Neoliberal restructuring, financialisation and socio-political competition in Argentina: the Convertibility System and the contradictory outcomes of dollarisation, 1989–2001

Abstract

In Argentina, as in many transition economies, the maintenance of monetary management and policy options while also maintaining the autonomy of national currencies has been severely constrained, becoming increasingly dependent on and conditioned by the financial globalisation process. So far, the dominant view within International Political Economy has too often assumed the existence of a process of convergence amongst different financial markets. I question this view by arguing that this process of convergence does not always hold if we look at the multifarious experiences of particular countries for explaining policy responses and outcomes as a result of very specific instances of distributional conflict and political bargaining. This paper argues that in searching for strategies, such as monetary policy, developing countries have constantly been compelled to introduce policies requiring (a) openness to international financial flows; (b) consensual and mutually advantageous relationships with states (and market actors) that provide and/or control international reserve currencies; and (c) domestic stabilisation and the re-articulation of socio-political coalitions around the policy choices implied by (a) and (b).

In search of a strategy, the Argentine government adopted in 1990 a rigid exchange rate mechanism via a currency board using the US dollar as an anchor, labelled the Convertibility Plan. Such a strategy required not merely economic adaptation but, more significantly, a re-articulation of the political process around different groups and interests. In Argentina, I identify a pattern of initial stability and credibility undermined by compromises with key coalition partners and with powerful opponents of the policy which eventually destabilised its credibility and sustainability, leading to a very protracted crisis and eventual abandonment of the policy in 2001 and the return to a managed exchange rate system.

Keywords:

• neoliberal restructuring
• dollarisation
• financialisation
• coalition-building

Notes

For a discussion on floating exchange rate see, for example: Fleming 1962, Macdonald 1988, Friedman 1996. For a discussion on fixed exchange rate see: Frankel 1999, Obstfeld and Rogoff 1995.

Data available from Banco Central de la Republica Argentina, Estadisticas e Indicadores, available at www.bcra.gov.ar.

Ibid.

Author's calculations based on data from the Central Bank and INDEC both available at: www.bcra.gov.ar and www.indec.gov.ar. In order to calculate the net private result I considered Privatization and FDI, Bonds and Loans, Trade credit, and Other.

Interview with Federico Braun, President of Banco Galicia, November 2001; Elsa Esposito, corporate risk management Citibank Argentina; Beatriz Biasone, Central Bank.

Interview with Federico Braun, President of Banco Galicia, November 2001.

Interview with Alberto Yaregui, Deputy, bloque de la UCR, Buenos Aires, Argentina, November 2001.

Interview with several members of the CGT Azopardo, Buenos Aires, Argentina, December 2001.

For a more detailed explanation of these movements see for instance: Edward Epstein (2006) “The Piquetero Movement in Greater Buenos Aires: political protest by the unemployed poor during the crisis” in E. Stein and Pion-Berlin, eds. Broken Promises? The Argentine crisis and Argentine democracy, Oxford: Lexington Books. Luis Oviedo (2001) Una historia del movimiento piquetero: de las primeras coordinadoras a las asambleas nacionales. Buenos Aires: Editorial Rumbos. Maristella Svampa y Sebastian Pereyra eds (2003) Entre la ruta y el barrio: la experiencia de las organizaciones piqueteras, Buenos Aires: Editorial Biblos. Norma Giarraca (2001) La protesta social en Argentina: Transformaciones económicas y crisis social en el interior del país, Buenos Aires: Editorial Alianza. Raúl Zibechi (2003), Genealogía de la Revuelta: Argentina y la sociedad en movimiento, La Plata: Letra Libre. Guillermo Almeyra (2004) La protesta social en la Argentina, 1999–2004: fábricas recuperadas, piquetes, cacerolazos y asambleas populares, Buenos Aires: Continente Pax (particularly ch. 6).

Amongst the business associations was one of the most powerful: the Industrial Argentine Union (UIA); Argentine Construction Chamber (CAC); and the Argentine Rural Confederation. Amongst the business sector were the influential Technit; Arcor; Perez Companc and Loma Negra.

Amongst the large industrial conglomerates were the influential Technit; Arcor; Perez Companc and Loma Negra.

Interview with Federico Braun, President of Banco Galicia, November 2001.

Ibid.; Elsa Esposito, corporate risk management Citibank Argentina; Beatriz Biasone, Central Bank.

Interview with Federico Braun, President of Banco Galicia, November 2001; and Elsa Esposito, corporate risk management Citibank Argentina.

Additional information

Notes on contributors

Mariana Jiménez-Huerta

Mariana Jiménez-Huerta is Teaching Fellow at the Politics Department, Queen Mary, University of London, and Associate Fellow at the Institute for the Study of the Americas, University of London. She specializes in the field of International Political Economy with research interests in monetary policy implementation, economic policy reform, global finance, and comparative politics in the context of Latin America. Prior to joining Queen Mary, University of London, Mariana was a Doctoral Researcher in IPE at the University of Manchester. The author would like to thank Professor Phil Cerny, Dr. Johnna Montgomerie and two anonymous reviewers from Contemporary Politics for their helpful comments on earlier drafts of this paper; the usual disclaimer applies.