Walk into the BAUEN Hotel and you won’t be overwhelmed by the luxury of the lobby. You will more likely feel like you a stuck in a 1970s time-warp, and possibly wonder how such an out-dated hotel is still in business.
But I would recommend you pay a visit all the same, as this place in the very centre of Buenos Aires says more in its history about Argentina’s recent economic crisis – and recovery – than most books will tell you.
It is a living, working sign of the country’s incredible economic recovery, and also tells of what has changed from pre-crash Argentina, and President Menem’s often-disastrous economic liberalisation policies of the 1990s.
The BAUEN is a cooperative. But it is more than just that – it is a taken building that had been abandoned by the owner, was then reopened by former employees and is now run by the workers. And it is a symbol of the phenomenon that has swept through Latin America, and more specifically Argentina, in the last ten years.
What is a cooperative?
According to the International Cooperative Alliance, a cooperative is ‘an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations, through a jointly-owned and democratically-controlled enterprise’.
The biggest difference that cooperatives have to regular businesses is that people are prioritised over capital. They are owned and democratically-controlled by their members, so any decisions that are made balance the need for profitability with the needs of individual members, and often the wider community as a whole.
All workers are paid the same, regardless of their profession or role within the enterprise, and decisions are made jointly as to what to do with any profit – whether to channel it back into the business to enable growth, or to split it equally amongst all members.
Cooperatives vary in size around the world – some are multi-mullion dollar businesses, whilst others are small in scale and just work in one local area or community. However, between them they have more than 800m individual members.
In 1994 the UN estimated that some three billion people’s income was ensured and made stable by cooperative enterprise. That is a number equal to half of the world’s population.
In Argentina the cooperative movement involves nearly 18,000 businesses with 9.1m members. Neighbour Brazil has 5.6m members, and in Venezuela, due to new laws pushed through by Venezuelan president Hugo Chávez, cooperatives are being set up at a rate of some 5,000 a month.
Whilst the cooperative movement has experienced a recent boom in Latin America, often due to left-leaning governments’ policy changes, the concept of such an enterprise is not a new one.
Robert Owen, a British socialist reformer, is often regarded as the pioneer of the movement. In 1800 he bought, with others, mills in New Lanark, Scotland. He reconstructed the community into a model industrial town with decent housing and sanitation, non-profit shops, schools and good working conditions. As the profits increased, the socio-economic ‘experiment’ became famous.
Although this was perhaps an extreme, all-encompassing version of what are regarded as being cooperatives today, Owen’s socially-aware community conscious project became the model of modern cooperatives.
By the middle of the 19th century the idea had spread to all corners of the world, via the British Commonwealth.
The economic crisis of 2001-2 led to a boom in a very specific kind of cooperative in Argentina. During the crisis, the peso, which had previously been pegged to the dollar, floated and devalued to eventually stabilise at just third of its previous value.
Many businesses went under, unable to afford to keep running in the poor economic conditions. Unemployment rocketed, reaching over 20%, with some 40% unable to find adequate employment, and at one stage 45% of the population were deemed to be living under the international poverty line.
Argentina’s previously strong middle-class were the worst affected, with many people losing their homes, unable to keep up mortgage repayments, as their debts tripled overnight.
Desperate searches for work began, and people were forced to do whatever they could to make ends meet. Many took to the streets and became cartoneros, some of the thousands of newly-unemployed sifting through rubbish for anything recyclable that could be sold on.
Throughout the country former colleagues began to get together and reorganise themselves, and new form of cooperative movement emerged – that of taking over disused or unoccupied factories and workspaces where they had previously worked. The groups would form cooperatives and work to get the businesses that had gone under during the crisis back on their feet, generally without the owner or senior-level management.
This was very much a shop-floor movement, the philosophy being ‘you can run a business without the owner, but you can’t run a business without the workers’.
Such acts were seen as ‘recovery’ – re-appropriation for the good of the whole of places abandoned by the private sector.
