Some say it smells on the streets of Buenos Aires. And not just of the infamous dog shit that plagues the city, but for those who know well, of 2001. The smell has lingered since last December, when price increases and pension cuts resulted in people no longer being able to pay for their electricity. Now a larger section of the population can no longer afford food.

Once a decade, financial or political crises (or both at the same time) have been features of Argentine history. It’s a cycle that Argentines know all too well, and has made the word ‘Argentina’ synonymous with crisis. Cortazar wrote that the ‘Argentinian future so insistently repeats the present.’ It’s also a cycle that is in large part orchestrated to benefit those with the ability to halt it.

A tumultuous federation has led to structural, political conflicts between the service and skilled economy in Buenos Aires, and the resource and agricultural sectors in the provinces. It is the latter that have bankrolled the current administration, and the resultant favours have hastened this particular financial crisis.

The Macri presidential administration was ushered into power as the better of two bad options in 2015. Free market ideologues, they proposed radical reforms for Argentina and to open the country up to trade and foreign investment. Tariffs on imported goods began to be removed and taxes on exported primary produce reduced. In practice, this immediately impacted employment, and as fear amongst Argentines grew, it slowed demand in the economy.

Subsidies for essential services such as electricity, gas and water were also reduced, while many monopolist companies (linked to the Macri family) had their debt forgiven by the Argentine government. A perplexing decision, unless you understand some of the dealings of the families involved in the Macri administration.

Mauricio Macri is the child of a mafia-like family. His ancestors fled to Argentina from Italy after World War II, having benefitted from, and established companies with, the Mussolini dictatorship. The family immediately set up business dealings, building civil infrastructure for government institutions; something almost impossible to do in Argentina without resort to basic bribery and corruption.

Upon entering politics, Macri divested his business interests, literally to a poor cousin (an expression-turned-joke-turned-reality in Argentina). But he is far from the only one with questionable histories, as leading actors in this recurring narrative show.

Luis Caputo, responsible for re-opening Argentina’s debt market as Finance Minister, used inside information to make 89,000,000 pesos on ‘lebac’ bonds. His ‘punishment’ upon losing his ministry amidst the slide in the peso? To become the president of the central bank. A man with significant offshore wealth, at the controls of one of the world’s largest economies, in the middle of a corruption scandal, visible to anyone with a computer.

It’s as brazen as it is bizarre.

And it is this two-fold problem that is leading the next Argentine crisis now: reductions in tariffs and export taxes acting as de facto capital controls have been removed, meaning there is no reinvestment in Argentina, and reopening capital markets is benefitting a few inside participants and external game players, creating a crisis of confidence and putting further pressure on the Argentine Peso.

Why is it important?

South America, and especially Argentina, has been the play thing of the ‘global north’, particularly the United States and the IMF. In the 1990s the IMF experimented with financial policies in Argentina, leading to a massive default in 2001. The IMF has a horrible reputation amongst working people and professionals in Argentina. The mere mention of the name draws a visceral and physical response in conversation.

The policies and their ramifications were largely criticised by economists such as Josef Stiglitz. A rethink within the IMF was meant to refocus attention on promoting avenues to growth, not just on punishing the poor through austerity.

But Argentina’s geopolitical position in the role of perpetual debtor serves a purpose in ensuring primary produce for the Global North, and a bigger role in facilitating unscrupulous business dealings in Latin America.

And of course, to rectify the damage caused by economic mismanagement, it is austerity that is favoured by the administration. In its gunsights now are healthcare and education. Whilst many developed nations have given up on the ideals of free education and healthcare, Argentina provides this for free, to anyone who crosses the border – ability to pay or not.

Argentina is a bastion of the welfare state in the Americas. This has at times resulted in contradictory political actors – none more so than Peron and the ensuing Peronismo (a hero and an ideology followed by elements from the authoritarian right to the authoritarian left, and everyone in between). A larger discussion for another time.

To attack the ramparts of the welfare state, Macri is using the IMF as a battering ram. Rather than using it as a solution for Argentina’s problems, he is using the IMF as justification for drastic social reforms: reducing wages, dismantling welfare and smashing the unions.

The administration has a wider agenda that is creating confidence issues in the market, and destroying the lives of working people. Earlier in the year, unions proposed a meagre pay rise, which was rejected by the government. A paltry counteroffer was wholly unsatisfactory and refused.

This lack of stability was not seen favourably by the markets and has seen multiple runs on the peso – coinciding with expiration of bonds. There is no reason to reinvest in a country where devaluation is the policy. Macri himself, as outlined in the Panama Papers, holds most of his money offshore.

Why are they doing this?

We need to return to the interests of the family. The families currently governing Argentina thrive on it. You could say it is their business model. Macri’s ancestors, aligned with Mussolini, likewise expanded rapidly in the military dictatorship in Argentina during the 1970s and 1980s, which was a period of recession and hardship for most businesses.

The Macri family and others in the current government also benefitted greatly from privatisations and questionable land sales during the Menem governments of the 1990s. Now even more of their wealth is held overseas, and their position is much stronger.

Difficult financial situations, followed by forced privatisations, followed by consolidated private debt on the public balance sheet, are features of disaster and vulture capitalism. It is much more easily achieved when you can do it from the inside. The return of Domingo Cavallo – one of the most hated figures in Argentina (widely blamed for the default in 2001) – is seen as insurance that the past is repeating for the same interests.

And what is the outlook?

Can Argentina escape Sabato’s tunnel, or will it descend into the repeating present? Macri has declared that this must be the last crisis that Argentina faces. But actions speak louder than words.

And this is framed by the appointment of another key person. Patricia Bullrich, responsible for plunging millions of retirees, disabled citizens and public workers into poverty during the 2001 crisis, has been minister for security since the beginning of the Macri government. An aggressive politician, she has a violent past, using the name ‘La Piba’ whilst a member of terrorist Peronist organisations in the 1970s. Her position makes ordinary Argentines feel more than uncomfortable, and if the worst does eventuate, a repeat of the 2001 riots where thirty-nine people were killed by police and security forces, would seem inevitable.

As the old tango lyric and common expression goes: ‘El que no llora no mama y el que no afana es un gil’ (the one who doesn’t steal is a fool [more or less]).

Argentines are right to feel nervous.

Image: street art in Buenos Aires

For an excellent review of the current political leaders in Argentina, read Macristocracia: La historia de las familias que gobiernan la Argentina, by Fernando Cibeira.