In late 2001, the people of Argentina took to the streets, driven to despair by the economic chaos into which their leaders had dragged them. Among them was Gustavo Benedetto, a 23-year-old killed on his first ever protest. Naomi Klein reports on the events that triggered a momentous new kind of politics, born of years of military dictatorship and corrupt rule.

How do you celebrate the anniversary of something that is impossible to define? That was the question faced by tens of thousands of Argentinians on December 20 2002 as they marched from all corners of Buenos Aires to the historic Plaza de Mayo. It was a year to the day since the first "Argentinazo", a word that is completely untranslatable into English or, for that matter, Spanish. The Argentinazo was not a riot exactly, although it sure looked like one on the television, with looters ransacking supermarkets and mounted police charging into crowds; 33 people were killed across the country. It wasn't an ordinary revolution, either, although it sort of looked like one on the face of it, with angry crowds storming the seat of government and forcing the president to resign in disgrace. But, unlike a classic revolution, the Argentinazo was not organised by an alternate political force that wanted to take power for itself. And, unlike a riot, it pulsed with a unified and unequivocal demand: the immediate removal of all the corrupt politicians who had grown rich while Argentina, once the envy of the developing world, spiralled into poverty.

In reality, the Argentinazo was just what the word itself sounds like: a chaotic explosion of Argentinian-ness, during which hundreds of thousands of people suddenly and spontaneously left their homes, poured on to the streets of the capital, banged pots and pans, yelled at banks, fought police, revved motorcycles, sang football anthems and managed to send the president fleeing his palace in a helicopter. Over the following 12 days, the country would go through five presidents and would default on its $95bn debt, the largest default in history. (The fifth, "caretaker" president Eduardo Duhalde, is still hanging on to power, and elections are planned for April.)

Now, one year on, as enormous crowds fill the Plaza de Mayo once again, it is clear that this is a significant day - but what, exactly, is it marking? Is it a celebration of a national revolt against corporate globali-sation, a mood that seems to be spreading across Latin America, with the Workers' Party taking power in Brazil, and privatisation programmes stopped in their tracks from Mexico to Peru? Is it the beginning of Argentinazo: The Sequel, a forward-looking movement that will replace the failed recipes of the International Monetary Fund (IMF) with something better?

In the end, December 20 2002 is not a day of jubilant celebration or of particularly convincing fist-waving. The mood, instead, is one of mourning, nowhere more so than at the corner of Avenida de Mayo and Chacabuco, in front of the headquarters of HSBC Argentina, a hulking 28 storeys of Darth Vader-tinted glass. It was on this same piece of asphalt that 23-year-old Gustavo Benedetto fell to the ground exactly a year earlier, killed by a bullet that came from inside the bank. The man charged with the murder - who had been in a group of police officers caught on video shooting through the bank's tinted glass - is Lieutenant Jorge Varando, chief of HSBC's building security. He is also a retired elite military officer who was active during the 1970s, when 30,000 Argentines were "disappeared", many of them kidnapped from their homes, brutally tortured and then thrown from planes into the muddy waters of the Rio de la Plata.

From the mid-1950s to the early 1970s, Argentina was a profoundly undemocratic place, ruled by a succession of juntas who, even when they did allow for limited elections, barred the populist Peronist party from putting up candidates. It was in this context that leftwing students and workers first began organising themselves into guerilla armies. Many of these activists thought that they were starting a socialist revolution, though for Juan Peron, who prodded them on from his exile in Spain, the militias were just a means with which to expedite his glorious return as paternalistic leader. The largest armed faction of this growing opposition was the Montoneros, a youth movement that borrowed its populist politics from Evita and its guerilla warfare theory from Che Guevara. Though such cells never posed a serious threat to national security, the Argentinian army used a series of guerilla attacks on military and corporate targets as an excuse to declare an all-out campaign against the left - the generals called the action "a war on terror", but the name that has stuck ever since has been "the Dirty War".

Between 1976 and 1983, Argentina was ruled by a twisted military regime that combined fundamentalist Catholic social control with fundamentalist free-market economics; it banned rock music while it raked in billions of dollars-worth of loans and investment from foreign banks and multinational corporations. The generals saw it as their mission to cleanse Marxist and other "subversive" thought from every school, workplace, church and neighbourhood. At the same time, they also saw it as their right to profit personally from this crusade, not only skimming from public coffers but also stealing private houses, possessions and even children from the people they tortured and killed (the state was eventually forced to pay compensation to many of the victims' families).

To this day, the generals deny almost everything and, thanks to an official state pardon, the killers of that time now walk free - the despised Leopoldo Galtieri, who led Argentina into the disastrous Falklands war and who died earlier this month, took many of his secrets with him to his grave. Since the end of the military dictatorship, however, several exhaustive fact-finding investigations have gathered evidence about abuses during and after the Dirty War. It was by combing through these investigations that Argentinian human rights groups discovered that Varando, the man whom the HSBC had put in charge of its security operations, was one of a group of military personnel accused by relatives of the disappeared of war crimes during an attack on the La Tablada military barracks in 1989. A report by the Organisation of American States' Inter-American Commission on Human Rights, completed in 1997, states that two prisoners at the La Tablada base, Ivan Ruiz and Jose Alejandro Diaz, were "disappeared" under the watch of Major Jorge Varando. Varando says that he transferred Ruiz and Diaz to another officer, and when that officer was later killed in the action, he believed the prisoners had escaped. Because of a subsequent amnesty, however, there was never a full criminal investigation into the events at La Tablada. Today, in connection with a separate incident, Varando is awaiting trial for the murder of Gustavo Benedetto.

