On the Saturday that then-Argentine Economy Minister Domingo Cavallo claimed on television that for 90 days Argentines could withdraw only 250 pesos a week from their bank accounts, María Teresa Nannini took the lid of a pot and went to the window of your house in Cordoba, make noise.
It started in December 2001, and on the Monday following the announcement, the population rushed to the banks to withdraw money. It was the first day of the “corralito” (corralzinho, in Portuguese), one of the measures taken by the government of Fernando De La Rúa to curb the flight of dollars from the Argentine financial system.
Long lines formed in front of banks and ATMs. The agencies increased their opening hours and set up consultation tables to guide the population, but nothing could contain the social indignation. The protests, with choruses of “Let them all out!” spread across the country.
Twenty years later, and in the midst of the most serious socioeconomic crisis since then, corralito is still the protagonist of nightmares and fears in Argentina. This week, the country’s Central Bank released a statement denying that bank deposits could be affected by measures announced by the government of Alberto Fernández last week, also to prevent the flight of currency.
The fear shows not only the open wound, but also that the country is once again haunted by some structural problems that it has not yet managed to resolve.
Nannini still defines that December 3 as the “day of fatigue”. A housewife, she says she shivers when she remembers everything that has happened since. In addition to the limit on withdrawals from cashiers and bank branches, Cavallo’s plan to try to control the bleeding of foreign exchange included a ban on cashing checks.
Cash began to become scarce, affecting consumption and payment for services. It didn’t take long for the looting to begin and other dramatic scenes are still remembered with pain in the country.
The protests were repressed with firearms and truculence – one of the most striking audiovisual recordings is that of agents on horses advancing against the Mothers of Plaza de Mayo – association of mothers of disappeared by the Argentine dictatorship (1976-1983).
Protesters even invaded and set fire to the Congress Palace. Supermarkets were emptied in the face of the tears of impotence of the owners of the establishments that ended up destroyed.
According to official data, 39 people died between the 19th and 20th of December, the height of protests and repression. The bloodbath led La Rúa to resign and leave the Casa Rosada – seat of the Argentine government – in a helicopter.
In the absence of a vice president – Carlos “Chacho” Álvarez, elected with De La Rúa in 1999, had resigned a year earlier -, the successor was the president of the Senate, Peronist Ramón Puerta, who was on a flight from Buenos Aires to the province of San Luis during the resignation.
“When I landed, I was the president”, he recalls, in an interview with CNN, in his apartment in a luxurious sector of the Argentine capital. Puerta, who was also governor of Misiones and national deputy and senator for that province, took office the next day and spent three days in office.
He says that, during this period, he signed more than 100 decrees, including the one to end the state of siege decreed by De La Rúa, and that he acted quickly to fill the ATMs with cash. “This was my obsession”, he explains, stating that, as a result, the country calmed down.
But the following days were one of more political and economic tremors: after Puerta, two more presidents passed through the position before the inauguration of Eduardo Duhalde, who in January 2002 decreed the end of parity. Amounts in dollars of checking and savings accounts were pegged, with the Argentine currency being worth 1.4 in relation to the North American one, in the so-called “corralón”.
Nannini remembers that many Argentines had a heart attack. In a January 2002 report, the daily La Nación highlighted that in addition to heart problems, doctors’ offices were being flooded by people suffering from symptoms that could be caused by the emotional impact of the situation, such as digestive and skin problems, tremors, migraine , insomnia, dizziness and depression. “The crisis is costing the body of Argentines dear”, the text concluded.
The years that followed were one of legal battles between citizens and the State and Banks. A resident of the city of Córdoba, Nannini was a member of the Burnt Out Argentine Bank Depositors (ABAE), a self-convened meeting that went to court to recover deposits in the original amount in dollars. After seven years of struggle and protests – which, says the Argentine housewife, even wrapped up a judge’s house with toilet paper – she was able to get a deposit back.
Twenty years after the corralito, Argentina finds itself immersed in the worst socioeconomic crisis since then. According to official data, 40.6% of the population is below the poverty line and the country’s year-on-year inflation is 52%.
In addition, since taking office in December 2019, Alberto Fernández’s government has negotiated with the International Monetary Fund the repayment of the loan taken out by his predecessor, Mauricio Macri, of US$ 57 billion, the largest in the history of the IMF.
The current administration has also taken strict measures against the outflow of foreign currency from the financial system, such as limiting the purchase of dollars (to a maximum of US$ 200 monthly) and taxes of at least 30% on card expenses abroad.
For Andrés Asiain, director of the Scalabrini Ortiz Center for Economic and Social Studies (CESO), there are two lines of continuity since 2001: the country’s external debt, due to the new cycle of indebtedness with the IMF, and capital flight, due to the trend of an important sector of the Argentine population to turn to the dollar to protect their economies, a reflection of the lack of confidence in the national currency and of undeclared incomes.
But according to him, there are also differences in relation to 2001. “The banking system today is much more solid, there is no risk of a corralito. And the downside is that today we have much higher inflation”, he explains.
Against this last evil that eats away at the Argentines’ pockets, the Fernández government extended the price freeze initiated in the second government of the former president and current vice president, Cristina Kirchner, and maintained by Macri. But the measures do not seem to have any effect.
According to Asiain, regardless of the original causes, Argentina is currently facing inflationary inertia. “It’s an economy that has been living with inflation for a long time,” he points out, explaining that rental contracts are updated according to past inflation, as well as nominal interest rates and salary negotiations based on this index.
“So, next year, entrepreneurs will increase their prices by at least 50% to cover these increases, and in a way the economy is already projecting this inflation forward.”
For the economist, the solution is to attack inertial elements. “Macri tried not to issue currency and as inflation continued, then they were forced to issue. If you don’t delay the dollar, prices keep rising and then the currency ends up devaluing. If you freeze prices, you have months of cheaper products, but everything keeps increasing, and then you have to update them. When there is an inertia, the entire anchor is dragged over time”, he points out.
According to the economist and historian Mario Rapoport, the crisis of 2001 and the current one are very different. “We cannot compare crises with similar economic policies, because they happen in different circumstances”, he says, stating that until De La Rúa, neoliberal policies of adjustment predominated, when, after Néstor Kirchner, measures of productive development started with aid favorable terms of exchange of international relations.
In social terms, “apparently the situation is not as serious as in 2001,” explains Eduardo Donza, a researcher at the Argentine Social Debt Observatory at the Catholic University (ODSA – UCA). Despite the current serious income indices, he recalls that 20 years ago, poverty levels had reached 52% of the population, when unemployment reached 21% and today it is between 10 and 12%. One of the points of difference, he emphasizes, is that state aid to the most impoverished sectors that emerged 20 years ago has increased over the last few governments and “is already a constituted right”.
But he warns that Argentina has been adding structural poverty over the years, which is more difficult to get out of than in the past. “Since 2001, poverty levels have never dropped from 27, 28% of the population, and have been accumulating. And many families directly need the help of the State to live”, he explains, also pointing out that after 2002, the countries of Latin America benefited from the increase in commodities.
Today, the context is not the same and it has worsened with the pandemic. In addition, locally, there is a delay in the devaluation of the peso in relation to inflation, which implies a risk that when the value of the currency falls, this difference will be transferred to consumer prices. “The exit from the 2001 crisis was very quick. Now, no specialist predicts that the exit from the crisis will be so fast”, he concludes.
Reference: CNN Brasil