[Wing at $150 million a month. The danger…]

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Wing at $150 million a month.

The danger of more bankruptcies forced Martinez de Hoz and his successors to channel government funds into failing companies, further undermining plans to cut public spending.

One contradiction ot Thatcherism not shared by Videlanomics was that the Argentinian government has not had to pay money to those they have forced into penury and unemployment by their policies.

Burden

The result is that massive inflation, the control of wages and unemployment (which is still officially below the British level) has imposed an almost incredible burden on the Argentinian working class.

Real wages are now around 50% of what they were in 1976. Although official unemployment is only about 5% in Buenos Aires the real figure (including • underemployment in ultra-low paid jobs) has been estimated at over 40%.

The hoped-for results of Martinez de Hoz economics was (as with Thatcherism and Reaganomics) that after a short sharp shock the policies would produce a new upsurge of healthy capitalist growth.

In fact it led to no overall growth at all but to extreme fluctuations from year to year.

At length in 1981, after Martinez de Hoz had left office along with his patron Videla, the contradiction of his policies suddenly exploded.

During 1981 the Argentinian peso was devalued from 2,000 to the US dollar to 10,000 to the US dollar providing the potentiality for a tremendous new boost to inflation, which in 1981 rose to 138% and now threatens to go up further.

Alongside the devaluation went a tremendous slump. The GNP in 1981 fell by 8.6% and industrial production by a staggering 14%. Car sales fell by 64% and excess capacity in industry was estimated at 42%.

It was this series of economic disasters which helped lead to the collapse of the Viola regime in December 1981.

General Galtieri who then seized power represented a bunch even further to the right both politically and economically. He declared that "the period of words and promises is over; now is the time for firmness and action."

Budget

And he has installed as Economics Minister, Roberto Alemann.

He plans a budget which cuts spending further and raises taxes so that the budget deficit falls to 2% of the GNP (from 3% last year). But this included a 10% cut in military spending which has already been abandoned.

Within 60 days he intends to present a plan for selling off large amounts of Argentina's large public sector to private capitalism.

This will include the state-owned banks (which hold 47% of deposits) and even army-owned enterprises like Fabricaciones Militares.

He has raised VAT from 10 to 12%, imposed a complete freeze on wages and state pensions and failed to raise income tax allowances in line with inflation.

The effects of these policies once again will be more slump and unemployment, lower real wages and higher interest rates in the short term even if it were to "work" in the long run.

For that reason it provoked, as soon as it was announced, a wave oi militant resistance.

The decision to indulge in an international adventure arises very clearly from the effects of this combination of the need to intensify the economic attack on the working class and growing evidence that the working class will step up its resistance to such an attack.

The Falklands adventure reflects the cynical decision to whip up chauvinistic sentiment in order to hold down class resistance.

But now a new problem has arisen - the economic effects of reactions to the invasion. The EEC boycott would cut off 28% of Argentina's exports: it is not likely that the USSR would fill the gap since Moscow has been complaining about the fact that Argentina does not import enough Soviet goods (last year it had a deficit of $1 billion with Argentina).

Besides Galtieri came to power with promises to reduce links with the Soviet Union and strengthen those with the West. He was regarded as Reagan's man in the Junta.

Britain's war threat may have produced mass demonstrations in the streets but it also • produced financial panic. There has been a run on the banks, huge capital flight and the regime has had to impose emergency measures. The peso was exchanging last week at 14,500 to the US dollar when its official rate is 11,500.

This means the war will create even more inflation while wages are frozen. Patriotic demonstrations could well turn into something else.

The situation has already led to the effective default of Argentina on its international loans as a result of the freezing of assets in London.

Argentina's economic situation is so bad that it is imperative that it maintains access to international loans. Its total international debts, public and private, probably amount to $32 billion -more than Poland's.

But while it would be a disaster for Argentina if it could not continue to borrow, it might also be a worse disaster to the stability of the world capitalist financial system if a major default were to happen.

Two major debtors (Argentina and Poland) and many minor ones are now on the brink of default.

• Both militarily and economicially therefore, the weapons available to the imperialists against Argentina are two-edged.