At the corner of Avenida de Mayo and Chacabuco, where the HSBC's plateglass facade is now encased in reinforced steel as impenetrable as the mirrored sunglasses on the police officers standing guard outside, Argentina's past and present have come crashing together. Benedetto's alleged killer worked for a foreign bank, one of the very same foreign banks that swallowed the savings of millions of Argentinians when the government declared a freeze on bank withdrawals in early December 2001. While the accounts were locked, the peso was "unpegged" from the US dollar and the currency went into free-fall. When the banking freeze was partially lifted a year later and customers could once again get at their money, their savings had lost two-thirds of their value.

Though banks such as HSBC blame the government for the freeze, the measure was in fact a response to the fact that private banks had helped their wealthiest customers to whisk roughly $20bn out of Argentina over the previous year. At the time, there was no ban on taking capital out of the country. A particularly dramatic moment came last January, when police raided an HSBC branch, as well as several other banks, searching for evidence that hundreds of armoured vehicles had been used to transport billions of undeclared US dollars to the Ezeiza International Airport in cash. The foreign banks claimed that the authorities were looking for scapegoats to blame for the economic crisis, and HSBC Holdings Ltd says that its locally incorporated subsidiary has always acted in accordance with Argentinian laws. It is not aware of any evidence that its subsidiary participated in flight capital.

According to the prosecuting attorney in the capital flight case, the investigation into allegations of "fraud against the state, and illegal association" is ongoing, and so far no charges have been laid.

At the core of the allegations against the foreign banks is the timing: the exodus of cash took place only days before the government froze all withdrawals, leading to a widespread belief that the banks - unlike regular Argentinians who were taken by surprise - had been tipped off that the freeze was imminent. This is an important point, because for many of Argentina's richest families and businesses, the banking fiasco and devaluation has actually made them richer than they were before: they now pay their employees, their expenses and their debts in devalued pesos, but - thanks to the banks - their savings are safely stored outside the country in US dollars. It's a highly profitable arrangement.

After the $20bn in "disappeared" capital was discovered, there was so much public outrage that several foreign bankers faced charges under Argentina's "economic subversion" law, which prohibits acts that sabotage the country's economy. This obstacle was neatly dealt with last May, however, when a coalition of banks, headed by HSBC, successfully lobbied to have the law struck down.

This incident has been linked to yet another controversy, this one involving bribery, legislators and foreign banks. In August, the Financial Times published allegations made by bankers and diplomats that Argentinian legislators had solicited bribes from foreign banks in exchange for offers to vote down several pieces of legislation that would have cost the financial institutions hundreds of millions of dollars a year. The banks reportedly turned down the offers. After the article was published, several banks were again raided by Argentinian police - among them HSBC's headquarters and the private residence of a senior HSBC spokesperson - this time to search for evidence of the reported bribe solicitation and to discover the source of the allegation.

There has been speculation that the raids were politically motivated, to get back at the banks for going public with the bribery allegations. When Mike Smith, president of HSBC Argentina, testified at a legal hearing about the scandal, he said that he had no specific knowledge of the incidents described in the Financial Times and denied HSBC paid any bribes. He also said that soliciting bribes in exchange for favourable laws was common practice in Argentina. This investigation, too, is ongoing.

Benedetto was only one of the 33 people who died violently during the Argentinazo of 2001. But his story, haunted by the ghosts of history, yet so unmistakably modern, has become a symbol for a country now trying to make sense of its unrelenting economic crisis. How can 27 children die of hunger every day in a country that is so naturally abundant that it once fed much of Europe and North America? How can a nation where factory workers used to buy homes and cars on the highest wages in Latin America now have the highest unemployment rate on the continent and an average wage lower than Mexico's? Benedetto thought that his government owed him answers to those questions, which was why he went to the plaza that December day.

"Once upon a time there was a country called Argentina," writes journalist Sergio Ciancaglini, "where many people disappeared and where, years later, the money disappeared, too. One thing is related to the other." Ciancaglini argues that anyone who wishes to understand what happened to Argentina's missing wealth must first journey back into its past, to find out what happened to its missing people. Since the Argentinazo, there has been a grassroots explosion of groups embarking on precisely such a journey, a kind of national forensic detective mission that is linking the economic interests of the generals' dictatorship with the policies that drove the economy into ruin years later. The belief - the hope - is that when these pieces are finally put together, Argentina may finally be able to break the cycle of state terror and corporate plunder that has enslaved this country, like so many others, for far too long.

Benedetto loved reading books about history and economics. According to his older sister, Eliana, "he wanted to understand how such a great country could have ended up in such a mess". Gustavo dreamed of being a professor of history, but that was a goal for a more optimistic time. When his father died in March 2000, Gustavo had to find a job, any job, with which he could support his mother and sister. It was a bad time to be looking for work. In La Tablada, the post-industrial suburb where the Benedettos live, most of the factories were already boarded up. The best job he could find was as a supermarket clerk in a nearby mall.

But at least he had work. Though the world's press discovered Argentina's economic crisis only relatively recently, it had been a fact of life in neighbourhoods such as La Tablada for at least six years. In the mid-1990s, when the IMF was still holding up Argentina as a miracle of economic growth, as a model of the riches that awaited poor nations who fling open their doors to foreign investment, unemployment was already reaching crisis levels. It's a pattern that has been replicated many times across Latin America, in countries who have followed similar free-market reforms; today, only Chile survives as a putative "success story", while more than 50% of Argentina's population has fallen below the official poverty line.

