Argentina: The Masses Rise, a Government Collapses

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Protests, strikes and demonstrations by Argentina's workers against cuts and austerity forced the appointment of the fifth president in two weeks, Eduardo Duhalde, at the start of January.

Duhalde replaced Aldolfo Rodriguez Saá who took over at the end of December. Saá was unable to stop the country descending into further crisis. First he announced the government would cease payments on its £106 billion of public debt. This was the largest debt default by any country in history. He maintained a near total freeze on bank withdrawals to prevent a run on the banks by depositors. He also announced the creation of a 'third currency' - the argentino - that would float alongside the pesos and US dollars already in circulation. Yet these measures only made matters worse and caused the resignation of the Saá government. The interim economic plan, including the third currency, was dead before it was born. It is against this background that Duhalde took over.

Behind the deepening political crisis lie long term economic problems. The economy is in recession because the government slashed public spending in order to keep up repayments on its growing debt problem. Now there are record levels of unemployment of over 18 percent, more than 45 percent of the population live below the official poverty line and the health system is in a state of collapse.

The recent protests have shown that millions of people are desperate for change. There have been calls for a nationalist or Peronist solution for the economy. This is a term used to define the political current that dominated the workers' movement after the army officer Juan Peron took power in the 1940s.

He argued that there was a national solution to the problems of Argentina, which was in the interests of workers and 'patriotic' employers. This involved greater state intervention and setting up large state run enterprises. Yet it was precisely these policies in the late 1970s and early 1980s that led to the four digit hyperinflation in the late 1980s forcing the government to peg their currency to the dollar - this was the forerunner to today's problems.

There is little agreement within the IMF or the wider financial markets about what to do. The IMF organised two bailout packages last year but in November, following pressure from the more ideologically right wing Treasury in the Bush administration, it took a more hard line approach. This was intended to be a signal not just to Argentina but to other countries as well that the IMF would not just come and bail them out when they hit difficulties. The result, however, has been to make matters worse. The IMF is now worried that Argentina's default on their debt could set a dangerous precedent.

Neither neo-liberalism nor state intervention offers an alternative for Argentina's workers. The new government will carry on with further austerity measures to try and solve the crisis.

Yet the protests that have erupted over the last few weeks show another outcome is possible. Workers and the poor have shown that they are capable of overturning a hated and corrupt government. The hope is that this will give them further confidence to raise demands against Argentina's bosses, posing an alternative to the capitalist system itself.