The movement was quick to gather pace, and according to Marcelo, former president of the BAUEN cooperative, today in Argentina some 200 businesses have been salvaged, employing between them more than 20,000 people. “And when you take into account entire families dependent on the wages of one breadwinner working in a cooperative, the movement probably involves around 100,000 people in Argentina,” he adds.
In 2002 the laws were reformed to make it possible for cooperatives to rescue failed businesses. There are now two ways businesses can be legally ‘taken’: a lease must be negotiated with the owner, or the authorities have to make an expropriation order.
However, most owners do not want to negotiate a new lease, as many are holding out for compensation on some level, and the authorities are slow to make expropriation orders. As a result, many rescued businesses – around 40% – are working without any legal standing.
In 2004 salvaged businesses won a more encouraging victory when the Buenos Aires city government expropriated 12 companies outright, granting the cooperatives concerned three years’ debt relief and 20 years to buy the buildings and plants on credit.
However, this example stands alone, and workers argue that this case-by-case support isn’t enough, and want definitive legislation on expropriation covering all salvaged businesses.
Many want Argentina to follow the example of Venezuela, where Chávez has been pioneering in legislation to hurry along the creation of cooperatives.
The case of the BAUEN
The BAUEN Hotel is one of the recuperated businesses that make up the 40% with no legal standing, not that you would know it. The hotel is being run very much in a ‘business as usual’ way, but behind the scenes is a turbulent and unstable story.
What makes the BAUEN unusual in that it is in the service sector. The majority of salvaged businesses in Argentina are factories or other enterprises that produce goods, rather than provide services. However, the stories of all such enterprises have many parallels.
The hotel was constructed in 1978 by businessman Marcelo Iurcovich with a public loan, provided by the military dictatorship that was ruling the country at the time. It was built as a five-star hotel for the World Cup that took place in Argentina that year, and for the next 20 years it was emblematic of Argentina’s bourgeois class.
However, the public loan that subsidised the construction has never been repaid. The business was sold in 1997 to Solari SA, a Chilean business, that repaid only US$4m of the US$12m loan before coming into financial problems four years later.
On 28th December 2001, at the height of the turbulent economic crisis, the management began firing staff, and within days, 150 workers found themselves jobless.
After a year of unemployment and desperation, in early 2003 a group of around 30 of the hotel’s former employees, inspired by stories of other recovered businesses, got together to talk about the possibility of taking back the hotel. They formed a cooperative, supported by the National Movement of Revived Businesses (MNER), and on 21st March broke into the hotel via the side entrance and began the occupation of the building.
The hotel had been ransacked and left to ruin, and there was no electricity: in short the hotel was dilapidated. The group were often daunted at the task that lay ahead. But lack of employment and any other feasible option, along with the support from other cooperative movements, spurred them on.
They physically ‘took’ their former workplace and would spend months guarding the hotel. Someone had to be on hand around the clock to stop them being evicted.
Marcelo, who has worked at the hotel for some 22 years, acknowledges what they did was perhaps outside of the law, but says: “Overseas private property is taboo, here it is different when you talk of occupied buildings and businesses.
“We must also consider when something stops being private property. When you are talking about corruption on a big scale, or a willingness to drive a business into the ground, you have to consider if what is legally right is always morally correct.”
As Solari SA never finished paying Iurcovich, there is a legal question mark as to who the owner actually is. The cooperative also deems both previous owners to be corrupt, further legitimising the workers’ case and generating more public support for their cause.
The BAUEN currently employs over 150 members of staff, all of whom earn more than a primary school teacher. Like a regular company, the cooperative has a formal board of directors made up of a president, vice-president, secretary, and treasurer, but political decisions are made in a general assembly.
For the first year working, it was decided that any profits should be put back into the business rather than be taken home in the form of a pay rise. Now, when things are going well, staff share 40% of the profits with the rest being reinvested.