Oddly, when Argentina had less wealth on paper, fewer Argentinians went hungry. Many complex economic factors contributed to this shift, from changes in agricultural export crops to falling wages in the industrial sector. But there were some simple changes that played a part, too, such as the fact that small neighbourhood markets used to sell food on credit during difficult times, a little bit of grace that disappeared when Argentina became a globalisation showcase and those small shops were replaced by foreign-owned hypermarkets the size of Aztec temples, with names such as Carréfour, Wal-Mart, and Dia, the Spanish-owned chain where Gustavo finally managed to get a job.

So it probably wasn't a coincidence that, in the days leading up to the Argentinazo, many of the hypermarkets found themselves under siege, looted by mobs of unemployed men, their faces covered by T-shirts turned into makeshift balaclavas. When Gustavo showed up for work at Dia on December 19, the atmosphere was unbearably tense: no one knew whether this concrete castle was about to be the next stormed by hungry, angry mobs. At noon, the manager decided to end the suspense and close early.

When Gustavo arrived home, he turned on the television. What he saw was a country in open revolt, with protests erupting everywhere. All day and all night, he flicked from one station to the next, but by 10.40pm every station was showing the same image: President Fernando de la Rua, his face clammy with sweat, stiffly reading from a prepared text. Argentina, he said, was under attack from "groups that are enemies of order who are looking to spread discord and violence". He declared a state of siege.

For many Argentinians, the president's declaration sounded like a prelude to a military coup - and that was a fatal mistake for the de la Rua government. Gustavo watched live images of the Plaza de Mayo filling up with people. They were banging pots and pans with spoons and forks, a wordless but roaring rebuke to the president's instructions: Argentinians would not give up basic freedoms in the name of "order", they declared. They had tried that before under the junta, and it had ended badly. And then a single rebellious cry rose up from the crowds of grandmothers and high-school students, motorcycle couriers and unemployed factory workers, their words directed at the politicians, the bankers, the IMF and every other "expert" who claimed to have the perfect recipe for Argentina's prosperity and stability: "Que se vayan todos!" - everyone must go! - they said.

Gustavo slept fitfully that night. When he arrived for work the next morning, the store was completely boarded up, so he went back home and turned on the television again. It was then that he felt an impulse he had never had before - he wanted to join a political demonstration. All of a sudden, Gustavo, an easy-going guy who had not protested against anything in his life, leapt up from the couch, flicked off the TV and told his mother that he was going downtown.

On his way to the bus stop, Gustavo asked several friends from the La Tablada neighbourhood if they wanted to come along with him - to be part of this history they were seeing unfolding on their television screens. But he couldn't find any takers: most people in La Tablada had had enough of history. During the 1970s and 1980s, this working-class neighbourhood was literally caught in the crossfire between the army and the guerillas: several leftwing cells were active in the area at the time, and it was also home to Infantería Mecanizada No 3 de La Tablada, a large military base that was the site of alleged human rights abuses. In La Tablada, the Dirty War was even filthier than it was elsewhere, with parents bumping into their children's killers at the corner shop. And since any kind of contact with a leftist was enough to get you branded a collaborator, the safest course of action was to retreat into your home: doors were closed on former friends looking for sanctuary, blinds were hastily drawn when there was a commotion outside, the radio was turned up to drown out screams from neighbouring apartments. In La Tablada, as elsewhere in Argentina, residents learned to live faithfully by the philosophy of the terror times: "No se meta" - don't get involved. It's an attitude that has survived to this day. Gustavo, however, had decided to break with that tradition. He had no way of knowing that the tactics of the dictatorship were about to return to the streets of Buenos Aires. During the two hours it took him to get from the suburbs to downtown Buenos Aires, the chief of police had sent down an order to "clear the Plaza de Mayo". At first, the riot squads used rubber bullets and tear gas; then they switched to live ammunition.

The police pushed the crowds on to Avenida de Mayo and the crowds pushed back. At around 4pm, a group of around 20 police officers were looking for a safe place to take refuge and reload their weapons. They chose the lobby of the HSBC, one of the most secure buildings in the city, because it also houses the Israeli embassy. A handful of demonstrators - fewer than five, according to court documents - broke away from the streams of people heading for the Plaza de Mayo and began throwing stones at the bank. One man shattered a pane of glass with a metal bar.

The police and private security guards inside panicked and opened fire. According to evidence heard later in court, in just four seconds a hail of at least 59 bullets was fired on to the packed street outside. Just then, Gustavo Benedetto, walking on his own and having been downtown for less than an hour, happened to turn on to Avenida de Mayo. He was many yards from the bank when a lead bullet, fired from a 9mm weapon, caught him in the back of the head. He fell to the ground; in an instant, he was dead.

The HSBC may have been a good place for the police officers to find sanctuary during the chaos of the Argentinazo, but when it comes to a murder allegedly committed from its lobby, a bank, with its security cameras monitoring every angle, offers little by way of cover. The HSBC's own surveillance cameras, since entered as court evidence, clearly show police and bank security officers aiming and firing their weapons through the plateglass window. This evidence has led to a rare event in the annals of Argentinian justice: the arrest of a former military officer on a charge of murder.

Jorge Varando is a graduate of the School of the Americas, a "counterinsurgency" training camp based in the southern US. He has testified that he did not shoot Benedetto and argues that he acted properly as a security officer defending the bank. In a recent radio interview, In a recent radio interview, he is quoted as admitting to firing his gun, saying that he did so "in total tranquillity" and "to stop those trying to enter the building".

