Argentina To Nationalize Pensions
RENEE MONTAGNE, host:
And add to a crisis of another sort, the worldwide economic slowdown has hit Argentina particularly hard because the country has been riding high on high prices for its exports. Now the government is nationalizing nearly $30 billion in pensions and critics say it's because officials want to raid the system for much-needed cash. NPR's Juan Forero reports from Buenos Aires, Argentina.
(Soundbite of music and protesters)
JUAN FORERO: Protesting is an Argentine tradition but this protest is particularly emotive. It includes young and old, office workers in white shirts and ties, and blue-collar workers from working class neighborhoods. Their signs read no plundering and they shout freedom, freedom. The message is this, hands off my money. Santiago Justiniano works in a bank and he's accumulated about $40,000 after 14 years of paying into his private pension fund.
Mr. SANTIAGO JUSTINIANO: I'm protesting because the government want to take all our savings that we have been putting, doing all this 12, 13 years. They want this money for all other things, for paying their debt.
FORERO: Argentines are tense these days, and carefully awaiting news of what will happen next. Lately, they've been focused on congressional hearings.
(Soundbite of man speaking in Spanish)
FORERO: Here, Labor minister Carlos Tomada is promising to protect workers from market forces that have shaken investor confidence in the United States.
Mr. CARLOS TOMADA (Argentine Labor Minister): (Spanish spoken)
FORERO: He urged the opposition forces to quickly approve the nationalization of the pension funds, warning that it can't wait. He also said the state would guarantee the $30 billion now found in 10 funds. But Argentines have long memories, remembering all too well how the government froze their bank accounts in 2001. That was when Argentina defaulted on its foreign debt and the economy collapsed plunging in millions into poverty. The country climbed out of its economic mess, thanks to high commodity prices as the world demanded Argentine soybeans, wheat, meat and milk. Nine million people were lifted from poverty. But the two governments that have ruled since then - the Kirchner, that is Nestor Kirchner, and now his wife Cristina Fernandez de Kirchner, also spent and spent. Now trouble looms. Daniel Artana is chief economist at the Latin American Economic Research Foundation in Buenos Aires. He echoes other economists who believe the government wants to raid the pension funds. That's to avoid defaulting on $28 billion in debt Argentina must pay in three years.
Mr. DANIEL ARTANA (Chief Economist, Latin American Economic Research Foundation, Buenos Aires): They say that they want to protect future pensioners, but that's probably an excuse. My impression is that they are trying to get some financing to cover government debts probably next year.
FORERO: Oscar Agual(ph) is a congressman and a leader in the opposition. He says he's not necessarily against reverting pension funds back to the state, but he says the government is trying to ram the plan through. And that could spell disaster.
Congressman OSCAR AGUAL (Argentina): (Spanish spoken)
FORERO: He says that this country, the land of Juan Peron after all, has a long tradition of populism. And populistsgovern for the short term to win elections. Not everyone, of course, agrees. The privatization of pensions came with big commission cost. And some argue that the returns have not been as good as expected. But what's clear is the American financial meltdown has led to a drop in demand for what Argentina produces. The price of soybeans for instance is down by half in just three months. That's left an export-dependent economy hard hit. Of course, it's always been that way for Argentina.
(Soundbite of Argentine music)
FORERO: In Buenos Aires, Argentines flocked to parks and local dance halls, wherever the tango plays. It's a tradition. But they also do it to forget hard times. Just ask Oscar Camartino.
Mr. OSCAR CAMARTINO: (Spanish spoken)
FORERO: He said Argentines are used to economic troubles, they come in cycles. And he said - with a frown - that Argentina should have been much better prepared.
(Soundbite of Argentine music)
FORERO: Juan Forero, NPR News, Buenos Aires.