A US court in New York ruled late last night that Argentina must pay US$1.3 billion to hedge funds that refused to restructure their debts after the South American country defaulted in 2001. The debts must be paid by December 15^th.

The US district judge, Thomas Griesa, rejected Argentina’s appeal to halt payments to bondholders who refused to participate in debt restructuring programmes following the 2001 default.

The ruling raises the possibility that Argentina may default once again. If upheld, it also illustrates that countries do not have as much sovereign immunity from creditors as is often perceived.

The court order is the latest development in a case that has run for 10 years and is not over yet. It will now return to the US 2nd circuit court of appeals, where officials will assess the judgement.  The hedge funds are led by Elliott Management Corp’s NML Capital Ltd, an aggressive fund that has a reputation for suing countries.

“It is hardly an injustice to have legal rulings which, at long last, mean that Argentina must pay the debts which it owes,” said Judge Griesa. “After 10 years of litigation this is a just result”.

Argentina has previously refused to pay the debts, claiming that the funds were “vultures” and “scavengers”.

Judge Griesa also confirmed that third parties will be affected by the ruling, placing an injunction on not just Argentina, but also “other persons who are in active  participation with the parties or their agents”.

The judgement rules that Argentina must pay almost immediately. The order states “the less time Argentina is given to devise means for evasion, the more assurance there is against such evasion”.

Hotel Bauen on Callao by Corrientes (Photo: Sam Verhaert)

This month, one of the most iconic businesses in Buenos Aires returned to the media spotlight. Hotel Bauen – a 20-storey high-rise in the centre of the city – was the scene of street protests that brought traffic to a standstill. Why? The hotel is one of the hundreds of companies that were bankrupted in the aftermath of the 2001 crisis, abandoned by their owners but then brought back to life by the people who had worked there.

Nine years since the workers recovered the hotel, the building is at the centre of a courtroom tug-of-war over its rightful ownership. On April 19^th another court date took place and supporters filled the streets around the hotel in a showing of solidarity. The battle for Bauen is heating up once again. It is plucky workers against big business -and the outcome is far from assured.

An Intricate Story

The history of the hotel is as mythical as it is murky. It was built during the military dictatorship’s beautifying of Buenos Aires in the run-up to the 1978 World Cup. Located in the centre of town – Callao and Corrientes – it was a shiny jewel in the city’s crown; one of only two five-star hotels in the capital.

Hotel Bauen's dance floor at the ready (Photo: Sam Verhaert)

It opened its doors in May 1978, with 250 rooms, boasting conference rooms, a swimming pool, a theatre and a disco. Bauen S.A., run by Marcelo Iurcovich owned the hotel. He had strong ties to the government in the 1970s and built the hotel with loans from the National Development Bank (BANADE).

The hotel enjoyed several years of prosperity and then in the 1990s it embarked on a trajectory typical of the dying moments of the 20^th century in Argentina. In 1997 Iurcovich sold the hotel to the Chilean company Solari S.A. who managed the business during the crash. On the 28^th of December 2001 the hotel closed and the employees joined the ranks of millions of Argentines out of work.

On the 21^st of March 2003, a small group of former employees, supported by the National Movement of Recuperated Businesses (MNER), broke into the building and started the remarkable journey to bring the hotel back into working order. Nine years on, the 160 workers run Bauen as a cooperative and are in a constant fight with the courts.

Old Buildings with Old Furniture

Since 2003, the workers have run the hotel on a shoestring. “Because we aren’t legal owners, we can’t go to the bank and ask for a loan, because they won’t give it to us.” Marcelo Ruarte, the hotel’s press officer, is one of the most recognisable figures in the Bauen Cooperative. He has been working at the hotel for over 30 years. “We don’t think about trying to compete with the Sheraton and the Hyatt, we have a lot of disadvantages  – the recuperated businesses are old buildings with old furniture.”

Hotel Bauen room with twin beds (Photo: Beatrice Murch)

For a conventional customer, this issue is difficult to ignore. A quick glance at the hotel’s online reviews reveals a less-than glowing report. “Dirty, old, dark, cockroaches in the bedroom… I recommend that you don’t waste your time or money in this hotel,” one user of the holiday review website Tripadvisor.com writes. “The hotel lobby resembles a train station, the lifts don’t work; the AC is broken; the furniture is in tatters, it’s loud and the windows that look onto the street don’t have double glazing,” writes another.

The list of the problems goes on, but the staff is well aware of the hotel’s shortcomings. Because they don’t have any legal rights in the building it is impossible to get investment, and without investment, the process of rebuilding the hotel – which was gutted by Solari S.A. in its bankruptcy – is painfully slow. “In the United States, companies have millions of dollars of subsidies, here we don’t have anything,” Arminda Palacios, the oldest worker in the cooperative, explains. “Everything that has been done here, has been done off the backs of our own work – it is an enormous sacrifice.”

The cooperative can only invest a percentage of the income that the business brings in; it has no capital. “At times they [the workers] were reinvesting up to 90% of the income back in the hotel and only taking home 10%” Fabian Pierucci, Bauen’s resident economist, explains. Progress is incremental and there are no guarantees that the workers investment – $6m over 9 years – will ever be repaid or recognised. “A lot of people are proud of us and what we’ve achieved but it’s us who have to keep working just to be able to survive, but this is bankrupting us,” cooperative member Maria Lavalle says.

Legality versus Legitimacy

On the 20^th June 2007, the cooperative received an official eviction notice but the workers are defiant that they will not give up the hotel. “How are we going to give the hotel back to the businessman who shut it down in the first place?” Ruarte asks. “This isn’t ours legally. Legitimately it is ours but those are two different things.”

