The Austral Plan - austerity, unemployment and a wages freeze FINANCE MINISTER Jean Sourrouille's so-called Austral Plan was implemented on June 15 this year. The plan was named after the new Argentinian currency created for the occasion, which replaces the peso and is worth one thousand times more than the old currency (one austral equ-ls 0.8 dollars.)
This plan is based on three main axes, a radical reduction in the budget deficit, a wage and prices freeze and a reform of the currency. The regime has put forward this economic strategy in the context of a massive economic crisis characterised by galloping inflation (30% per month in the last period), a dramatic recession and a growing external debt. At 43.6 billion dollars in December 1983, the debt payment represented 160% of the excess trade balance per year. In July 1985 the debt stood at 53 billion dollars and that is not counting the 4.2 billion borrowed by the government in August.
The article published below is reprinted from the July-August Issue, No 8 of the Southern Cone edition of Inprecor, a journal of the
Q. What work have the human rights organisations done during the trial?
A. While the trial has been going on, the human rights organisations, the families of the victims have brought complaints against the armed forces to civilian tribunals. The mechanism is then the same as for the trial of the three juntas: the judges respond that they must take the trial to the military courts, the military decline to accept responsiblity, and so on.
The accumulation of these suspended trials could constitute a time bomb if at least some finally come before civilian courts. Here there is 2 central political problem that could jam the machinery put in place by Alfonsin. If a single middle-ranking officer of the army were convicted, the whole edifice of the 'duty of obedience' would collapse.
The best example of this and the most explosive case is that of Captain Astiz, accused of having murdered the young Swede Dagmar Hagelin and two French nuns.
There is strong pressure on this subject from the Swedish government, and pressure is growing for Astiz to be tried, after the broadcasting of a witness on the television. International pressure can play a decisive role in this test case.
Fourth International. JUAN ROBLES
"The costs of the economic crisis will never come from the workers pay packets'. This was Alfonsin's favourite phrase during the first election campaign which he repeated in the first speeches shortly after his inauguration as president on December 10, 1983. But, on July 29, this Radical Party government agreed a memorandum with the International Monetary Fund (IMF) in which it promised that 'wages would be held down as long as necessary Government promises had already been definitively forgotten by June 14, when a series of economic measures were adopted, which, amongst other things, introduced an indefinite wage freeze. Subsequently congratulations from the imperialist bankers were not slow in coming, following the adoption of the Austral Plan.
According to official propaganda the Austral Plan represents a radical struggle against inflation, aimed to achieve the second stage of the economic regeneration of the country. In reality, this plan is aimed at a very clear target; the workers. As to its eventual beneficiaries, these will be the holders of the scandalous Argentinian foreign debt.
The above statement is not an empty assertion but can be proved in an examination of the facts. For example, we read in an independent Argentinian review that with the recent drastic measures wages were frozen from May 30 and prices from June 13. In the first two weeks of June, prices went up by between 30 and 40%. This will not be restored to wage earners, because the readjustment to be introduced at the end of June will only incorporate 90% of the loss in buying power accumulated in May. Thus the two freezes were not equal; wages were frozen without taking into account the massive rise in prices in the first twelve days of June and this difference was carried over to the extent that only 90% of previous buying power was restored. In this way the most significant outcome of the measures currently underway amounted to a decrease in wages of 30 to 40% at least. If you take into account that the gross national product of Argentina is in the order of 75 billion dollars and that wages
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International Viewpoint 9 December 1985
represent less than 30%, that is 22 dose of orthodox monetarism billion dollars, the decrease in wage the part of the local oligarchies is levels of 30% (on the most optim- bound to be financial speculation and istic estimates) implies a transfer of the payment of the tribute of interrevenue to the capitalist class in the order of 6.7 billion dollars in because the crisis is intermittent but one year.' (1) continuous and demands new and
Furthermore, this 6.7 billion dol- deeper despoilment in order to mainlars, which has been stolen from the tain the continuing cycle of imperworkers, has already been accounted ialist exploitation. for. About two billion dollars will be In Uruguay, under the dictatorship, added to the trade balance surplus more than six million dollars has been which is expected to be in the order of wrung from the workers to pay for three billion dollars and to pay the future 'take-offs' and hopeless attempts dollars worth of annual at renewals of growth. In Argeninterest on the foreign debt. The under the criminal military remaining 4.7 billion dollars *will juntas, workers were robbed to the go towards increasing the profits of extent that every three years they lost the equivalent of one years' revthose firms which are prospering despite the recession, that is those enue in comparison with the income who are exporting; and to beef up that they had before 1976. In these state funds, which for the most part two