Once-proud Argentina is in the grip of despair

BY Anthony Faiola Aug.7, 2002: The Washington Post

  ARGENTINA WAS ONCE considered the shining star of Latin America. But devaluation, unemployment and a staggering foreign debt have led to the worst economic crisis in the nation's history. People from every walk of life share disaster stories. Economists and politicians differ on the causes, but all agree there is no easy fix. And the most bitter loss for Argentines is the loss of their dignity.

  ROSARIO, Argentina - Word spread fast through the vast urban slums ringing Rosario. There was food on the freeway and it was still alive.
  A cattle truck had overturned near this rusting industrial city, spilling 22 head of prime Angus beef across the wind swept highway. Some were dead. Most were injured. A few were fine.
  A mob moved out from Las Flores, a shantytown of trash heaps and metal shacks boiling over with refugees from the financial collapse of what was once Latin America's wealthiest nation. Within minutes, 600 hungry residents arrived on the scene, wielding machetes and carving knives.
  "Kill the cows!" someone yelled. "Take what you can!"
  Cattle company workers attempting a salvage operation backed off. And the slaughter began. Cows bellowed as they were sloppily diced by groups of men, women and children. Fights broke out for pieces of flesh in bloody tugs of war.
  "I couldn't believe my eyes," said Alberto Banrel, 43, who worked on construction jobs until January, when the bottom fell out of the economy after Argentina suffered the world's largest debt default ever and a massive currency devaluation.
  "And yet there I was, with my own bloody knife and piece of meat," Banrel said. "I felt like we had become a pack of wild animals. ... Our situation has turned us into this."
  The desolation of that day in March suggested how profoundly the collapse has altered Argentina. Traditionally proud, Argentines have begun to despair.

  A legacy of chaos
  Argentines have a legacy of chaos and division. In search of their "workers' paradise," Juan and Eva Peron declared war on the rich. During the "dirty war" of the 1970s, military rulers arrested tens of thousands of people, 15,000 of whom never resurfaced. And when then President Carlos Menem touted New Capitalism in the 1990s, the rich got richer many illegally while the poor got poorer.
  Yet some things never really changed. Until last year, Argentines were part of the richest, best educated and most cultured nation in Latin America. Buenos Aires cafe society thrived, with intellectuals debating passages from Jorge Luis Borges over croissants and espresso. Argentina was, as the Argentines liked to say, very civilized.
  Not anymore.
  With statistics showing 11,200 people a day falling into poverty -earning less than $3 daily - Buenos Aires, a city once compared to Paris, has become the nightly dominion of scavengers and thieves. Newly impoverished homeless people emerge from abandoned buildings and rail cars, rummaging through trash in declining middle and upper-class neighborhoods.
  Every Argentine, no matter the social class, has a crisis story.
  A desperate gesture
  The morning of her 59th birthday, Norma Gonzalez awoke in her middle class Buenos Aires home, kissed her husband on the cheek and caught a bus to the bank. There, before a stunned teller, she doused herself with rubbing alcohol, lit a match and set herself ablaze.
  That was in April. Today, Rodolfo Gonzalez, 61, her husband, keeps a daily vigil at the burn center where his wife is still receiving skin grafts. She had no record of mental Illness, according to her family, and has spoken only once about that morning.
  "She just looked up at me from her hospital bed and said, 'I felt so helpless, I just couldn't take it anymore,'" Gonzalez said.
  Argentina long had the largest middle class, proportionally, in Latin America, and one of the continent's most equitable distributions of wealth. Much of that changed over the past decade as millions of middle managers, factory workers and state employees lost their jobs during the sell off of state run industries and the collapse of local companies flooded by cheap imports.
  An engineer for the state power company, Rodolfo Gonzalez survived early rounds of layoffs in the early 1990s when the company was sold to a Spanish utility giant. But he was forced out in 2000.
  He was 59 and had worked for the same company for 38 years. Yet he landed a part-time job, and with his severance pay safely in the bank, he and his wife thought they could bridge the gap until Gonzalez became eligible for social security in 2004.
  Then came Dec. 1, 2001 when the government froze bank accounts to stem a flood of panicked depositors pulling out cash.
  Most banks here are subsidiaries of major U.S. and European financial giants that arrived promising stability and safety. But many Argentines who did not get their money out in time more than 7 million, mostly middleclass depositors faced a bitter reality: Their life savings in those institutions, despite names such as Citi-bank and BankBoston, were practically wiped out.