HSBC has so far refused to comment on the case because of the ongoing legal proceedings, except to note that its employee Varando has steadfastly maintained his innocence. It's not yet clear whether Varando will be represented by an HSBC lawyer when the case goes to trial, but the bank had its own counsel at the pre-trial hearings.

HSBC is inevitably involved in some part, because the shooting took place from its premises and its security cameras offer crucial evidence. But that evidence has proved problematic. When the court staged a reconstruction of the murder, matching the videotape of Varando firing his weapon with the site where Benedetto was killed, it became clear someone had changed the angle of the key security camera, making it extremely difficult to match the re-enactment with the original footage of Varando shooting through the glass. Bank personnel said the camera angle had been changed accidentally during routine cleaning.

And the case has attracted even more widespread interest because every month since the murder, friends and family have placed a makeshift memorial to Gustavo Benedetto in front of the bank - and every month the memorial has been mysteriously removed and Gustavo's name erased. This practice finally stopped last November, when a television crew that had been staking out the HSBC building at 3am filmed as two federal police officers pulled up outside the bank in an unmarked car and destroyed the concrete and ceramic monument with crowbars. The officers have since been suspended.

[Part-2 below]

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Diary of a revolution
by John Jordan
Saturday January 25, 2003

The Guardian http://www.guardian.co.uk/weekend/story/0,3605,880910,00.html

Activist John Jordan gives an eyewitness account of a country working to forget its past

Rumours of a hurricane

'We know what they are against, but what do they want?' I was tired of hearing this refrain, targeted at the global anti-capitalist movements. We knew what we wanted: another kind of globalisation, where life comes before money, where direct democracy and ecological sustainability become the norm, where progress is defined by the amount of diversity and dignity in the world, rather than the amount of cash that changes hands. The problem was that we didn't know how to get it. Many of us realised that, however many economic summits we protested against or GM crops we uprooted, we weren't really bringing the new worlds we were dreaming of any closer.

In early 2002, while the movements were trying to come to terms with the fear and uncertainty caused by September 11 and the war on terror, something happened that no one expected. Through the movements' emails, websites and face-to-face gatherings, stories emerged of a land where politicians were so discredited that they were ridiculed wherever they went, angry middle-class women smashed up banks, occupied factories were run by their workers, ordinary people held meetings to decide how to run their neighbourhoods, and thousands of unemployed people blocked highways, demanding food and jobs. It sounded like France in 1968 or Spain during the civil war, and yet it was lasting for months across a country 11 times the size of the UK, in a state that was recently one of the world's top 20 strongest economies, a sparkling model of emerging markets, the most compliant pupil of the International Monetary Fund, with a capital city known as the 'Paris of Latin America'. It was happening in Argentina.

I had always wondered what a real grassroots rebellion would look like, how it would feel, what it would smell like. I had imagined huge crowds spontaneously taking to the streets, the smell of teargas drifting across barricades, the noise of hundreds of thousands of voices calling for a new world as the government fled from office and people took control of their everyday lives. All of these things have happened in Argentina over the past year, inspiring activists from as far afield as South Africa, Italy, Thailand and Belgium to visit and see how a crippling economic tragedy was being transformed into an extraordinary laboratory for creating alternative economic models, to witness the reinvention of politics from the bottom up.

Last September, after several trips to Argentina, I decided to give up my job and my flat in England and move there for an indefinite period, convinced that the lessons I could learn could one day be applied to the anti-capitalist movements closer to home. It did not take me long to realise that it is not the stench of tear gas or the clamour of the angry crowd, but the smell of cooking and the gentle chatter of neighbours meeting late into the night that best reflects the popular rebellion that is taking place here.

The piqueteros

I met Carlos, an unemployed telephone technician in his 50s. He is part of the MTD (movement of unemployed workers), one of the most radical branches of the enormous unemployed movement, the piqueteros, that kick-started the rebellion in the mid-1990s with their road blockades (piquetes), in which families blocked highways, demanding unemployment subsidies, food and jobs. We met in a huge, abandoned electronics factory, which Carlos's group dreams of transforming into a self-managed organic farm, clinic and media centre. He said that his most profound political moment since the December 2001 uprising was seeing three young piqueteros faint from hunger. 'Our main aim now is to have enough bread for each other', he said. 'After that, we can concentrate on other things.'

The Argentinian media's image of the piqueteros has been one of masked youths blocking roads with burning tyres. The everyday reality is very different, but the smell of baking bread does not make headlines. Their main work is creating what they call the solidarity economy, an autonomous, non-profit economic system based on need. During the roadblocks, they demand a specific number of unemployment subsidies, and usually get them from local government. The subsidies are shared and used to fund community projects. Some piquetero groups don't delegate leaders to meet officials, but instead demand that the officials come to the blockades so that everyone can collectively decide whether to accept any offers - they have too often seen leaders and delegates bought off, corrupted, killed or otherwise tainted by power.

A friend took me to an extraordinary MTD popular education session. It was held in a back yard in Admiralte Brown, a huge, sprawling neighbourhood on the edges of Buenos Aires where hope is in short supply and unemployment runs at 40-50%. Most of the participants were in their early 20s. Despite barking dogs and small children running between chairs, they seemed intensely focused as Lola, the energetic facilitator, ran a workshop debating the differences between MTD and capitalist forms of production.

The level of debate was astounding: these young people took turns to stand up and eloquently explain how the different systems are organised, describe their alienating experiences of working for managers, their disdain for profit-driven economies and the joy that collective work provides. After the workshop, Maxi, one of the founders of the group, took me on a tour around his neighbourhood. He listed the range of activities they had organised. 'We have a group building sewage systems and another that helps people who only have tin roofs put proper roofs on their houses. There is a press group that produces our newsletter and makes links with the outside media. We have the Copa de Leche, which provides a glass of milk to children every day. We have a store that distributes second-hand clothes, two new bakeries, a vegetable plot and a library.'