countries the military left behind will be transfered to private enter- a scene of total destruction on the prise through the nationalisation of economic, and indeed, on every other the private debt as in the case of the Bank of Italy. It will also serve tow- The Austral Plan will not, the interests, not just of the more than any other plan of a similar banking system but also of the spec- ilk, put an end to inflation. For the ulative capital which flows into dependent countries in increasing the high interest rates on live, the problem is a structural one money loans. These are in the order which is permanently fed by the of 8% per month in dollars and loans 'national' bourgeoisies and aggravated which have been contracted to support by the contribution of the imperialist the fictional stability of the austral countries who are trying to offload and which will become a further their own inflation onto the dependexternal debt. (2) ent countries. There is talk about
All these policies of 'adjustment' reducing the budget deficit in order which been implemented to avoid inflation. At the moment, those countries are being however, the debt payments - which strangled by the foreign debt have the will rise with the Austral Plan -same content. Leaving aside the constitute the main item of public technical jargon of monetarism, they expenditure at 37% of the total. With are similar in the extent that they annual interest rates at 60% in dollars lead to an increase of poverty and to attract speculative capital, can one dependence in each country, to a really still talk about controlling inflation? All this is one big swindle reduction of income for waged workers and to the growth of pillage which will continue to deepen the of the Latin American peoples who are crisis in the interests of monopoly becoming poorer and poorer. The new finance capital. variation introduced by Minister of Finance ministers from the 11 Finance Jean Sourrouille, is the shock industrialised countries who dominate tactic. This 'should give a warning light the capitalist world met together in to our country and to the rest of Latin Tokyo on June 21. All their monetary America since the Austral Plan repre- analysis led to the conclusion that sents a testing ground, insofar as it an increase in unemployment introduces very going read- metropolitan imperialist countries was state policy, which the direct result of a 'diversion' could become a model for other of funds towards short-term investcountries in Latin America where ments. The 'treasurers of the large measures were halted half way firms and the managers of the major private and public financial institu-
It is important to understand that tions are shifting from one market to the Argentinian crash programme, another' and floating capital, which and the Uruguayan is made up of 'hot money' is avoidplan are not temporary measures ing productive investment and going to cure the economic ills of under- financial environments developed economies. The aim of this produce high interest rates. (4) Given readjustment is not to plan invest- the reality of the world economic ment for growth of production mach- situation, any talk of favouring or inery, nor to ensure improvements promoting capitalist investment in in housing, health and conditions of industry and agriculture in terms of the mass of the people. The result 'adjustments' of the application of such a strong inflation' is simply to promote fairy 26 stories.
Within the vicious circle of world capitalism and under the yoke of finance capital there is no chance of 'development' nor of coming out of this crisis.
The spokespeople of the Industrial Union of Argentina (UIA) announced that the effects of the plan would be 'an industrial recession and a fall in workers' wages. The prices freeze was not the severest blow to those firms working in the internal market. There was also the rapid lowering of sales to the order of 20 to 30% from mid-June to midJuly. This could get worse in August when the supplementary buying power represented by half the bonuses. which, in July masked the real lowering of salaries, will no longer exist. Thus unused industrial capacity stands at an average of 30%. ' (5) An expert in work economy, Alvaro Orsatti, predicted that the next inquiry into employment will show an increase of 100,000 unemployed on the previous one' - (6)
A programme of massive layoffs was the form chosen by Argentinian capitalists, especially those which are subsidiaries of the big monopolies, to deal with the new situation. In the most important industrial area within Buenos Aries, the Ford motor company gave the signal for layoffs and was met with strong resistance from the workers.
The medium term result of all this will be a greater concentration of capital and those who adapt the best and the quickest to the situation will have the best prospects of survival and of a share of the spoils. It is within this framework that the merger between the Banco Rio and the Banco Gandero Argentino must be seen.
The planned reduction of the budget deficit will possibly herald massive redundancies for state employees. For the moment, as there is no issuing of money from the state, 'the public sector is being financed with loans from abroad'. (7) By the end of July this debt will have already reached 460 million dollars.
In conclusion, recession, massive unemployment, wage cuts, and an increase in the foreign debt will be the only result of a plan which has absolutely nothing to do with economic recovery for Argentina. This demonstrates once again that without a radical break with capitalism, there is no possibility of overcoming exploitation and dependence.
1, 'El Periodista", Buenos Aires, No 41, Year One.
2. Idem.
3. 'El Periodista, No 47.
4. Le Monde, June 26, 1985.
5. 'El Periodista', , No 47.
6. 'Clarin', March 8, 1985.
7. 'El Periodista', No 47. International Viewpoint 9 December 1985