Hotel Bauen cooperative employees protest in 2006 in front of Buenos Aires City Hall. (Photo: Olmo Calvo Rodriguez)

The court battle over ownership of the building is Dickensian in its complexity and shows no signs of being resolved soon. The Bauen group – headed by Marcelo Iurcovich – constructed the hotel with the aid of several million dollars of state loans from the now defunct BANADE. These loans have never been paid back in full to the state. Solari S.A. then bought the hotel in 1997 with a down payment of 10% and, according to Fabian Pierucci, the company did not pay much more before it went bankrupt. Iurcovich took ownership of the hotel once again and then in 2004 sold it to Mercoteles, the company currently claiming ownership.

This diluted notion of ownership is at the core of the court proceedings. The people at the cooperative believe that so many people have “bought” the building without paying for it that the state – who made the initial loan for its construction in the 1970s – should expropriate it. There has been a trial running for over 30 years between Iurcovich and BANADE over the repayment of the loan but it is still to be concluded.

The Bauen Cooperative is also crying foul play, claiming Iurcovich’s enterprises have not kept everything above board. “After lots of investigation, it is a possibility that they bankrupted it so they could come back with a company with a different name and wash away a lot of debt,” Pierucci claims, “Common practice in Argentine capitalism.” He also doubts the legitimacy of Mercoteles: “This company Mercoteles is made up of Iurcovich family members and commercial associates. This business never existed [before buying the hotel]. Kaliman [the recently deceased former director] was clearly the director of a ghost company, he was the straw man for the Iurcovich family.” Hugo Iurcovich, Marcelo’s son, currently runs the company.

Mercoteles were approached to comment for this piece but, despite initially showing interest, were not available for an interview. Mercoteles maintain that they are the legal owners of the hotel and on various occasions they have filed eviction orders against the cooperative. At the recent court hearing on the 19^th April, the Iurcovich family lawyer said they would keep all the current staff on if they got back control of the hotel.

Cooperative: A Model for the Future

Both Ruarte and Pierucci admit that the cooperative’s main role was to provide people with employment when the fabric of Argentine society was unravelling. “The cooperative was founded on the ruins of 2001, it was fulfilling a social role which, in that particular moment, even the state couldn’t do.” Pierucci explains. “Every job has a social value that is incalculable.”

Workers and clients enter the Hotel Bauen lobby (Photo: Sam Verhaert)

A huge proportion of their business comes from people who are sympathetic to their cause: members of other collectives, leftwing political groups and “responsible tourists”. Around 40% of the hotel’s custom comes directly from the state; ministries often arrange conferences and rent out their rooms. It is a precarious situation: without the government’s – ideological if not judicial – support, the hotel would surely struggle to survive. “In one way or another, this turns us into captives, captives of the state.” Ruarte said.

Even if the Bauen Cooperative does get what it wants – for the state to take control of the hotel and lease it back to them – there are still question marks about how successful the hotel would be. “We are workers who have recuperated this business, but what calls the shots outside is the capitalist market.” Ruarte comments. Can a hotel run as a cooperative thrive in a capitalist market?

The main criticism of cooperatives is that they are inefficient and they lack the resources to grow their business. All decisions have to be made collectively -a worker remembered the time that she was involved in a 20-hour-long meeting when she worked in a factory run as a collective. Many say that they lack the decisiveness to compete in an unforgiving market.

But as the fallout of the global economic crisis deepens, the cooperative model is becoming increasingly attractive to workers around the world. “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.” Ban Ki-moon, the UN Secretary General, announced this year, bringing in the UN’s International Year of Cooperatives at the beginning of 2012. These days, 99% of Sweden’s dairy production, 95% of Japan’s rice harvest and 60% of Italy’s wine production are all run cooperatively. The Mondragon Corporation, the most successful business group in the Basque Country and one of the most successful in Spain, is also run cooperatively.

The cooperative model is a viable one, but the challenges Bauen faces are by no means negligible. Unless the workers get legal recognition, the logistics of running a cooperative business are low on their list of priorities. The threat of eviction still hangs heavy.

More court hearings are due to take place over the next few months and a favourable outcome for the workers is far from assured. But they are determined and, in a year of high profile national expropriations, Fabian Pierucci is hopeful. “We’re hoping that this time, legitimacy wins.”

What do people think about the Bauen workers’ right to ask for an expropriation and the viability of their business model? Click here to find out.

Buenos Aires is divided into 15 'comunas'.

On 10th July 2011, after 15 long years of legislative indecision, the city of Buenos Aires finally held its first elections for the representatives of the juntas comunales (community boards). Each of the city’s 15 comunas, approved definitively in 2005 by the Organic Law of Municipalities (ley de comunas), elected seven representatives to their new local governing units.

In the weeks leading up to the elections, which also reaffirmed incumbent Mayor Mauricio Macri for a second term, the city government polled a selection of 1050 residents of Buenos Aires. When asked about their awareness and knowledge of the comunas, a staggering 82% responded that they had no idea what they were.

Finally active after years of political struggle, the basic purpose of the comunas is to address the needs of their neighbourhoods and involve greater citizen participation in the life and governance of local affairs.

“The comunas are completely open to their communities,” says Juan Carlos Quiroga of Movimiento Comunero, an NGO dedicated to forming a non-traditional political movement based on participation and power for the common citizen. “We invite people to get involved in their communities, to freely debate the problems and solutions, and to modify the reality of their neighbourhoods,”

Faced with the reality of their low public visibility, the comuneros’ principal challenge now is to inform the public not only of the promise, but the direct advantages of bringing new voices into the mix of democracy in Buenos Aires. To this end, the history of the comuneros’ struggle can bring to light the factors that have led and shaped their current predicament, as well as their priorities moving forward.

Decentralisation in the City Constitution 

“As in fairy tales,” says a 2009 report from the Facultad Latinoamericana de Ciencias Sociales (FLASCO), “the decentralisation of the municipalities of Buenos Aires is a never-ending story: one is always near the end, but it never arrives.”

Consistent with the six-year gap between the passage of the ley de comunas and last year’s elections, a chronic history of delay may be the best general explanation for the lack of public knowledge regarding the function and active status of the comunas.

