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Privatization: the neo-liberal onslaught of neoliberalism | REPORT

Privatization: the neo-liberal onslaught of neoliberalism | REPORT

1992 was an important year in the wave of privatization faced by President Carlos Menem and Minister of Economic Affairs Domingo Cavallo during their time in power. In the midst of the respect of the one peso = one dollar balance, there were profound economic reforms that considered the privatization of strategic public companies, which had played a fundamental role in the development of the country. In memory were the promises of PJ’s candidate for a “production revolution” and a “wage”.

As he wore the presidential belt, Menem not only threw in his election speech, but also the legacy of the protectionist policy that Juan Domingo Perón introduced during his first two presidencies. He had the constitution approved for his role: State reform 23,696 (August 1989) and economic emergency law 23,697 (September that year) were the basis for selling public companies at ridiculous prices. As the neo-liberal manual learned in record time, he became an “exemplary student” of the United States.

“The state reform law entails a substantive change in ideas about the role of the state, which covers different areas: administrative reform, decentralization, tax reform and privatization of public companies,” said Cecilia Senén González, CONICET researcher and professor of communication. working at the Department of Social Sciences at the University of Buenos Aires (UBA).

In an interview with the University Appendix, he stated that “among his main chapters was a statement on the state of emergency in public administration, state-owned companies and companies, privatization, concessions and joint ventures.

“Regarding privatization, it allowed the executive branch to intervene in almost all public companies, suppress their boards and other regulators, change their corporate form, divide them and obviously privatize them,” Senén González said.

Regarding the Economic Emergency Act, he pointed out that “it gave the executive a wide decision-making power, by abolishing all the criteria that separated foreign capital from domestic capital, allowing the former to enter previously restricted privatized areas and postponing domestic purchases. “.

As part of the state reform, Menem and Cavallo issued Directive 2,408 on 12 November 1991 with the “Basic Plan for the Application of the Privatization Process of Public Enterprises and Services” (available at

In December of the same year, the regulatory framework and tender documents for the privatization of Obras Sanitarias de la Nación (OSN) were approved, completed in 1992, and an audit of the Empresa Nacional de Correos y Telegrafos (National Post and Telegraph). Company) was carried out (ENCOTEL, today Correo Argentino), for subsequent private delivery that year.

In 1992, the Empresa Líneas Marítimas (ELMA), freight and passenger lines, electricity distribution and power plants – the renowned Servicios Eléctricos del Gran Buenos Aires (SEGBA) – and Puerto Nuevo, Costanera, Dock Sud power plants were also sold. and Pedro de Mendoza. The power outage also led to the creation of twenty hydropower plants, but their concessions expire in 2023 and subsequent years.

For Menem and Cavallo, the state-owned companies were “business units” according to official wording. In 1992, they faced the collapse of Agua y Energía Electrica, Gas del Estado and YPF.

In addition, a system of tolls on roads and highways was created, but its tender was provided for in the period January to July 1992, according to Article 8 of that ruling, for “operation of an access network to major cities”.

The official regulation took as a basic argument, just as the privatization of the media system had been doing from the government of Raúl Alfonsín, that the concession program “will bring significant benefits to society, by improving the services it should receive. and the compression. efforts in priority areas: security, health, education and justice “. A promise that was never fulfilled.

As a summary of the current situation, Natalia Álbarez Gómez, PhD in Political Science, Professor and Researcher at the Universities of Córdoba (UNC) and La Rioja (UNLaR), reflected: ” these privatizations would be possible and without active social participation, which puts such a decision in the discussion “.

Flagship company tickets

“The state reform law of the 1990s marked the beginning of the privatization process of public enterprises, with a special focus on those companies that were owners and providers of public services,” said the researcher from the National University of José C. Peace (UNPAZ). ) Juan José Carbajales, Supervisor Handbook of Public Enterprises in Argentina (1946-2020).

Carbajales noted that in 1983, the year democracy was restored, there were almost 300 state-owned enterprises in the country, of which 260 were non-financial corporations – 143 national, 83 provincial, 6 local, 3 international and 24 mixed.

“From 1990 onwards, the process of abolition and privatization of state-owned enterprises, especially public services, will begin, based on the principles of economic liberalism and the need to achieve greater efficiency in the provision of services,” he said. this supplement.