That afternoon, we visited one of the two weekly assemblies that were happening simultaneously in Admiralte Brown. A group of 70 or more stood in a circle. They discussed plans for demonstrations, the problems of the past week, how to get children's shoes, and how to resolve conflicts between group members. It was mostly women - earlier, Lola had told me how women were hit hardest by unemployment: when there is no food on the table, no clothes for the children, it is women who are at the sharp end of poverty. Often the men felt rejected and paralysed by the loss of identity that followed unemployment, so it is the women who are first to take part in roadblocks. 'Women's struggle is the pillar of the movement', Lola explained.

After the assembly, Maxi showed me the Copa de Leche, the project that distributes milk to children, housed in an abandoned municipal building next to a plot of land the piqueteros had taken down the fences that surrounded the plot and used them to build the base of a huge, roaring outdoor oven on the edges of a football pitch that had probably never seen grass but was now surrounded by newly-dug vegetable plots. Fences being pulled down and turned into something practical struck me as a beautiful metaphor for the transformation of the private spaces of profit into shared tools of social change. A transformation that involves people beginning to build the life that they want and preparing to defend it - rather than simply protesting against what they don't want. The piqueteros know you can gain nothing by winning power. They don't want to take over the crumbling centre; they want to reclaim the edges, bring back into their community life that's worth living. 'We are building power, not taking it' is how Maxi described it.

Whenever I asked them what had changed in their lives since they became involved in the piquetero movement, they told me that the loneliness and isolation of unemployment and poverty had disappeared. Tuti, a punky 21-year-old who is in charge of the piqueteros' security, said, 'The biggest change was the relationship with other people in the neighbourhood, the development of friendship and the possibility of sharing ... When you're on a roadblock and you have nothing to eat, the people next to you share their food. Now I feel I'm living in a large family, my neighbours are my family.'

The assemblies

A football careers across the bank lobby and hits the steel door of the vault with a thud. 'Goal!' scream the kids whose improvised game weaves between the soup kitchen, art workshops and video screenings in the new HQ of the Parque Lezama Sur assembly, an occupied bank.

The local assemblies meet weekly, are particularly popular in middle-class areas and are open to anyone, so long as they don't represent a political party. The first one I attended involved some 40 people: a breastfeeding mother, a lawyer, a hippy in batik flares, a taxi driver, a nursing student... a slice of Argentinian society standing on a street corner, passing around a megaphone and discussing how to take back control of their lives. It seemed so normal, yet this was perhaps the most extraordinary radical political event I'd ever witnessed: ordinary people discussing self-management, understanding direct democracy and putting it into practice.

In the past eight months, there has been a shift that can best be described as a move away from the politics of quantity towards that of quality. The various projects are bearing fruit and, most importantly, establishing links between assemblies and other parts of the movement. Despite the rising poverty, destitution and despair, there are self-managed neighbourhood assembly projects right across the city. In one of the several occupied banks, they cook meals for 150 people every weekend, while on the top floor independent media activists update their website. Assemblies plant organic vegetable gardens in vacant lots, while a self-managed clinic for workers in the occupied factories is being set up.

The assemblies have also become a stand-by citizens' force against police repression. Last June, while a book by asamblistas was being printed at a self-managed printing firm in Buenos Aires, police arrived to evict those in the building. A call went out to the local assembly and literally as the book was coming off the presses, they were forcing the police away and securing the building.

In the age of global networks, it is the small-scale and the local that have the greatest strength, something that activists in the global anti-capitalist movement understand and that many in Argentina's social movements are practising. 'Our groups don't get big and bureaucratised', one piquetera told me. 'They just divide and multiply.' She knows the era of the giant political monster is over.

THINKING BY DOING

Whether you talk to a middle-class member of an assembly or an unemployed participant in the piquetero movement, there is a common understanding that you can't change society with an overnight revolution. They understand that change is a step-by-step process of talking and listening, of dreaming and constructing alternatives that are rooted in our own neighbourhoods, and that each neighbourhood, each participant, each place must be profoundly interconnected and mutually supported.

'We can't do it on our own, and we shouldn't do it on our own', says Fabian, a member of Mocase, the autonomous peasants' movement from the northern province of Santiago de L'Estera. 'No one can construct a new world by themselves.' When I met Fabian, he was attending a meeting trying to create a national network of the 'solidarity economy', where goats from the provinces can be swapped for bread from piqueteros bakeries, seeds traded for popular education and so on.

'The resistance can't stand still', he says. 'It has to keep moving to keep healthy. We have always made mistakes. It's important to make mistakes.' He frowns deeply. 'At first we were like this' - his huge brown hand jerks like a rollercoaster - 'but now we realise that sustainable change is slow.' His hand pauses in midair and begins to trace a gently undulating wave, gradually rising higher and higher. And it's that gently undulating wave, like a gentle tide, that best describes the reinvention of popular politics that is taking place in Argentina.

'Do you have any hope for what's happening here?' I ask Pablo, an active member of his assembly.

'I don't feel hope abstractly, only when I'm doing something do I feel it', he replies.

In this economically devastated country, hope has become a verb; not an abstract noun, but a process. Politics has been freed from the icy grip of intangible ideologies, liberated from abstract dreams of a pending revolution. The futile dream of taking power and running governments has been abandoned, and politics has returned to the physical processes of everyday life, to the necessities of the immediate moment. In Argentina, politics thinks by doing.