The plan to create local administrative units in Buenos Aires originated in the ratification of the autonomous City Constitution of 1996. Providing five years for the city to adapt to its decentralised role, the Constitution obligated the municipal legislature to create and define the function of the comunas no later than October 2001.

More significant at the time, however, was the newly elective nature of the mayoral office in Buenos Aires, previously a role appointed by the federal government. The overall move toward decentralisation and the city’s autonomous status now signified a novel political space.

Introduced as part of the same constitutional process, the call for comunas and the adapted role of the mayor in the city initiated spheres of decentralised power, often antagonistic, that have since shared important links in defining themselves and the new political space.

Crisis and Opportunity

As the end of 2001 approached, Argentina was spiralling into an economic, political, and social crisis of historic proportion. The emergence of extreme opinions and public confrontation polarised attitudes toward radical positions.

'Que se vayan todos' (Photo: Nicolas Liuzzi)

Characterised by the cry, “Que se vayan todos!” (“They all must go!”), the agitated stance of the public, reacting to administrative dysfunction, served simultaneously to support differing ideas of reform.

Citizen activists, driven by the extensive loss and distrust sweeping society, could genuinely claim an urgent need for participative democracy to reform the broken politics of Argentina. The city government, meanwhile, vulnerable and in crisis mode, could effectively dismiss the comuna question as a step into further chaos or systemic collapse.

“In the 90s and during the economic crisis, the city experienced tremendous social fragmentation,” Quiroga explains. “The instability in this context, intensified by unemployment and hardship in many sectors of the population, created a scenario for participative democracy to offer hope, opportunity, and better health for the people of our neighbourhoods.”

Since the City Constitution already provided the legal grounds to establish the comunas of Buenos Aires, private citizens and neighbourhood organisations embarked on their long fight to make the constitutional mandate a reality.

‘The juntas comunales were envisioned in the Constitution as the governing power, delegated by the neighbours, to their 7 elected officials, as in traditional representative form,” says Ismael Reaño, a retired agronomist and comunero in comuna 14 (Palermo). “The other governing bodies, consejos consultivos, were to provide the new participative space led freely and voluntarily by residents of the comuna to inform the actions of the juntas comunales.”

Confronted with mounting public pressure, the city legislature returned to the problem of drafting the ley de comunas after the worst of the crisis had passed. While independent neighbourhood networks coordinated to raise motions in the courts, the city government favoured its own transitional centres of citizen participation, the Centros de Gestión y Participación (CGPs), which had served since 1998 as forums for testing administrative models of decentralisation.

With the issue indefinitely relegated to a question mark, the fervour for democratic participation during the critical years of the crisis succumbed to inertia in the eyes of the wider public. Compared to an improving status quo, the comunas lacked the kind of meaningful progress and institutional support on which city residents could base practical expectations.

Not surprisingly, as the traditional party organisations positioned themselves for control of the evolving mayoral office, little was done officially to discourage empty forecasts for the comunas and citizen-led democracy.

The Long Road to Elections

Far from producing definitive answers, the eventual ley de comunas of 2005 exposed fault lines between the city government and neighbourhood organisations fighting to launch the comunas. Gradually, the neighbours’ struggle intensified around securing elections and limiting the degree of executive power the mayor could exert over the comunas’ implementation.

Elections in Buenos Aires (Photo: Beatrice Murch)

While the ley de comunas called for fulfilment by the end of May 2007, the government at the time did not call for elections. Aware by 2008 that Macri’s position was to thwart or fatally amend the comunas altogether, the neighbours’ groups proactively re-engaged the courts. Finally, in 2009, at the order of a judicial decision, the legislature set an election date for June, 2011. The mayor, however, moved the date of the elections to 10th July, making it coincide with citywide elections, and placed the candidates for the juntas comunales on the full city ballot.

“This is a very important factor to consider in our first elections,” says Alberto Silber, coordinator for Movimiento Comunero in comuna 7 (Flores and Parque Chacabuco). “Article 20 of the ley de comunas clearly states that if the elections coincide with other city elections, there must be a measure for separate ballots or commissions.”

The mayor, executing his interpretation of the law, timed the first public action to establish the comunas in the shadow of mayoral and legislative elections.

For the 18% polled who were knowledgeable about the comunas beforehand, the outcome was nevertheless a victory that displayed clearly the government’s complicity in the perception that nobody cares about the comunas.

Local Authority: Limits of Macrismo

As of last December, the 15 comunas operate freely with legal status and territorial jurisdiction. Their limited scope, as per the ley de comunas, defines only green spaces and secondary roads as exclusive competencies. Other powers the comunas share concurrently with the central government to meet local needs and demands, include the execution of plans for public works, projects, and services.

What remains uncertain, in both the long and short terms, is the comunas’ destiny in the realm of city politics.

Guido Palazzo of Eudemocracia plans steps on the white board (Photo courtesy of Eudemocracia)

Looking at the big picture, the elaboration of future goals depends necessarily on the citizens, NGOs, and other social organisations that participate to create an impactful role for the comunas in Buenos Aires. Right now, however, with the consejos consultivos formally opening only last month, the focus is on asserting the comunas’ immediate practical authority against Macri’s rival policies of local administration.

“The situation between the Macri government and the comunas is full of tension,” says Pablo Nanini, a comunero and activist with the Asociación Civil Eudemocracia, which advocates incorporating technology into the exercise of direct democratic decision-making. “There is a void of distribution, a budget held to the minimum, and efforts at co-optation.”

With respect to the last point, Nanini was referring to the mayor’s creation of Units of Citizen Attention (UACs after their name in Spanish) to overtake the previous CGPs. The UACs, enacted by decree of the mayor, consist of 17 units staffed directly by the mayor and charged with duties that interfere with the transfer of local functions to the comunas, diverting their resources and cutting back their already minimal budget.