Many of the staff have retrained and take on different roles: former cleaners now handle sales, a previous receptionist is now the head of marketing and handles public relations. Most workers have thrived on this ability to learn roles that were previously out of their reach. Even those who remained in the same position exude a sense of pride – as one maid comments: “We work with our consciences – we don’t have anyone looking over our shoulder or telling us what to do. We are working so that the hotel is clean and beautiful.”
This sense of a collective conscience and pride, rather than working for financial gain, is common throughout the cooperative movement.
Another example of this can be seen in Zanon, a tile factory in the southern province of Neuquén. Like the BAUEN, Zanon also went under during the crisis, and was later taken over by former employees.
Zanon is run in a different way to the BAUEN, but the principles are the same – people are at the heart of making the business work. Prior to the occupation, profitability was a priority, with wages cut to the minimum possible level, health and safety measures disregarded and corners were cut on every possible level to maximise profits. Such conditions led to numerous accidents, averaging 25-30 per month and one fatality a year. A total of 14 workers died in the factory.
Since Zanon’s occupation by the workers not one accident has occurred, further proof of people being a priority at the heart of the movement.
Idealogical as all of this sounds, the movement regularly faces challenges.
In most cases, when cooperatives are formed or businesses are recuperated, management is not involved and a level of expertise is lost. Workers have to train themselves, and learn to run the business’ administration, taking on roles that previously eluded them. Whilst this can be seen as an exciting challenge, it can also mean short-term losses whilst roles are defined, things are learnt and the business gets back on its feet.
It can also be costly to get the level of training needed, and often the employees have to self-train, or try and work on a system of exchanges, perhaps providing the goods produced in the factory as payment for training.
These problems can be overcome, and the BAUEN is a good example of how trade-offs have been made to improve the level of staff in all areas. For example, staff who deal with the guests take language lessons, and in payment the teachers can use spare rooms at the hotel for paying classes.
Another way the cooperatives in Argentina have overcome challenges is by the creation of a network that mutually supports all members. Proof of this can be seen in the BAUEN’s lobby – the tiles on the floor are Zanon tiles, and in the restaurant the tomato sauces used come from a tomato cooperative in Mendoza. This form of banding together, helping one another out, has been key in aiding the success of the salvaged enterprises, who often find it difficult to find clients to buy their products. By becoming one another’s trading partners, the level of solidarity is strengthened.
Another threat to the working of the enterprises is their legal status. This again can be seen in the case of the BAUEN – court orders to close the hotel down, and counter challenges have been numerous. Quite often it has become a physical stand off between the authorities and the BAUEN workers and their supporters.
One such eviction order came in July last year – the cooperative was given a month to vacate the hotel. A large group took to the streets to protest the order and the staff managed to get a further reprieve.
Participating in this march for the BAUEN were people from cooperatives and recuperated businesses across the country. Protestors carried banners stating ‘we are all the BAUEN’.
“It is like a domino effect – if a ruling goes against a salvaged business and the authorities are successful in evicting the cooperative, it will set a precedent for the movement across the country,” explained one man who had travelled 14 hours from San Juan to join the march.
Many in the cooperative believed the July eviction order was due to a change in the political climate, seen in the win of Mauricio Macri in the race for Buenos Aires mayor. Macri, a businessman who was to be president of Boca Juniors football club before moving into politics, has promised to make big changes during his time in power, and his record shows his sympathies will more likely fall on the side of private enterprise and businesses than the cooperatives. His win has made the future of the movement even more precarious.
In the meantime, the BAUEN continues functioning fully. As well as working with guests, the function rooms are still regularly used as the main meeting area for representatives of salvaged businesses from across the country. Walking through the lobby you are as likely to cross a tourist as a you are a trade unionist.
If the eventual eviction order comes, something the hotel’s cooperative are steadying themselves for, they are sure to have a network of supporters around them to fight it. What such an order would mean for the movement as a whole, only time will tell.