· John Jordan is an anti-globalisation activist, and is a member of a collective currently working on a book, We Are Everywhere: The Irresistible Rise Of Global Anti-capitalism, to be published later this year by Verso (weareeverywhere.org).

Part two of Naomi Klein's report on the events that triggered a momentous new kind of politics in Argentina.

Out of the ordinary (part one)

Up until quite recently, Argentina pursued a policy of official amnesia when it came to the crimes of the Dirty War. Sure, the human rights non-governmental organisations still issued numerous scathing reports, the Mothers of the Plaza de Mayo still marched and the children of disappeared parents still showed up, from time to time, outside the homes of ex-military figures to throw red paint. But before the Argentinazo, most middle-class Argentinians regarded such actions as macabre rituals from a bygone era. Hadn't these people received the memo? The country had "moved on" - or at least it was supposed to have done, according to former president Carlos Menem. Menem, a Ferrari-driving free-marketeer who is Argentina's very own morphing of Margaret Thatcher and John Gotti, was first elected in 1989, with the economy in recession and inflation soaring. Claiming that many of Argentina's economic troubles stemmed from botched attempts by his predecessor to bring to justice the generals of the Dirty War, Menem offered an alternative approach: instead of going backwards into the hell of unmarked graves and the lies of the past, he said, Argentinians should wipe the slate clean, join the global economy and then put all of their energy into the pursuit of economic growth.

After pardoning the generals, Menem launched a zealous programme of what here in Latin America is called "neo-liberalism": that is, mass privatisations, public sector layoffs, labour market "flexibilisation" and corporate incentives. He slashed federal meals programmes, cut the national unemployment fund by almost 80%, laid off hundreds of thousands of state employees and made many strikes illegal. Menem dubbed this rapid free-market makeover "surgery without anaesthesia", and assured voters that, once the short-term pain subsided, Argentina would be, in the words of one of his advertising campaigns, "born again".

The middle-class residents of Buenos Aires, many of them ashamed of their own complicity or complacency during the Dirty War, enthusiastically embraced the idea of living in a shiny new country without a past. "Don't get involved," the mantra of the terror years, gave way seamlessly to "Look out for Number One", the mantra of high capitalism, in whose cause neighbours are competitors and the market is put before all else, including the quest for justice and the rebuilding of shattered communities. In the years that followed, 1990s Buenos Aires went on a career and consumerism jag that would put the most shopaholic, workaholic New Yorker or Londoner to shame. According to government data, between 1993 and 1998, total household spending increased by $42bn, while spending on imported goods doubled over the same high-rolling five years, from $15bn in 1993 to $30bn in 1998.

In the swanky neighbourhoods of Recoleta and Palermo, residents bought not only the latest imported electronics and designer fashions, but also new faces and new bodies - Buenos Aires soon rivalled Rio de Janeiro as a capital of cosmetic surgery, with one plastic surgeon alone boasting 30,000 clients. Argentinians clearly wanted to be remade, just like their country - and like their president, who himself disappeared periodically, to reappear later with his face stretched taut and claiming that he had been stung by a bee.

The masks and disguises of the 1990s looked remarkably lifelike for a while. The national GDP increased by 60% over the decade and foreign investment poured in. But, just as Enron's stockholders did not care to look too closely at the books so long as their profits were going up, Argentina's foreign investors and lenders somehow failed to see that Menem's lean, mean government was $80bn deeper in debt in 1999 than the 1989 government had been. Or that, thanks largely to layoffs at privatised firms, unemployment had soared from 6.5% in 1989 to 20% in 2000.

In short, "Menem's Miracle", as Time gushingly called it, was a mirage. The wealth flowing in 1990s Argentina was a combination of speculative finance and one-off sales: the phone company, the oil company, the rails, the airline. After the initial cash infusion and greased palms, what was left was a hollowed-out country, costly basic services and a working class that wasn't working. It also left behind it a wild west-style deregulated financial sector that allowed Argentina's richest families to move $140bn in private wealth into foreign bank accounts - more than either the national GDP or the foreign debt.

As Argentina's wealth disappeared, destined for bank accounts in Miami and stock exchanges in Milan, the collective amnesia of the Menem years wore off, too. Today, almost 20 years after the junta's dictatorship ended and with the old military generals dead or dying, the ghosts of the 30,000 disappeared have suddenly reappeared. They now haunt every aspect of the country's present crisis. In the months after the Argentinazo, the past seemed so present that it was as if time itself had collapsed and the state terror had been committed only yesterday. In the courts and on the streets, a national debate erupted not only about how so many had got away with murder, but also about the reasons why the terror had occurred in the first place: why did those 30,000 people die? In whose interest were they killed? And what was the connection between those deaths and the free-market policies that had failed the country so spectacularly?

Back when students and union members were being thrown into green Ford Falcons and driven to clandestine torture centres, there was little time for such questions about root causes and economic interests. During the terror years, Argentinian activists had a single overarching preoccupation - staying alive. When groups such as Amnesty International began to intervene on their behalf, they, too, were preoccupied with day-to-day survival. Investigators would trace the missing people and then petition for their release, or at least for confirmation of their deaths.

There were, however, a few exceptions, individuals who were able to see that the generals had an economic plan as aggressive as their social and political ones. In 1976 and 1977 - the first two years of junta rule, when the terror was at its bloodiest and most barbaric - the generals introduced an economic "restructuring" programme that was to be a foretaste of today's cut-throat corporate globalisation. The average national wage was slashed in half, social spending drastically reduced and price controls removed. The generals were rewarded handsomely for these measures: in those same two years, Argentina received more than $2bn in foreign loans, more than the country had received in all of the previous six years combined. By the time the generals gave back the country in 1983, they had increased the national foreign debt from $7bn to $43bn.