Prohibited from imposing taxes on residents in their respective territories, the comunas are dependent on allocations from the city budget. For the first two years of operation, this amount is not to exceed 5% of the total city budget, divided as chosen among the 15 comunas. However, in the 2012 budget the comunas were given a scant 0.002%, or $71.8 million, for their first year of operation.

“If we don’t have money, we don’t have real autonomy. We can’t serve the people in our comunas,” says Ernesto Altamiranda of comuna 14. “This is why we are so focused on preparing our budget for 2013.”

Local Participation: The Future of the Comunas

It could be argued that the city government’s basic attitude toward the comunas all along—that they first need to prove their worth among the citizenry—was not so wrong in light of the poll numbers published prior to the elections.

The NGO Movimiento Comunero holds a community meeting in 2010 (photo courtesy of Movimiento Comunero)

Active members of the comunero movement are well aware of the need to reach a wider demographic; and in essence, given the city government’s feeble attempts at promoting the new system, this is the comunas’ de facto bottom line for survival.

“Salud. Siempre, salud…por el 5%,” Altamiranda jokes over a round of beers following much discussion of what is wrong instead of right—corruption, waste, the corporate nature of traditional politics.

Many of the men and women long involved in the creation of the comunas understand that what they have fought for will be for the benefit of future generations.

“For these guys,” says Pablo Nanini, indicating his elder peers, “the struggle came from the generation of the dictatorship, to first rebuild democracy. For my generation, it’s about carrying that idea through and bringing direct participation to the people.”

Alarmingly, however, per the government’s poll, the demographic least informed about the comunas fell between the ages of 18 and 29.

“I think this is one of our most important tasks,” Nanini reflects. “We need the participation of young people, and we are working online, with the technology we have, to bring the comunas to the to the attention and interest of all to participate.”

To see what porteños think about the decentralisation process in Buenos Aires, click here.

In the Argentina of today, looking back on the country’s crushing economic crisis of 2001-02 a decade ago can sometimes become an oversimplified exercise: things were bad, people got angry, now everything is fine. With unparalleled economic growth since 2003, and President Cristina Fernández de Kirchner’s landslide re-election victory, it is easy to forget just how the country climbed out of those dark days of December. While many attribute former President Néstor Kirchner with creating a new economic model that reigned in a private sector run wild, it was the Argentine people whose unyielding protests during the 1990s and through the turn of the century would ultimately bring about change.

As historian Ezequiel Adamovsky writes in Le Monde Diplomatique, “It was the constant threat of looting, targeting of politicians, of rebellion, of occupations, of roadblocks, and those assemblies that disciplined both management and local and international financial sectors, opening an unimagined space for politics.”

This unimagined space included the unemployed, labor unions, and the middle classes alike, who took to the streets in the final days of 2001, uniting under the slogan “Que se vayan todos!” (They all must go).

Batering in lieu of cash (Photo: Oriana Eliçabe)

From a vacuum of political power and severe economic necessity grew new formations outside of traditional party politics. Hundreds of neighborhood assemblies came together to meet peoples’ most basic needs and create a space for local dialogue. Bartering clubs (with their own forms of currency) experimented in alternative economics, and workers of bankrupt businesses began to occupy and run enterprises on their own.

Ten years on, with fewer street protests and U.S. trademarks like Starbucks and Subway encroaching on the capital, what remains of this anti-neoliberal angst? How have the political and social formations, whose “horizontal” nature inspired not just Argentina but the entire world, faded into the background of the political landscape? Which projects have survived? Though the country may be far from the chaos of economic collapse, is the economic model the Kirchner governments have so exalted crisis-proof?

Long Time Coming: 1990s and the Piquetero Movement

The neoliberal model exercised in the extreme by Carlos Menem in the 1990s took its toll on society. Unemployment reached 17% in 1996 and infant mortality rate from 1995-97 was 20.4 (20.4 of 1000 infants would die before their first birthday). At the same time, the country had no social safety net or unemployment centers to help the poor subsist and find work. As sociologist Maristella Svampa details, “there were no policies to compensate the effects of labor ‘flexibilisation’ measures or massive firings that accompanied the privatisation of state enterprises, not to mention these companies’ adjustment to a new open­market context.”

The poor suburbs of Buenos Aires in addition to rural provinces like Salta and Jujuy were the hardest hit, with entire neighborhoods left to fend for themselves without paved roads, electricity, sewage, transportation, and whole communities out of work. Big unions were ineffective, striking deals with the Menem government to remain docile while ignoring the growing ranks of unemployed.

“You saw people deteriorate very quickly,” says Fabián Pierucci, economist and former piquetero with the Movement of Unemployed in the neighborhood of Solano. “Because how long can people go without eating, without being able to buy their medicine? You saw friends get thin and die like flies.”

Piqueteros cutting off Puente Pueyrredon (Photo: Manuel Palacios)

From these forgotten neighborhoods the piquetero (road blockade) movement of the unemployed was born. Living on the outskirts of the city, residents regularly witnessed the food and goods they sorely needed pass their precarious homes on the way to the centre. Seeing no alternative, they began to blockade major roads with burning tires as a way to draw attention to their destitution and demand government assistance.

Blockades were met with police repression and a minimal response by the Menem government, including the Plan Trabajar (Work Plan), that put the onus on non-profits to propose local improvement projects and then subsidise residents to work on them. As Svampa writes, the subsidies were “aimed at containing social disruption” and “constituted neither unemployment insurance, nor targeted financial assistance, nor job relocation policies.”

As the economic situation deteriorated in 2001, the piquetero movement began to gain legitimacy within the middle classes who joined them in the streets in response to additional pension and salary cuts implemented by a government scrambling to avoid the inevitable debt default. The country was on the brink, and hit breaking point with the mass uprising on 19th and 20th December that finally forced out President Fernando De la Rúa and ended 25-years of neo-liberal economic rule.

