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Representatives of the Inter-American Commission on Human Rights visited Argentina for the first time in 1979. Their mission was to investigate the work of a murderous military dictatorship responsible for thousands of "disappearances." This July, three senior members of the Washington, D.C.-based commission stepped into the lobby of the Hotel de las Américas in Buenos Aires. They were greeted by protestors who claimed to be victims of human rights violations just as egregious as the crimes of the dictatorship's killing machine almost a quarter of a century ago.
The protestors didn't look like human rights victims. Many women had donned mink coats for the occasion; other women and men frenetically dialed cell phones, inviting friends and neighbors to join them. The crowd had come to protest the corralito, a set of banking restrictions that had kept the savings accounts of at least two million Argentines, or over 5 percent of the total population, locked up since last December, when the country's already troubled economy reached an unprecedented low. The government, initially with the blessing of the International Monetary Fund, instituted the restrictions to avert a run on the banks that could have destroyed Argentina's crippled financial system. Only in October did the government begin to ease the restrictions on withdrawals.
To protestors, the corralito was the work of a sinister network of bankers, politicians, foreign investors, international organizations, economists, and, depending on whom you asked, Yankee imperialists plotting to cripple and conquer resource-rich Argentina. Crowded into the marble-floored lobby, the well-dressed and very angry depositors sought confirmation that their righttheir fundamental, inalienable rightto withdraw savings had been wrongly suspended for the past eight months. They wanted the commission to alarm that they were victims.
Led by Santiago Canton, the commission's executive secretary, the three representatives filed through the crowd, as protestors barraged them with pleas and accusations. Canton, an Argentine who was visiting his homeland for the first time since the restrictions were adopted, seemed startled. "It's overwhelming," he said, surveying the crowd. "We have never seen anything like this." In an average year, the commission receives about 600 claims of human rights violations from the Western hemisphere; from June through August, it had received three times that number against the corralito alone.
Awaiting Canton in a gilded conference room were the de facto leaders of the protestors, the odd couple of Nito Artaza and Juan José Guaresti. Artaza is a 42-year-old actor and comedian who made his name impersonating politicians on a sketch comedy show; last summer he was more often found wielding a microphone and shaking his fist on the front line of a demonstration. Guaresti, age 62, is a lawyer, economist, and the former head of Argentina's Central Bank. In a blue pinstriped suit with his silver hair combed back, he looked the part. He still attends an informal monthly discussion with the country's top bankers.
Guaresti avoided the purgatory of the corralito. Four years ago, when he realized the dangerous game that Argentine banks were playing with deposits, he moved all of his savings abroad. He has a tendency to shun the popular spotlight, but in June, when he filed denunciations of the restrictions with the Inter-American Commission on Human Rights and the United Nations Office of the High Commissioner for Human Rights, he became one of the corralito's most formidable opponents.
Artaza and Guaresti had arrived at the hotel armed with binders overflowing with evidence: stories of struggling families and videotaped testimonies of sick pensioners. They were given an hour to make their case.
Most depositors painted their fight against the corralito in binary termsthe people versus the powerfulbut the reality of Argentina's financial implosion is more complicated, the result of a decade of faulty monetary policy, risky business on the part of banks, and the whims of international finance.
In 1992, the Argentine peso was pegged to the U.S. dollar, guaranteeing an artificial one-to-one exchange rate between the two currencies. Accompanying a slew of free-market reforms, privatizations, and infusions of foreign investment, the dollar peg brought a needed, though illusory, dose of stability to an economy plagued by runaway inflation. Wary Argentines, with memories of devastation from past hyperinflationary spells, deposited most of their savings in dollars, assuming they could withdraw dollars if the Argentine currency reverted to its previous instability.
After watching government cash reserves plummet through the first half of 2001, however, businesses and a few savvy depositors suspected that it would soon be impossible for banks to return savings in dollars and began to make frantic withdrawals. They started a vicious cycle: confidence faltered, which caused capital flight, which drained dollar reserves, which further reduced confidence. And so on, to the establishment of the corralito. "It was a flight that no one knew how to stop without dealing with the problems of a basic lack of trust in the government and the economy," said Juan Luis Bour, director of the Buenos Aires-based Foundation for Latin American Economic Research. "If you can't resolve the problem with economic policy, you have to shut the doors of the banks."
