Prosperity and poverty divide Argentina

from Yahoo News

by Olivier Baube

RAFAELA, Argentina (AFP) - In this farm town deep in Argentina's "Pampa," the collapse of the national economy six years ago is a distant memory that has been tilled over and given way to a lush prosperity.

This is one of the areas that has done very well out of skyrocketing worldwide demand for commodities, which has helped add 45 percent to Argentina's gross domestic product since 2003.

The devaluation of the peso from its one-to-one peg with the US dollar to less than a third of that has also been beneficial, allowing farmers rich in export dollars to pay off peso-denominated debt more easily.

"When the peso and the dollar were at parity we sold soya beans at 180 pesos for 180 dollars. After the devaluation we got 500 pesos so that year we paid off a big chunk of that debt. It was a real boost," said 30-year-old farmer Fernando Clacha. He has expanded his holding to 3,200 acres (1,300 hectares), growing soya, wheat, maize and sunflowers.

Even the government's take -- a 27.5 percent tax on each tonne of exported soya, for instance -- has done little to undermine the boom in the sparsely populated countryside.

Dairy farmers are the only ones to grumble a bit, saying that government price controls designed to put cheap milk on the domestic market are robbing them of the export manna.

"Today all production for export is controlled by a fund that sells milk at 4,600 dollars but only pays us 2,100," complained one, Jorge Pesce.

Pesce, looking comfortable in his Ralph Lauren shirt and designer sunglasses as he tended his 1,200 acres, is now getting a quarter of his income from crops.

Omar Perotti, mayor of Rafaela, 500 kilometres (300 miles) northwest of Buenos Aires, proudly points out that local unemployment is just 6.6 percent, less than the 8.5 percent national average, and well under the 20 percent seen at the worst of the economic crisis.

But the contrast between the increasingly rich countryside and the forgotten slums that circle Buenos Aires could not be more flagrant.

In the latter, the economic recovery has completely bypassed the ramshackle collections of dwellings that have swelled in the wake of the collapse that decimated Argentina's middle class.

In one such poor suburb, known as "Misery Town Number 20," 25,000 people, most of them immigrants, live hand-to-mouth.

One resident of 25 years who gave her name as Natalia said her family had to get by on her 600 pesos a month. Her husband, a builder, is out of work.

Her home is often flooded when it rains, and the neighborhood is prey to insecurity linked to "paco," a cheap street drug.

One neighbor, Alberto Scrazzollo, is a "cartonero," meaning he lives off what he finds in the trash dumped in the streets of Buenos Aires.

"I was a laborer in 1999, but I lost everything with the crisis," the 35-year-old explained.

At least 250,000 people now live in such shanty towns around the capital -- a figure that is nearly triple that of before 2002, according to the city-funded agency in charge of the slums.

Although some have recently pulled themselves out of poverty in the slipstream of the booming economy, chances of others following have narrowed.

Argentina holds a presidential election on Sunday, which First Lady Cristina Fernandez de Kirchner is hot favorite to win. She has emphasized the economic turnaround under her husband's stewardship, and vowed to pursue his nationalist, leftist policies.

Argentina's economic growth is showing signs of faltering, undermined by inflation estimated to run at 20 percent and the wariness of foreign investors.

The country's farmers will ride high as long as the demand for commodities stays strong. But those in the ramshackle poor zones look set to be staying put for some time to come.