Collapse, Chaos, Creativity

By the time Eduardo Duhalde was appointed interim president at the start of 2002—the country’s fifth leader in less than two weeks—political legitimacy was lost. The year would begin unlike any other: with newfound popular power, a sense of intra-class solidarity, and innovative propositions for local decision-making.

Neighborhood Assemblies in 2002 (Photo: Oriana Eliçabe)

From initial citywide gatherings made up of thousands, assemblies began to form based on neighbourhoods. While at first meeting in plazas and on street corners, they began to occupy buildings and organise themselves into work committees around press, culture, employment, services, health, political action, and community purchases. Assemblies organised neighbourhood surveys to determine local needs; set up soup kitchens, community gardens, tutoring programs, and radio stations; and continued protesting the banks by staging direct actions and occupations.

Meanwhile, the lack of cash meant that clubes de trueque or bartering clubs – which had existed prior to the crash – tripled in number throughout the country, reaching 5,000 in 2002 with an estimated 4 million participants. Members invented their own forms of currency and began to trade food, goods, and services, creating an alternative economy based on principles of solidarity.

Simultaneously, another movement of workers was occupying bankrupt factories and businesses that had been abandoned by their owners. As journalist Marie Trigona explains, “most of the worker takeovers were to guarantee that the owners wouldn’t be able to liquidate assets before filing bankruptcy to avoid paying workers indemnities and back salaries.” But as the occupations continued, “demands steadily grew from a measure to safeguard their jobs to the idea of implementing a system of self-management.” Knowing that former owners were never going to compensate them nor reinvest in the business, workers planned and began production, laboring under a new cooperative model with equal pay for all and no bosses.

New Values, New Identities

It wasn’t simply what Argentines jumpstarted after the crisis, but how they did it that was so groundbreaking. Guided by principles of autonomy, equal participation, and democracy, these new formations were an implicit rejection of the hierarchies of the traditional political parties and private businesses that had so deceived the people.

Neighbourhood assemblies referred to themselves as “autoconvocados” (self-convoked) and made decisions using a consensus model in which all had equal say and majority voting was often a last resource. There was also a renewed sense of solidarity between classes, as assemblies in middle-class neighbourhoods directed many programmes to the poor and unemployed. In Villa Pueyrredon, the assembly set up daily lunches for the growing number of cartoneros, those who collect and recycle cardboard in return for a small stipend. In a country where inequity often pits the poor against the middle class, this kind of solidarity was unique and critical.

By the same token, solidarity, democracy, autonomy were the core values of the recuperated factories movement. At odds with a capitalist business model that looks to maximise profit often at human expense, for the cooperatives, in which workers are also owners, layoffs are not a tool for balancing the books.

Fabian Pierucci (Photo: Patricio Guillamón)

Through Argentines’ experiences in these “horizontal” projects, new forms of social relationships and new identities emerged based on values of mutual support and solidarity over individualism and exploitation. Fabián Pierucci, who after organising with the unemployed workers’ movement began working with the 180-room recuperated BAUEN hotel says that the most important part about the recuperated enterprises has been the “possibility of constructing a new imaginary” that directly questions the logic of private property.

“It puts hierarchy into question when organizations like this one that can move forward by way of assembly and doesn’t need employers with their managerial placards who come to administrate.”

Though faced with countless uncertainties, Argentines’ efforts led to what Adamovsky calls the “permanent installation of a new left culture, absent in political traditions of the past.”

The Kirchner Effect

It was in this context of amplified political activity that Nestor Kirchner was narrowly elected president in May of 2003. Often seen as the political knight in shining armor, Adamovsky terms Kirchner’s election as “unthinkable without the political vacuum that 2001 created.” The immediate steps his government took to renegotiate international debt and cut ties with the IMF and World Bank, Adamovsky believes would have been “impossible without the underlying detail of people in the streets and the profound questioning of financial institutions.”

Yet for the majority of the movements that sprung up in the late 90s and throughout the crisis, the Kirchners have been a demobilising and contentious force. For the piquetero and unemployed workers movements, the minimal increase in state assistance came to be the dangling carrot with strings attached. Still without broad solutions for unemployment, assistance plans multiplied and were left up to the piquetero organizations and political party leaders to distribute, usually in exchange for political loyalty.

“Nestor Kirchner’s policy consisted of simultaneously enacting strategies to integrate, co-opt, and discipline the piquetero organizations,” writes Svampa. She details how the piquetero movement as a whole became limited to acquiring and maintaining government funds, leaving aside goals of broader social reform. While not all piquetero groups could be co-opted, those that have chosen to ally with the government have been rewarded with economic and organisational resources.

In many cases, the so-called political leaders charged with giving out funds to impoverished neighbourhoods—commonly referred to as punteros—have used their role as distributor in order to turn a profit.

“The puntero is the same in any neighborhood,” says Fabián Pierucci, “where a leader from the Workers Party or Kircherist or Duhaldist says, ‘I’ll give you a plan if you give me money.’” Disheartened by the decline of the piquetero movement he reflects on these assistance-based politics. “To me the question has to do with what kind of alternative politics one represents, and if reproducing forms of clientalism is the alternative, or if it’s something else.”

Neighbourhood assemblies also dwindled, with some of the largest having disappeared altogether. Initially assembly spaces were politically diverse due to members’ newness to social activism and differing backgrounds.

“We were neighbors. We didn’t have anything else in common other than our neighbourhood, no kind of ideology,” says Eva Sinchecay of the Villa Pueyrredon assembly. It was something that turned out to be both a strength and a weakness as assemblies were more independent but became susceptible to the agendas of left groups that used them as a means of recruitment. “It began to dissolve,” says Sinchecay, whose assembly splintered after the uncooperative participation of a communist group.

Much of the middle-class that made up the bulk of the neighbourhood assemblies was captivated by Kirchner’s presidency. The rejection of neoliberal economics and opening up of human rights cases against former members of Argentina’s military junta gave many new hope that this government would be different. But the Kirchners’ reforms were not the radical move toward alternative economic and social relations that the assemblies had once proposed.