When the government instituted the corralito on December 3, 2001, the restriction on withdrawals was supposed to be a temporary measure to stave off financial collapse. The run on the banks had drained $20 billion from a nearly $90 billion banking system. The government's temporary solution instead spanned the better part of a year, accompanied by skyrocketing unemployment (officially at 21 percent, though the combination of un- and underemployment is over 40 percent) and a poverty rate above 50 percent.
Banks, meanwhile, had dilemmas of their own. In recent years, they lent dollars deposited by their clients to the sputtering government, charging abnormally high interest rates to offset the obvious risk. This lending strategy violated no law or financial regulation, but critics now denounce it as inexcusable. Banks were caught between depositors who want their money back and a nearly broke government that promised to pay back dollar loans in relatively worthless pesos. (A month into the corralito, the government unpegged the Argentine peso from the dollar, sending the peso into a downward spiral.) Looking out for the bottom line, bankers have lobbied for a "market solution": passing the government's unpaid debt onto depositors by converting savings into long-term government bonds. Even if the government does someday repay bondholders, however, a person's life savings, converted from dollars to pesos at far less than the going market rate, would be worth less than a quarter of its original value.
Depositors were told that some $70 billion in Argentine savings, much of which sits in Citibank, BankBoston, and other large foreign banks, had temporarily disappeared into the depths of the financial system. Economists explained the disappearance in terms of lending policies, capital flows, and interest rates. But depositors looked up and saw robberya conspiracy by corrupt politicians, greedy bankers, and a multinational financial elite that gets taken care of at the expense of the people.
The depositors' frustration spilled onto the streets this summer. On most weekdays, downtown Buenos Aires looked like a refugee camp for the middle class. Lines at banks stretched entire blocks, and many banks were sheathed in metal siding to protect them from the crowbars and kitchen utensils depositors wielded when venting their rage. Several days a week, pot-banging, banner-waving protestors clogged the financial district, covering buildings with angry graffiti and waging an improbable war under the flags of "private property" and "the rule of law."
The depositors also took their battle to the courts. Domestic appeals over the alleged unconstitutionality of the corralito freed some $5 billion, mostly to wealthy depositors with insider connections. Guaresti's human rights case sought to establish universally what depositors spent eight months arguing for in street protests, domestic and foreign courts, and thousands of personal appeals to bankers and politicians.
His legal arguments are straightforward. In a brief submitted to the U.N.'s Office of the High Commissioner for Human Rights, he drew on Article 17 of the Universal Declaration of Human Rights"no one shall be arbitrarily deprived of his property"to claim that the IMF and the Argentine government cannot support a policy that strips depositors of their savings. In his case before the Inter-American Commission, he presented the corralito as a violation of Article 21 of the American Convention on Human Rights, a similar guarantee of private property. "It's a simple fact: The banks won't return the people's money," he explained. "They have taken our property, and that goes against human rights." He accused banks of recklessly gambling with deposits"a crime, a violation of the trust of their clients"and of trying to pass their losses on to small depositors, who have no defense against this expropriation.
The problem with Guaresti's argument is that following his case through to a conclusion could mean destroying the already shattered financial systema possibility that even the most adamant protestors recognize as dire. "They're demanding an impossible solution. The money's just not there," said Juan Luis Bour. "You can't force the banks to take a loss, because if the banks don't have property rights, they're not going to lend to anyone."
The validity of the human rights case hinges on the word "arbitrarily." With the survival of Argentina's financial system at stake, it's difficult for the depositors to prove that the sacrifice of individual property rights was merely a governmental whim. The strength of the human rights case depends more on the tangible effects of the corralitothe human costs to those forced to live under itthan on legal principles.
As the representatives of the commission heard Artaza and Guaresti make their appeal in Buenos Aires, the depositors in the lobby traded war stories. The tragedies ranged from failed businesses and dashed dreams to sick parents and hungry families. Sara Genova talked about her middle-aged husband. For the past seven years, he has had a neurological disorder that causes him to black out in mid-sentence and remain unconscious for 40 minutes at a time. His monthly treatment costs upwards of $500. "I'm very afraid for him. He doesn't see any future, and every day he's worse," she said. "We never believed that something like this could happen, that Citibank or BankBoston would not return our deposits. They broke all contracts. They broke the rule of law. They broke hope."
When the representatives left the conference room, there was an uproar, with each depositor shouting to be heard. The clamor had an angry edge, and it betrayed a dark realization: They may never be able to get back what they've lost.