Conflict in Argentina’s countryside

July 2, 2008

Since Argentina’s President Cristina Fernandez de Kirchner--who won election after her husband Nestor Kirchner decided not to run in October 2007--imposed new export taxes on agricultural products in March, large and medium-scale farmers and ranchers have protested with a series of blockades and lockouts.

Skyrocketing international food prices as well as ethanol production have created a boom in the countryside, which produces primarily for export, but it has also imported a 20 percent inflation rate into the domestic economy. That inflation is eating away at workers' wages and is threatening to derail the economic recovery from the 2001 crisis that produced mass uprisings which toppled several presidents.

About 50 percent of Argentina's farmland is dedicated to soybeans, grown for export. In March, Fernandez raised export taxes on this commodity to 52 percent, from 27 percent last year, sparking the confrontation. In addition to negotiating with the farmers, the Fernandez administration has also tried to mobilize protests in the cities to show support for the government.

In this article, Eduardo Lucita, a member of the Economistas de Izquierda from Argentina, exposes the class forces behind this confrontation and explains the economic stakes.

THE CONFLICT quickly surpassed the original reasons that were given for it: export tariffs and a scheme to calculate caps on the extraordinary profits derived from the growing demand of the international market. What began as an economic question now lurks at the borders of a political crisis.

From the technical economic perspective, the problem was resolved some days ago [on June 17, Fernandez sent a new tariff schedule to the National Assembly that caved in to many of the farmers' demands, but they remain to be approved].

The government gave up more than it admits, but according to its own internal logic of power, it cannot implement the agreements until it recuperates political authority. The "countryside" is in general agreement with the solutions, but cannot accept them without going through the charade of a negotiation, because it wants to assert its accumulated social force in the future.

Thus, every day, the conflict more and more resembles a game of smoke and mirrors, where the conflicting parties out-do themselves in a society that shows signs of growing tired of so many comings and goings. A conviction sets in that things will be different after this conflict than they were before.

Argentine President Cristina Fernández de Kirchner
Argentine President Cristina Fernández de Kirchner

The government cannot avoid a high political cost--still less can it avoid the inflationary framework that is eating away at as much the workers' and popular sectors' incomes as it is the well-to-do middle layer, which the government has proven unable to control. Meanwhile, the right--although it still lacks leadership and organization--has found an important social base.

The times ahead will, no doubt, show signs of new confrontations.

Nothing is as it seems or says

The different organizations that represent the countryside, unified as never before, question the export tariffs not only in defense of their profits, but as a legitimate instrument to uncouple international prices from local ones--and, in that way, diminish the inflationary impact of rising prices on so-called "good salaries" [of workers].

(There are four agricultural and ranching organizations. The Rural Society (RS in Spanish), which groups together the largest producers, numbers more than 10,000. They are the most rancid and conservative, who, in their imagination, represent the old cattle oligarchy. Confederation of Rural Argentina (CRA in Spanish) unites the most elite medium producers in the most fertile regions, with some 100,000 members. CONINAGRA is made up of the biggest cooperatives heavily engaged in commercialization. The Federation of Argentine Agriculture (FAA in Spanish) originated in the first agricultural strike in 1912 and brings together small and medium producers, some 100,000 in all.)

But this cannot hide the fact that behind their opposition to the export tariffs--and their attempt to minimize them--they are proposing a program that will eradicate restrictions on meat, grain and vegetable oil export markets. The elimination of all tariffs will come later.

In not quite as explicit a way, there is also a challenge to state intervention in the economy. Regulatory measures implemented by the state, no matter how moderate they might be, as well as the possibility of the distribution of revenue, are rejected.

The political right jumped on board this corporate drive because they see in the agricultural lockout the possibility of establishing a program to try to return the situation back to the period before 2001.

The national government stumbled into an unexpected reaction [to the export tariffs] and then sought in every instance to defend the legitimate action of the state to appropriate extraordinary revenue--like that based on the exceptional international demand--arguing that this is essential for a policy of distributing wealth and in the fight against inflation.

Clearly, this is only partial attempt. The main crop subject of the tariff is soy, which does not affect the internal market much at this conjuncture, even though it does displace other crops and therefore affects their availability.

It is also clear that the tariff increase has a fiscal side, one necessary to continue maintaining subsidies--if not for that, public service rates would explode with a corresponding impact on inflation. The government also must come up with the cash to deal with the debt payments that grow automatically, making the payments or refinancing each time more burdensome.

Incapacity or inexperience and errors in political calculation and technical implementation unified the opposition front and split up the alliances built during the first Kirchner period, and this has been reflected within the Peronist party [Fernandez's party]. In this context, the government used up its forces trying to recuperate its political clout.

The recent convocation of the Partido Justicialista [official name of the Peronist party] is nothing more than an attempt to discipline the ranks, which are showing signs of disintegration. However, whatever the results might be, it did not put the party in a good light, and it is well known that the president's stature has been diminished.

An unreal dilemma

From the beginning, this was seen as a dispute between the traditional agricultural-ranching oligarchy and a national-popular-reformist government. However, not everything is at it seems. If there is any virtue to this conflict, it is that it has thrown a light on the social structure in the countryside.