“What we wanted is for them all to leave,” says Sinchecay, who says she is doesn’t identify with any political party. “Hardly anything has changed. I’d like to see better distribution of wealth, more education, more healthcare. There is terrible corruption.”

Adamovksy puts the Kirchners’ role into perspective, explaining that “as much as some of their followers imagine Kircherism as a spearhead for ‘liberation’ or a fight against capital, the government has made it perfectly clear that it’s goal is a ‘normal’ country with a representative state and ‘serious capitalism.’”

One of the laborers busy at work in the recuperated factory 'IMPA' (Photo: Beatrice Murch)

It has been the recuperated enterprises that have turned out to be one of the most enduring projects to emerge from the crisis. From 2001 until today, there have been 205 functioning recuperated enterprises that run the gamut of chocolate and shoe factories to printing presses and hotels. Rather than laying off workers, 77% of these cooperatively-owned businesses have taken them on, paying more than other companies in similar industries. The country’s largest recuperated enterprise Zanon, a tile factory occupied in 2001 and renamed FASINPAT (short for factory without boss) currently employs 470 workers in the province of Neuquén.

In 2009, Neuquén’s legislature voted to grant legal expropriation to FASINPAT, a victory that has given other cooperatives hope. Yet with no overarching federal law, each recuperated enterprise must navigate its own way through provincial courts and live with both eviction threats and the remaining debt of former owners.

Tools for the Future

With little doubt the social movements that flourished during the 2001-2002 crisis have left their mark on Argentina. Though they may not have achieved all they had hoped, they pushed the boundaries of political imagination and showed the creative capacity of ordinary people in extraordinary situations.

Still for many, specifically those on the independent left like Fabián Pierucci and Eva Sinchecay, the movements missed a historic opportunity for structural change. Despite Argentina’s economic growth, they say the economic model is still based on instable and short-term factors like the international price of soy and exploitation of natural resources.

“With a globalised economy, you can have all the reserves you want and have the foreign debt under control, but does that mean you are financially autonomous?” asks Pierucci. “How long will the model last? One year, two years, five years?”

Sinchecay, who still helps cartoneros in her community collect cardboard, says the social programs have been insufficient in combating poverty. “We have seen three generations of people without work,” she laments.

Pierucci believes Argentina has not seen the last of economic crises, and that despite the relative calm, another collapse could be on the way. “We can’t lose perspective that crisis is cyclical in the economy, and that each time it will be deeper,” he says.

With the economies in Europe and the U.S. in turmoil thanks to some of the same runaway financial practices that so hurt Argentina, it’s no wonder that people around the world have looked to the country’s vibrant social movements for inspiration. Though weakened, these movements have imprinted the culture and consciousness of the Argentine people with an irreplaceable spirit of solidarity and possibility. That same spirit may be the foundations upon which future movements will build and, perhaps, move beyond.

A version of this article was published in UpsideDownWorld.org

Read about the UCR’s revolutionary origins and early struggles with the military and peronism in ‘History of the UCR: Part I‘.

UCR Shield

After the ousting of President Arturo Illia and return of military rule in 1966, the Unión Cívica Radical (UCR) was left in a weakened state, fragmented and wounded by the failure to return as the dominant political force after Juan Domingo Perón’s exile. The recovery from this point would take almost two decades, though key UCR figures would continue to play a crucial role in local politics in the meantime.

After de facto President General Juan Carlos Onganía banned all political parties, the activity of the UCR naturally diminished. Most of the political activitism that remained was concentrated in university groups. These student organisations were behind the most important protests against the dictatorship, including those known as “Cordobazo” and “Rosariazo” which, in 1969, brought Onganía’s government to an end.

After 1970, the UCRP—led by Ricardo Balbín—and many other parties (including the peronists, but with the exception of the UCRI that had supported the new military government) united in their claim for free and fair elections. In 1971, and with a new military in charge of the government, Balbín started negotiating the so-called “electoral exit”.

At this point, the military government allowed the UCRP to change its name back to Unión Cívica Radical while forcing the UCRI to change its name. It was also at this time that Raúl Alfonsín, a lawyer from Chascomús in Buenos Aires Province, started to form his own faction, differentiating himself from Balbín and emerging as the left-wing representative of the Radical party.

Finally, elections were held in March 1973. For the first time since 1951, the peronists were able to participate in presidential elections (although Perón was still in exile) and their candidate Héctor Cámpora comfortably beat Balbín by 49.5% to 21.3%. After allowing Perón to return to the country, Cámpora resigned and new elections were called in September of that year, giving Perón a landslide victory with 62% of the vote.

UCR leader Ricardo Balbín and Juan Perón, who again, in exile, became the central issue of the 1973 campaign. (source: Wikipedia)

After Perón’s return, the differences between the ‘balbinist’ and the ‘alfonsinist’ factions of the Radicals deepened. While Balbín, after decades of confrontation, was now in favour of an agreement with Perón to achieve the much sought after “national unity”, Alfonsín maintained a strong anti-peronist stance. Balbín’s softened approach to dealing with Perón was evident when, during the latter’s funeral in 1974, he declared: “This old rival bids a friend farewell.”

The UCR became increasingly polarised during the 1976-83 military government, which captured and ‘disappeared’ around 30,000 people. Balbin’s position has been widely criticised as too forgiving towards the dictatorship, a stance he called necessary to save the lives of his fellow party members.

Alfonsín, on the contrary, had a very active role during these years. He was a founding member of the Permanent Assembly for Human Rights and, as a lawyer, risked his own life by petitioning for writs of habeas corpus for political detainees. He was also one of the few politicians to publicly oppose the Falklands/Malvinas War in 1982.

After the military regime lost the war against the British, its credibility crumbled and a democratic transition process was established. Elections were called for October 1983, and surprised many when Alfonsín won with 51.7% of the vote; it was the first time the peronists had lost a presidential election in their history.