On March 24 1977, a year after the coup, Argentinian investigative journalist Rodolfo Walsh published an Open Letter From A Writer To The Military Junta - it was destined to become one the most famous pieces of writing in modern Latin American letters. In it, Walsh, a member of the Montoneros youth movement, broke with official press censorship by launching a righteous and detailed account of the generals' terror campaign. But there was a second half to the Open Letter which, according to Walsh's biographer, Michael McCaughan, was suppressed by the Montoneros leadership, many of whom, though militant in their tactics, were not as focused as Walsh on economics. The missing half, just published in McCaughan's book, True Crimes, shifted the focus from the military's human rights abuses to its economic programme, with Walsh declaring - somewhat heretically - that the terror was not "the greatest suffering inflicted on the Argentinian people, not the worst violation of human rights which you have committed. It is in the economic policy of this government where one discovers not only the explanation of the crimes, but a greater atrocity which punishes millions of human beings through planned misery."

Walsh once again offered a catalogue of crimes: "Freezing wages with rifle butts while prices rise at bayonet point, abolishing all forms of collective bargaining, prohibiting assemblies and internal commissions, extending working days, raising unemployment ... an economic policy dictated by the International Monetary Fund, following a recipe applied indiscriminately in Zaire or Chile, in Uruguay or Indonesia." Minutes after posting copies of his letter, Walsh was ambushed by police and shot dead on the streets of Buenos Aires.

Harder to kill, however, has been Walsh's description of an economic logic that outlived the dictatorship, a logic that guided the scalpel of Menem's surgery without anaesthetic and that still continues to guide every IMF mission to Argentina, which always seem to call for more cuts to healthcare and education, higher fees for basic services, more bank foreclosures on mortgages. But Walsh didn't call it "good governance" or "fiscal prudence" or "being globally competitive" - he called it "planned misery".

Walsh understood that the generals were not waging a war "on terror" but a war on any barrier to the accumulation of wealth by foreign investors and their local beneficiaries. He is proved more prescient every day. Civil trials continue to unearth fresh evidence that foreign corporations collaborated closely with the junta in its extermination of the union movement in the 1970s. For example, last December a federal prosecutor filed a criminal complaint against Ford Argentina (a subsidiary of Ford), alleging that the company had inside one of its factory compounds a military detention centre where union organisers were taken. "Ford [Argentina] and its executives colluded in the kidnapping of its own workers and I think they should be held accountable for that," says Pedro Troiani, a former Ford assembly line worker who has testified that soldiers kidnapped and beat him inside the factory walls. Mercedes-Benz (now a subsidiary of DaimlerChrysler) is facing a similar investigation in both Germany and Argentina, which stems from allegations that it collaborated with the military in the 1970s to purge one of its plants of union militants, giving names and addresses of 16 workers who were later "disappeared", 14 of them never to be seen again. Both Ford and Mercedes-Benz deny that their executives played any role in any of the deaths.

And then, of course, there is the case of Gustavo Benedetto. On the face of it, there is nothing to connect Benedetto's murder to the past and there is no comparison between the repression during the Argentinazo and the terror of the Dirty War. Yet the Benedetto case highlights the changing role of the military, the state and financial interests, and the current role of ex-military officers.

In the 1970s, Jorge Varando, the man accused of Benedetto's murder, worked for a military regime that opened up Argentina's banking sector to private banks. In 2001, with the military downsized along with the rest of the public sector, he worked directly for one of those very banks. The fear is that the grand achievement of two decades of democracy is only that the middleman has been cut out and that repression has been privatised. Now Argentina's banks and corporations are guarded by units of armed former military officers, who protect them against public protesters, raising difficult questions about the compromises that were made in the country's transition from dictatorship to democracy.

Today, the history of that transition is being rewritten on the streets. There is no neat "before" and "after" the dictatorship. The dictatorship's project is instead emerging as a process: the generals prepped the patient, then Menem performed "the surgery". The junta did more than disappear the union organisers who might have fought the mass layoffs and the socialists who might have refused to implement the IMF's latest austerity plan. The great success of the Dirty War was the culture of fear and individualism that it left behind in neighbourhoods such as La Tablada, where Gustavo Benedetto grew up.

The generals understood that the true obstacle to complete social control was not leftist rebels, but the very presence of tight-knit communities and civil society. Which is why they set out to "disappear" the public sphere itself. On the first day of the 1976 coup, the military banned all "public spectacles", from carnivals to theatre to horse races. Public squares were strictly reserved for shows of military strength and the only communal experience permitted was football. At the same time, the military launched a campaign to turn the entire population into snitches: state-run newspapers were packed with announcements reminding citizens that it was their civic duty to report anyone who seemed to be doing anything "subversive".

And when the population had retreated into their homes, the economic project of the dictatorship could be continued and deepened by successive civilian governments without even having to resort to messy repression - at least until recently.

In the 1970s, when the Mothers of the Plaza de Mayo began searching for their missing loved ones, it was common for these brave women to say that their children were innocents, that they were "doing nothing" when they were taken. Today, the Mothers lead demonstrations against the IMF, talk about "economic terrorism" and proudly declare that their children were indeed doing something when they were kidnapped - they were political activists trying to save the country from the planned misery that began under the dictatorship and only deepened under democracy.