In the spring of 1992, the privatization of one of the brand companies was completed. In a scandalous congress, between September 23 and 24, the House of Representatives approved the handover of the YPF, founded in 1922 by President Hipólito Yrigoyen. This was done by Act 24,145, which was enacted on October 13, 1992.

Another of the important companies privatized by Menem and Cavallo was AyE, founded by the first Peronist government in 1947, which had supplied water to cities and towns across the country to operate power plants, military installations and pipeline water. Act 24,065, passed by the Althingi in December 1991, was published in the Government Gazette on 16 January 1992.

Within the framework of the privatization program, Directive 817 (26 May 1992) on port activities was issued, which aimed ‘at restructuring the administration and privatization; transport by sea, rivers and lakes; coxswain, coxswain, lead and torque; and work arrangements.

Invalid vote

Founded in 1946, another symbolic public company privately owned by Menem and Cavallo was Gas del Estado, which was divided into 11 private companies with a majority of foreign capital. Of which 9 for distribution and 2 for transport by gas pipeline.

Demanded by the World Bank, privatization was enshrined in Law 24,076, enacted on June 9, 1992. The date indicated public opinion: on that day, in 1956, the dictatorship of Aramburu-Rojas began firing on Peronist troops and civilians after the Juan José uprising. Valle General.

The privatization of that company was one of the biggest political scandals in the history of Argentina. At the Deputy Parliamentary Assembly on March 26, 1992, a “deputy” voted in favor of the privatization. His name was Juan Abraham Kenan and he was an adviser to the then assistant Julio Manuel Samid. The “help” was due to the fact that PJ was running out. The court did not punish anyone.

That year also saw the privatization of Caja de Ahorro y Seguro (Law 24,155, enacted on 26 October) and Sociedad Mixta Siderúrgica Argentina (SOMISA), established in 1947. The latter was put out to tender and auctioned. domestic and foreign public for the transfer of the share package and the sale of its assets.

The strength of the numbers

“Privatization, according to FLACSO, involved the transfer of public assets, strategic for the economy, for which the Treasury raised $ 23,851 million and owed $ 20,106 million,” said Karina Forcinito, a doctor of economics and researcher at the National University of General Sarmiento ( UNGS).

In a conversation with this supplement, he added that “the winners made an extraordinary profit that did not lead to a significant investment in most of the activities in the nineties.”

An expert recalled that in the time of the governments of Néstor Kirchner and Cristina Fernández, “the governing power of the state was partially restored by the nationalization of the ownership of some strategic companies.

“On the other hand,” he warned, “the neoliberal regulator granted foreign capital firms privileges that are still valid, such as the possibility of suing the Argentine state in international arbitration against changes to the original economic-economic balance of agreements resulting from sovereignty decisions. economic policy and regulations. “

Forcinito emphasized that because of this, “the Argentine state, which is leading the proceedings in the World Bank’s arbitration tribunal (ICSID) with 56 cases, has paid $ 16,538 million and is currently suing for another $ 8,755 million from 2001 to the present. “.

“It is necessary to terminate bilateral investment agreements (BITs); “reform the regulatory systems, which were inefficient, socially excluded and environmentally unsustainable, and replaced the market with social participation planning”, he emphasized.

lessons to learn

“It can be concluded that privatization was a real ‘custom suit’ for the same stakeholders who had been organized from the dictator’s economic policy,” Daniel Azpiazu and Eduardo Basualdo point out. Privatization in Argentinanecessary book to understand the process of state reduction.

Álbarez Gómez, in this sense, pointed out that “the idea of ​​privatizing state-owned enterprises in Argentina takes us back to the 1990s and to the neoliberal model, whose germ can be found in the 1976 dictatorship.”

In a conversation with the University Addition, he warned that “30 years after these privatizations, it is inevitable to ask ourselves about their impact and consequences for Argentine society.”

An example is public services which, in his opinion, “cannot be in the hands of the private sector; the reason is that private companies have profit as their main goal and the state needs to ensure the public good “.

Three decades later, the consequences of privatization are still being felt: “The speed and speed of its application, which was characterized by vague and weak regulations, benefited those who pursued only lucrative interests, because it promoted capital consolidation, did not create competition and weakened it. the supervisory role of the state, to which is added compensation for workers and their families “.

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