Two facts are usually invoked to explain this result: Alfonsin’s denunciation of an alleged pact between the peronist unions and armed forces to avoid the trials for crimes against humanity, and the gesture by peronist politician Italo Lúder who, during the final rally before the election, burned a coffin marked “UCR”. This gesture was considered poor taste given the country’s recent history, and was rejected by a large section of society who wanted to leave political violence behind.

Alfonsín: The Father of Democracy (1983-89)

Alfonsín took office on the 10th December 1983 – the date coincided with the anniversary of the Declaration of Human Rights. A massive crowd took to the Plaza de Mayo to hear the new president speak from the balconies of the old Town Hall.

Alfonsín had repeated during his campaign a phrase that would become the motto of his government: “With democracy we eat, we heal, we educate.” Amid the euphoria of an end to military rule, there was an expectation that democracy would solve the country’s ills.

Former members of Argentina's last dictatorship endure opening statements in their 1985 trial for human rights abuses. (source: Wikipedia)

Early measures fuelled this optimism. Only five days after taking office, Alfonsín decreed that there would be trials for the ERP and Montoneros guerrillas and for the three military juntas that had ruled the country between 1976 and 1983. The 1985 trials were unprecedented in the world and all the participants in the military juntas received jail terms of between four years and life.

In reality, restoring the State’s authority after half a century of military coups and counter-coups was a monumental challenge, and many of the new government’s promises were never fulfilled. The military was unrepentant, and hardline factions were already plotting another return to power. In 1986 and 1987 a series of military uprisings sent a warning to the president. With the fledgling democracy under pressure, Alfonsín was forced to negotiate with the insurgents, ending with the passing of two bills which put an end to the trials against the military men from all ranks involved in crimes against humanity. This decision cost Alfonsín dearly, his popularity diminished and the UCR lost the legislative elections that year.

At the same time Alfonsín was struggling to regain control of the economy. The last military dictatorship, unlike any of the previous ones, had made deep, structural changes in Argentine society and economy which would have lasting consequences. The political persecution of the 1976-83 period was a means to an end: to change the economic model of incipient industrialisation to one geared towards financial activities and services.

Perhaps unaware of the full extent of the changes instigated during the previous years, the government’s diagnoses were misguided and the old tried and tested solutions to overcome the crisis did not work in this situation.

The picture was bleak. The military government had multiplied the foreign debt by 5.5 times in seven years, poverty had increased, and inflation became a massive problem very early on in Alfonsín’s government. Efforts to bring prices under control—including the Plan Austral, which introduced a new currency in 1985—had only limited success.

The increasingly desperate Radical government found its efforts to introduce structural reforms blocked by the Peronists in Congress (they would later approve the same measures during Carlos Menem’s government). By 1989, the crisis had reached a critical point, with the country suffering from hyperinflation (the inflation rate reached 3000% at one stage) and a sharp rise in poverty and social unrest.

In May 1989, early elections were called and the UCR candidate, Eduardo Angeloz, lost against the peronist candidate Carlos Menem. Amid a deepening crisis, Alfonsín, who had united the UCR and arrived with such high expectations for the country, was forced to handover the government to Menem in July, five months before his term was up.

The situation that drove Alfonsín to resign has been called a “market coup”, meaning that the economic actors forced an institutional change by resorting to economic destabilisation in the form of lock-outs, rising interest rates, shortage of supplies, rising inflation.

That said, there were other, more positive policies implemented during Alfonsín’s government, which harked back to the core principles of the UCR since Yrigoyen. These included the creation of the Mercosur alliance with other South American countries, the signing of a peace treaty with Chile, the roll out of a massive literacy plan, the normalisation of the national universities under the principles of the University Reform, and the approval of the Divorce Law.

Despite the economic turmoil and the disappointment that his decision to put an end to the trials against the military government caused -for many it was seen as a capitulation and a betrayal- it would be fair to say that Alfonsín’s presidency fulfilled a crucial role of putting Argentina back on the democratic track. However, his highly ethical and idealistic stance, his faith in democracy and institutional restoration -in true Yrigoyenist fashion- were not enough to tackle the new economic and political balance of power that the dictatorship had left on its wake.

Menem and The Alianza Years (1989-2001)

It would be another ten years before the Radicals governed again. During the first half of the 1990′s, the UCR had to again deal with its legendary in-fighting following Alfonsín’s downfall and poor results in the legislative elections.

Carlos Menem in victory (Source: Wikipedia)

In 1994, a Constitutional reform was proposed by then-president Menem, with the main objective of allowing him to run for re-election (until then, a president was allowed only one six-year term). A secret agreement known as the Olivos Pact was negotiated between Menem and Alfonsín—who had remained as UCR leader—as a condition for the Radicals to support the reform. The Radicals gave Menem the changes in presidential terms (shortening of the term from six to four years, allowing one re-election, eliminating the electoral college and a second-round or ballotage system) in exchange for other reforms they considered necessary, such as the introduction of the role of cabinet chief, the autonomy of the City of Buenos Aires, changes in the election of Senators (which directly favoured the radicals), and the inclusion of third and fourth-generation human rights.

However, The Olivos Pact had a negative impact on the people’s opinion of the party and in the 1995 elections, the UCR performed poorly, finishing third for the first time in its history, behind the centre-left Frente País Solidario (FREPASO).

At the same time, and despite its overall poor results in elections, the UCR was doing quite well among the middle-class voters in the City of Buenos Aires. In 1992, Fernando de la Rúa, a conservative ‘balbinist’ who had developed his political career during the 1970′s and had been Balbín’s running mate in the 1973 election, was elected senator for the city and in 1996 became its first elected mayor (before the 1994 constitutional reform, the mayor of the city of Buenos Aires was appointed by the president).

