THE abrupt resignation of economy minister Martin Guzman on July 2 was the most significant casualty to date of the power struggle between Argentinian President Alberto Fernandez and his deputy Cristina Fernandez de Kirchner and their respective supporters in the ruling Frente de Todos coalition government. 

Guzman was the architect of a restructure of the remaining $44 billion of a $55bn International Monetary Fund loan, obtained in dubious circumstances by the previous corrupt government of Mauricio Macri in 2018. 

Critics say that the price of the restructure is too high. In return for postponing repayment until 2026, Argentina must decrease subsidies on public services, cut spending, reduce monetary emissions and increase interest rates as a means of combating the chronic inflation that has long afflicted the country. 

According to the official statistics agency, Indec, at the end of 2021, 37.3 per cent of the population were living in poverty of which 8.2 per cent are indigent with inflation on course to reach 70 per cent year on year, one of the highest rates in the world. 

Guzman’s resignation provoked a run on the embattled Argentinian peso, the unofficial “blue” rate reaching nearly 270 to the dollar at one point compared with the official rate of 132, until the first public pronouncements of his hastily appointed successor, Silvina Batakis, slowed the rout. 

Retailers and wholesalers have responded to the falling value of the peso by raising prices on a daily basis, prompting consumers, where they could, to buy goods and services as quickly as possible, thus fuelling the inflationary spiral still more. 

Argentinians, with long memories of previous currency crises, have no little or no faith in the peso and will buy dollars at every opportunity as a hedge against future crashes, though that is not an option for much of the impoverished working class. 

Orhodox economists will blame Argentina’s seemingly endless battle against inflation on poor fiscal policy, reckless spending and printing money. 

These factors are often present but the underlying structural problems of the republic’s economy are rooted in a neocolonial and neoliberal world order. 

Paradoxically, Argentina is one of the world’s biggest creditors and the only one in Latin America. In 2020, the assets of Argentinians abroad were more than $400bn, a sum that exceeds both the country’s GDP for the year and also the $120bn received in foreign investments. 

Moreover, though precise figures are not available, much of the $55bn borrowed by Macri went straight out of the country into offshore accounts. 

Needless to say, none of this has done anything to benefit Argentina’s economy but in an era of zero exchange control regulations, free markets and the US dollar as the world’s de facto reserve currency, capital flight is inevitable.

In common with other Latin American countries, Argentina’s economy is based on the production and export of primary products, particularly in the agricultural sector. 

Previously renowned for the quality of its meat from livestock roaming freely on its vast expanses of fertile land, the beef industry has been largely replaced by the environmentally disastrous cultivation of genetically modified crops. 

Sixty per cent of Argentina’s arable land is now given over to GM soya, a plant dependent on the liberal application of agro-toxics like glyphosate which in 2015 was described by the international agency for the investigation of cancer as “probably” carcinogenic. 

Their analysis would seem to be borne out by the abnormal amount of cancer clusters and birth deformities in towns and villages situated in the midst of soya’s green desert and affected by aerial spraying.  

Exports of genetically modified crops have boomed and Argentina is now the world’s largest exporter of processed soy and the second-largest exporter of corn. 

Farmers who had enjoyed unprecedented levels of profit have always been reluctant to pay more taxes to finance social programmes and redistribute wealth. 

The agricultural sector is dominated by a small group of multinational companies including Glencore, Cargill, Bunge, Archer Daniels Midland, Dreyfus and Chinese state company, Cofco, which uses its network of affiliates to indulge in transfer pricing and other financial manoeuvres to minimise its tax exposure. 

Farmers complain that the government has imposed export quotas to guarantee supplies for domestic consumption at a time when they could fill a gap in the world market left by the conflict in Ukraine. 

However, production costs are rising because 60 per cent of their fertiliser is imported, 15 per cent of it from Russia, and the cost of oil-based chemical pesticides will inevitably go up as well. 

Ultimately, neither the state nor the farmers control the price of agricultural goods that are the subject of growing speculation in the international commodities futures markets. 

Power struggles between Buenos Aires and Argentina’s rural interior can be traced back to the birth of the republic in the early 19th century. 

As long ago as 1923, president Marcelo T de Alvear created a public meat-packing plant in the capital to challenge the then monopoly position of British and US firms and guarantee a supply of reasonably priced food for the urban population. 

In 1933, a conservative government established a grain production board and in 1946, president Juan Peron wanted agricultural exports to fund his programme of import substitution industrialisation. 

Rural elites have consistently opposed these and other measures to establish strategic stocks of grain or to create a national export agency. 

Between 1989 and 1999, they were rewarded when president Carlos Menem and his chancellor Domingo Cavallo abolished virtually all controls on the trading of agricultural products, privatised the ports and liberalised the entire sector.

Menem’s two terms were a watershed for the Argentinian economy and firmly ushered in the neoliberal era. Subsequent governments have attempted to increase export taxes or introduce quotas in the agrarian sector and have met with fierce resistance, leaving the privatised model more or less intact despite an explosion of social unrest in 2002. 

Today, bets are being taken as to whether President Fernandez will survive until the next elections in 2023 and, if he does, what chance his divided coalition has of winning again. 

Despite their negative environmental and climatic effects, Fernandez is putting his faith in mining, fracked gas and agriculture to bail him out. 

It is almost inconceivable that a country the size of Argentina with the resources it possesses cannot even properly feed nearly half its population. 

It provides a vivid example of the urgent need to replace a failed profits driven, export-oriented economic order with a redistributive, democratic system of popular governance that puts people first and is not predominantly for the benefit of the corporate class.