ARGENTINA: Adjustment Causes Second Provincial Crisis

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, May 8 1997 (IPS) - The people of Tartagal, a town on the Argentine frontier with Bolivia revolted this week, just as an International Monetary Fund (IMF) mission arrived in the capital to discuss provincial adjustment with the government.

Some 1,000 local people blocked a road in Tartagal, in the province of Salta, 1,600 km northeast of Buenos Aires, where 65 percent of the economically active population is unemployed. The Interior Ministry sent in 300 gendarmes to restore order.

A similar protest took place in the southern province of Neuquen in mid-April, in the town of Cutral Co, where demonstrators blocked the highway to call attention to the lack of employment.

In this case, the reason behind the action had nominally been a teacher’s strike, but the root was the same – the lack of employment. In Cutral Co, 35 percent of the population of working age are jobless, and they can no longer swallow the government’s empty promises.

The Cutral Co rebellion reached its highest point with the arrival of some 700 gendarmes who cleared the road with the use of batons, tear gas, dogs and water cannon. They also opened fire on the crowd, killing one 24 year-old woman.

Both Tartagala and Cutral Co became ghost towns following the privatisation of the YPF oil company – the most profitable Argentine company. And even though the oil fields could have continued to be exploited, the company decided to withdraw, leaving a tide of unemployed in their wake.

As a consequence of the IMF demands, Argentina’s Economy Minister Roque Fernandez, asked all the provinces to make adjustments. In return for the redundancies and closures, the government offered loans for public works.

The IMF delegation stressed its concern over the “spiralling of provincial expenditure.” In April, the provinces spent 21 percent more than in the same month of 1996. If the total extent of public spending is measured, 41 percent goes on the provinces.

Therefore, the creditors believe the structural reforms must now be focussed on improving fiscal discipline in the provinces, an adjustment Fernandez agreed was “indispensible.”

The Tartagal crisis, in a town of 50,000 inhabitants, accompanied resistence from all of Salta province to the adjustment recommended by the multilateral creditors and echoed by the Carlos Menem administrators.

This week, the World Bank made the granting of a 60 million dollar loan to Salta conditional on the elimination of 4,000 more public posts. The institution also recommended deepening adjustment through new privatisations.

Meanwhile, an IMF delegation arrived in Buenos Aires this week to discuss the possible granting of an extended facilty loan to partially balance the fiscal deficit with the economic authorities.

This year, the central State will have a deficit of three billion dollars, which will reach 4.5 million if provincial adjustment is sped up. This move implies passing provincial pension funds over to the Nation and the dismissal of thousands of public employees with compensation payments.

But this week, Tartagal appears to have become witness to a form of adjustment which aims to tighten a belt already past the last hole.

The town had not only suffered a high level of unemployment following the closure of the YPF plant, but the local government also owes the civil servants three months in back pay – or around 600,000 dollars.

Local mayor, ruling Justicialist Party member, Ruben Benitez, said he has 3.5 million dollars of funds from the InterAmerican Development Bank to pay for public works, but cannot pay salaries.

“I have told the international organisms this money cannot satisfy the hunger of the people today,” he said Thursday, going on to criticise the national government decision to send in the gendarmes.

“Instead of sending gendarmes it would have been better to send solutions,” he said. “Unfortunately I don’t have the keys for the strong box,” he told the workers of Tartagal.