  Savings swept away
  Virtually all had kept their savings in U.S. dollar denominated accounts. But when the government devalued the peso, it gave troubled banks the right to convert those dollar deposits into pesos. So the Gonzalez family's $42,000 nest egg, now converted into pesos, is worth less than $11,600.
  As the family had trouble coveing basic costs, Norma Gonzalez would go to the bank almost weekly to argue with tellers and demand to see a manager, who would never appear. As prices rose, the couple could not draw on their savings.
  "You have to wonder: Is all this really happening?" Rodolfo Gonzalez asked. "Are our politicians so corrupt? Are we now really so poor? Have the banks really stolen our money? And the answers are yes, yes, yes and yes."
  Food manufacturers and grocery stores are raising prices even as earning power has taken a historic tumble. A large factor in both the price rises and the slump in real wages is the 70 percent devaluation of the peso over the last six months. But the price of flour has soared 166 percent, canned tomatoes 118 percent even though both are local products with little real increases in production costs.
  Severe hunger and malnutrition have emerged in the rural interior something almost never seen in a country famous for great slabs of beef and undulating fields of wheat. In search of someone to blame, Argentines have attacked the homes of local politicians and foreign banks.
  Economists and politicians differ on the causes of the crisis. Some experts blame globalization and faulty policies imposed by the International Monetary Fund. But just as many blame the Argentine government for runaway spending and systematic corruption. One thing everyone agrees on, how ever, is that there is no easy fix.
  Before 1999, when this country of 36 million inhabitants slipped into recession, Argentina's per capita Income was $8,909 double Mexico's and three times that of Poland. Today, percapita income has sunk to $2,500. The economy is projected to shrink by 15 percent this year, putting the decline at 21 percent since 1999.
  What had been a snowball of poverty and unemployment has into an avalanche since January's default and devaluation. A record number of Argentines, more than half, live below the official poverty line. More than one in five no longer have jobs.
  "We've had our highs and lows, but in statistical and human terms, this nation has never faced anything like this," said Artemio Lopez, an economist with Equis Research. "Our economic problems of the past pale to what we’re going through now. It’s like the nation is dissolving.

  Hunger and shame
  In the province of Tucuman, an agricultural zone of 1.3 million people, health workers say cases of malnutrition have risen 20 percent to 30 percent the past year.
  "I wish they would cry," whispered Beatriz Orresta, 20, looking at her two young sons in a depressed Tucuman sugarcane town in the shadow of the Andes. "I would feel much better if they cried."
  Jonatan, 2, resting on the dirt floor behind the family's wooden shack, and Santiago, the 7-month old she cradled in her arms, lay listlessly.
  Jonatan's lustrous brown hair as turned a sickly carrot color Clumps of it sometimes fall out at night as Orresta strokes him to sleep. Santiago hardly seems to mind that Orresta, weak and malnourished herself, stopped lactating months ago.
  Six months ago, Orresta's husband, Hector Ariel, 21, had his $100 monthly salary as a sugarcane cutter slashed almost in half when sugar manufacturers in the rural enclave of Rio Chico, 700 miles northwest of Buenos Aires, were stung by dried up credit and a massive drop in consumption.
  Ariel now earns just over $1.50 a day, not enough for the family to survive. The peso's plunge has generated inflation of more than 33 percent during the first seven months of the year.
  Goods not in high demand, such as new clothing, have not gone up significantly in price, but staples that families need for daily subsistence have doubled or tripled. The last time inflation hit Argentina in the late 1980s, when it rose to a high of 5,000 percent the unemployment rate was half the current 21.5 percent and most salaries were indexed to inflation. Today, there are no such safety nets.
  Orresta started trimming costs by returning to cloth diapers for her two young boys when the price of disposable ones doubled. But then she could no longer afford the soap to wash them, and resorted to reusing the same detergent four or five times. The children began to get leg rashes.
  "You know, we're not used to this, not having enough food," said Orresta, with a hint of embarrassment in her voice.
  She paused and began to weep.
  "You can't know what it's like to see your children hungry and feel helpless to stop it," she said. "The food is there, in the grocery store, but you just can't afford to buy it anymore."