In the rubble that was left of Argentina after December 2001, something extraordinary started to happen: neighbours poked their heads out of their apartments and houses, and, in the absence of a political leadership or a party to make sense of the spontaneous explosion of which they had been a part, they began to talk to each other. To think together. By late January 2002, there were already some 250 "asambleas barriales" (neighbourhood assemblies) in downtown Buenos Aires alone. The streets, parks and plazas were filled with meetings, as people stayed up late into the night, planning, arguing, testifying, voting.

Many of those first assemblies were more like group therapy than political meetings. Participants spoke about their experience of isolation in a city of 11 million. Academics and shopkeepers apologised for not watching out for each other, publicity managers admitted that they used to look down on unemployed factory workers, assuming that they deserved their plight, never thinking that the crisis would reach the bank accounts of the cosmopolitan middle class.

And these apologies for present-day wrongs soon gave way to tearful confessions about events dating back to the dictatorship. A housewife would stand up and publicly admit that, three decades earlier, when she heard yet another story about someone's brother or husband being disappeared, she had learned to close her heart to the suffering, telling herself "Por algo será" - it must have been for something.

Most assemblies began, in the face of so much planned misery, to plan something else: joy, solidarity, another kind of economy. Soup kitchens were opened, job banks and trading clubs formed. In the past year, between 130 and 150 factories, bankrupt and abandoned by their owners, have been taken over by their workers and turned into cooperatives or collectives. At tractor plants, supermarkets, printing houses, aluminium factories and pizza parlours, decisions about company policy are now made in open assemblies, and profits are split equally among the workers.

In recent months, the "fabricas tomadas" (literally, "taken factories") have begun to network among themselves and are beginning to plan an informal "solidarity economy": garment workers from an occupied factory, for example, sew sheets for an occupied health clinic; a supermarket in Rosario, turned into a workers' cooperative, sells pasta from an occupied pasta factory; occupied bakeries are building ovens with tiles from an occupied ceramic plant. "I feel like the dictatorship is finally ending," one asamblista told me when I first arrived in Buenos Aires. "It's like I've been locked in my house for 25 years and now I am finally outside."

Rodolfo Walsh estimated that it would take 20 or 30 years before the effects of the terror campaign would wear off and Argentinians would at last be ready to fight for economic and social justice again. That was a little more than 25 years ago. So I couldn't help thinking of Walsh when I met Gabriela Mitidieri, a self-confident high-school student who, except for her politics, would fit right in at an audition for Fame Academy 2. Mitidieri was born in 1984, the first full year of elected government in Argentina after the dictatorship. "I am the daughter of democracy," she says, with a slight edge of 18-year-old sarcasm. "That means I have a special responsibility."

That responsibility, as she sees it, is vast - finally to free the country from the economic policies that survived the transition from military to civilian rule. Yet she seems undaunted by the task, or at least unafraid. Gaby, as she is called by friends and family, charges off to demonstrations wearing low-slung cargo pants and her brother's Blink 182 knapsack; she holds placards with black-painted fingernails and she stares down police lines with eyes dusted in blue sparkles. Her parents don't share her fearlessness. When the streets of Buenos Aires exploded in the 2001 Argentinazo, the modest Mitidieri home was experiencing an explosion of its own. The conflict was over whether or not the then 17-year-old Gaby would be allowed to join the demonstrations. Gaby was determined to go to the Plaza - "I just couldn't stand to be one of those people who watches the world through a TV screen," she says today. Her father, a survivor of the Dirty War, during which he had been kidnapped and tortured, physically blocked Gaby's way to the door, while she shouted that he, of all people, should understand why she needed to be in the streets. Sergio Mitidieri was unmoved - he had been Gaby's age when he first got involved in student politics and his youth hadn't saved him or his friends, many of whom were killed in the concentration camps.

Like many of his generation, Mitidieri did not return to political activism after the generals retreated. The terror of those years stayed with him, robbing him of the outspoken confidence of his student days - for years, he told Gaby that the scars on his back and shoulders were from sporting injuries. Today, he still doesn't like to talk about the past; he keeps his head down and works hard to support his wife and four children. Gaby says that her father's fear - "He lives with the idea of death hanging over his head" - means that the dictatorship, whether imposed by external terror or internal fear, is still gripping the country. "When I first found out about what happened to my father," Gaby says, "I kept asking myself, 'Why did he live? Why did they let him survive?' Then I read 1984 and I realised that he and the others survived to keep the fear alive, and to remind the entire population of the fear. My father is living proof of that."

But sitting in the Mitidieri home on the first anniversary of the Argentinazo, it struck me that Gaby, the self-proclaimed daughter of democracy, might just be underestimating democracy's contagious power. In 2002, when she announced on the morning of December 19 that she was joining the anniversary demonstrations, her mother quietly helped her pack her knapsack: water, a cellphone, a lemon (it helps mitigate the effects of teargas). She even lent Gaby a headscarf. And Gaby's father watched them pack, looking worried, but also proud.

That evening, the local neighbourhood assembly called for everyone to come out of their houses with their pots and pans to celebrate the day, one year earlier, when something happened to change Argentina (though still no one can explain exactly what that was). And a strange thing happened: Gaby's parents showed up. They hung around on the edges of the gathering, they didn't talk to anyone - but they were there.

"We still have fear," Sergio Mitidieri told me, "but we have anger, too. It's better to fight in the streets than to be quiet at home. Gaby taught me that."

· Naomi Klein, 2003. Additional research by Dawn Makinson and Joseph Huff-Hannon. Naomi Klein is the author of No Logo and Fences And Windows. She is working on a documentary in Argentina.