The rural bosses, who refer to themselves as part of the old oligarchy today, form part of the new landlord bourgeoisie--they are stockholders in great corporations or members of investment funds.

Their counterparts, those descendents of the tenants and sharecroppers who raised the "Call of Alcorta" in 1912 [a mass movement of poor farmers], are today owners of their own land, exploiting labor--generally darker-skinned labor--if they haven't become landlords, renting their lands to a planters' "pool."

Perhaps here is the hidden reason for this alliance, unexpected just a little while ago, between the Confederation of Rural Argentina (CRA) and the Rural Society (RS).

Big capital, above all financial capital, has invested in agriculture and ranching. Clear-cutting, the displacement of the original population from their ancestral lands and environmental damage has accompanied the incorporation of millions of hectares of fertile land and the expansion of the farming frontier. Cultivated area grew by more than 35 percent in the last 10 years, and grain production increased from 45 to 95 million tons.

The Argentine countryside today confirms the tendencies revealed by Belgian economist Ernest Mandel in the early 1970s that he characterized as the "industrialization of agriculture" (see Late Capitalism, chapter seven). Together with technological innovations in planting, irrigation, harvesting and storage, the large enterprises have imposed criteria for efficiency, productivity, competitiveness and profitability.

Argentina is today the most important exporter of vegetable oil products in the world and, with Brazil, the most productive global center for grain and vegetable oil output.

This government--which is not the same as those that went before it because of, among other things, the popular revolt in December 2001 and the expression of the changes taking place within the bloc of dominant classes--is riding and, at the same time, spurring on an economic growth cycle that reflects global tendencies.

There are elements of rupture with the past, but there is also much continuity.

From another angle, it is clear that the "neo-developmentalist" model that the Fernandez administration personifies emerged from the bosom of neoliberalism itself and, because of this, encounters some of its limitations.

Proof of this is the contradictory situation of a government that, in defense of the export tariffs, attacked the "soy-ization of the country"--but when these last years are examined, it will be clear that the government, from its first days in power, supported the soy model and strengthened it. Moreover, in the middle of the negotiations, it proposed to create a sort of private regulatory board controlled by the grain magnets.

If some other proof was needed to confirm that the government and the agricultural bosses maintain an equilibrium, they both agreed to marginalize those grain exporters who had played the most aggressive role during the negotiations.

Lately, it is acknowledged that the legislation has cracks that will permit the multinationals to avoid the increases in the tariffs, and the Federation of Agricultural Argentina (FAA) has been obliged to quit the exporters exchange and the planting "pool."

One would have to be generous to believe that we are dealing with a government of reforms--and if there are reforms, they are not very significant. It is enough to recall that five years are enough to change the current regressive tax policy, which is the principal obstacle to an effective redistribution of wealth.

The point in question

Looking a little below the surface, one will see that there is a confrontation that goes beyond the present conjuncture and is quietly playing out in the bloc of dominant classes. This bloc has the same composition as it did in the 1990s because, among other things and unlike in past epochs, there is no fraction of the bourgeoisie fighting to get in.

This does not mean that there are no national bourgeois--there are, but the biggest have been transnationalized, and the rest have neither the social organization nor the politics to dispute the direction of the process of capital accumulation.

However, there is one element of rupture--that the leaders of the bloc do not yet include finance capital and the privatized public service enterprises. Instead, they come from productive capital: agriculture and industry. These were the great beneficiaries of the macro-devaluation in 2002, and they have led the cycle of economic expansion from the second quarter of that year.

After six years of growth, the economic cycle is beginning to run into limitations and contradictions, both internal and external, which as a result, means that nothing has been done to resolve the historic structural imbalances of Argentine capitalism.

The result is not novel--the congenital weakness of Argentine industrial capitalism reappears: it cannot develop itself without state subsidies. And thus returns agricultural revenue, with its social and political weight.

In this framework, what is being disputed is whether the future orientation for the accumulation and reproduction of capital will be directed by an industrial/agrarian alliance, sustained by the internal market, or by an agro-industry/financial alliance that prioritizes the export model.

The recent paid advertisement placed in the newspapers by industrialists, bankers and merchants calling for "dialogue," as well as the public event organized by the rural bosses in Rosario (that had a mass turnout), are examples of how the different fractions of capital, even though they are more interconnected than in the past, are beginning to mark out their territory.

We are dealing with an inter-capitalist dispute, but when we analyze it in detail, we see that which side wins is not irrelevant. Here, although it is an "inter-bourgeois" dispute, a sort of guarded neutrality will not suffice.

Clearly, this does not mean flipping over into following the rural bosses as they play at manipulating the masses of the SR and CRA behind the slogan of "helping the small producers," while they are really only defending their own interests.

The way this dispute gets resolved--or which fraction or fractions of capital will finally win out over the others--will not substantially change the current model, but it is necessary to understand that the popular classes, especially the workers, cannot remain indifferent to defending the tariff and to state intervention in the economy.

No doubt the times ahead will see new confrontations. A political intervention that does not remain within the framework of immediate demands of the workers and the subaltern classes, but on the contrary, tries to elaborate a proposal starting from these demands and an unrestricted defense of democratic freedoms may contain profound transformations that open a decidedly anti-capitalist perspective.

First published in Punto de Vista Internacional. Translation by Todd Chretien.

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