of U.S. values and interest rates. The result?
More loans to keep up with the dollar and more cuts in basic
services to keep up with the loans ““ a downward cycle ending
in total collapse.
In order to reduce Argentina’s gargantuan debt, the
IMF’s Structural Adjustment Programs reduced wages and hacked
social spending, leading directly to the suspension of rights.
Following drastic cuts in education, the World Bank encouraged
shifting meager funds from secondary and higher education to
primary school. Decreased state support for higher education
prompted the rise of elite private schools unaffordable to most of
the population. (Current Issues in Comparative Education, April 30,
1999) Undermining higher education leads to fewer professionals and
technical experts, a huge obstacle to any real economic or social
development.
Thus, the rich borrow recklessly while the poor foot the bill.
In Argentina, the masses of poor debtors took to the streets. On
Dec. 19, organized protests demanded the resignation of President
Fernando De la Rua, while food riots and looting rocked Buenos
Aires and other cities.
The New York Times (Jan. 20, 2001) reported that entire families
were taking food, cooking oil and other essentials. “We are
stealing because we have to,” stated former custodian Jorge
Castro.
Yet Interior Minister Ramon Mestre argued that “the
looting is not about hunger,” as the government declared a
state of siege, handing the president the power to suspend
constitutional rights like freedom of travel, press, property,
association and labor organizing (New York Times, Jan. 20,
2001).
Clearly, combining the IMF’s free market reforms with a
corrupt government equals one thing: an economic disaster and
inevitable repression in the form of an all-out attack on civil
liberties and human rights.
While the current crisis and outpouring of popular frustration
are often portrayed as violent and haphazard, both the IMF and the
international community should have seen it coming. Similar
austerity measures and support for overvalued currencies in
countries like Brazil led to economic collapse in 1999, with over
100,000 Brazilians marching to demand an end to IMF reforms (The
Guardian, Nov. 23, 2001).
Across the developing world, massive demonstrations confront
specific IMF and World Bank policies that seek to privatize public
resources or restrict social services. “People want a change
in economic policy, and they want it now,” said Sergio Curia,
an Argentine lawyer (Associated Press, Dec. 20, 2001).
Yet the only demonstrators we often hear about involve a small
group of anarchists in Seattle or Genoa screaming about some
abstract notion called “globalization.” However, what
the L.A. Times describes as pot-banging rioters in the streets of
Argentina (Dec. 12, 2001) more closely resembles democracy than
anything free market economic reforms so adamantly claim to
provide.