In 1997, as the economic climate deteriorated and Menem’s government became increasingly tainted by corruption scandals, the UCR and FREPASO formed an electoral alliance called Alianza por el Trabajo, la Justicia y la Educación, or simply “Alianza”. The Alianza won the legislative elections that same year and the presidential elections in 1999, taking Fernando De la Rúa to government, along with his vice-president, Carlos “Chacho” Alvarez (from FREPASO).

De la Rúa based his presidential campaign on portraying the image of an austere and honest man, in stark contrast with Menem’s corrupt and frivolous ways. People voted for this change and welcomed it joyfully, but it was merely cosmetic. In terms of economic policy and underlying ideology, De la Rúa was hardly different from Menem and his government continued – and in some cases deepened – the disastrous policies of his predecessor.

The love affair between Argentina and The Alianza did not last long, and it did not take long for the new government to come under strain. In October 2000—less than a year after taking office—vice-president Alvarez resigned after publicly denouncing corruption in the senate. The centre-left factions within the Alianza were slowly displaced by De la Rúa’s conservative group, but they were unable to revive the economy, which was mired in debt and had been in recession since 1998.

Massive protests broke out in the streets of Buenos Aires during the 2001 economic collapse. (Photo: Fabricio Di Dio)

In 2001, after the resignation of two economy ministers (one of them, Ricardo López Murphy, only lasted two weeks on the job), De la Rúa called on one of the strongest symbols of Menem’s first presidency to rescue the economy: former minister Domingo Cavallo. The attempts to curb the crisis using the orthodox policies prescribed by the IMF continued. More budget cuts, salary cuts (for public employees and pensioners), and debt renegotiations were implemented, while the economy was kept alive via the acquisition of more loans from the IMF and the World Bank.

As the situation worsened and social tension increased, legislative elections were held in October 2001. The Alianza was defeated by the Peronists and lost control of the Congress, weakening the executive even more.

In December 2001, the grave economic and political situation caused distrust amongst investors, which in turn increased bank runs and capital flight. To avoid the collapse of the banking system, the government placed a restriction on the withdrawal of deposits, which came to be known as the “corralito” (“little [pig] pen”). This affected the economic and trade system as well as the middle classes who saw their life savings trapped in the banks and only worsened the social situation.

Protests increased and by 19th December rioting and looting – mainly of supermarkets – started to take place. It is suspected that many of these riots were not spontaneous and were being fuelled by opposition groups for political gain.

That same evening President de la Rúa declared a State of Emergency, suspending constitutional guarantees. Thousands took to the streets of Buenos Aires and other major cities to protest against the government, in open defiance of the security measure. The protests continued throughout the night and the following day, during which time an aggressive police response caused the deaths of thirty-nine people in two days.

In the early hours of 20th December, Cavallo resigned. A few hours later, in the evening and after one final failed attempt to call on peronist governors to form a coalition government, Fernando de la Rúa gave his resignation speech on TV. For the 5th consecutive time, a Radical president was unable to complete a full term, though this time, the image of De la Rúa leaving the Casa Rosada in a helicopter while the masses rioted below would be especially devastating for the UCR.

President de la Rúa upon tendering his resignation, December 21, 2001. (source: wikipedia)

Beyond 2001: Picking up the Pieces

The disaster of De la Rúa’s government and resignation left the UCR at its weakest in a 110-year history, unleashing an internal crisis from which it is still recovering. In the 2003 presidential elections, with the devastating effects of the crisis still evident and the image of De la Rúa’s helicopter still fresh in the minds of voters, the party had its worst result ever, obtaining only 2.3% support.

The UCR fell to pieces. Some of its members, like Ricardo López Murphy, left the UCR and created their own parties. Others, like Tucumán’s governor José Alperovich, even joined the Peronist party. During Néstor Kirchner’s government (2003-07), many Radical governors and mayors forged alliances with the national government and became known as “Radicales K”.

Amongst them was the governor of Mendoza, Julio Cobos, who was chosen to be Cristina Fernández de Kirchner’s vice-president in 2007. Cobos was expelled from the UCR for taking the job, but barely a few months after the new government took office, in 2008, his role during the campo crisis catapulted him to the position of virtual leader of the opposition and reconciled him with the party.

In March 2009, the old Radical leader Raúl Alfonsín died at the age of 82. His funerals were attended by thousands of people drawing comparisons to those of Perón and Yrigoyen. That same year, the UCR formed an alliance with the Socialist Party and the Coalición Cívica and improved its results in the legislative elections, where it came second with 30% of the vote.

In 2010, the competition for the 2011 candidacies began. Cobos’ popularity had already begun to fade and a new contender appeared: Raúl Alfonsín’s son Ricardo. The party was going to hold internal elections between Alfonsín and his two rivals Cobos and Ernesto Sanz, but the last two decided not to take part in the internal election. This way, Alfonsín was proclaimed presidential candidate for the UCR for 2011.

Ricardo Alfonsín conceding defeat in the UCR bunker after the August primaries (Photo: Santaigo Trusso)

Despite relying heavily on his father’s image for his own political recognition, Ricardo Alfonsín went against Raúl’s centre-left, social-democratic ideals and abandoned his previous arrangements with the Socialist Party to privilege an alliance with centre-right wing politician Francisco De Narváez, much to the distress of many of his fellow party-members. This proved to be a bad move at the primary elections, where the UCR came second – in a virtual tie with dissident Peronist Eduardo Duhalde – but almost 40 percentage points behind President Fernández.

This poor showing has once again opened up cracks in the UCR. The alliance between Alfonsín and De Narváez is under strain, and some Radical deputies and provincial governors have even started campaigning against Alfonsín, trying to save their own votes by suggesting that their supporters should split their ballots and vote for a president from another party.

The latest polls show that the UCR could slip out even further from power in October, losing its second place to the social-democrat Frente Amplio Progresista (FAP), Hermes Binner’s alliance, which is picking up the more progressive voters that the UCR’s latest arrangements left behind.

As the UCR faces yet another identity crisis, it might be time for the party to reflect on its long history and rediscover the causes and convictions of the men who made it the great party that it once was.