Takeover Inn Argentina

Buenos aires — When he was hired as a hotel doorman in 1980, Marcelo Ruarte never imagined he’d be at the top of the corporate hierarchy one day. But then again, the corporate hierarchy isn’t what it used to be at the BAUEN Hotel.

The 20-story luxury hotel, built in Buenos Aires’ theater district in 1978, featured a disco, theater, pool, two restaurants and a piano bar. In the 1980s, business was very good, and a major addition was built.

Built with government loans, the hotel was part of an effort by the then-military dictatorship to boost the country’s tourism industry. The 200-employee business was highly profitable for its president, a politically well-connected Argentine businessman named Marcello Yurkovich, and it quickly became a venue strongly associated with the country’s ruling elite. But by the late 1990s, the hotel began experiencing financial difficulties, and in December 2000, BAUEN had declared bankruptcy. At the height of Argentina’s peso crisis in late 2001, bankruptcy trustees closed the hotel.

The workers went their separate ways, trying to find employment elsewhere. But about a year later, Ruarte and a small group of other former employees met to discuss ways of starting up the business again. They were inspired by the growing movement of “empresas recuperadas” (recovered businesses) — businesses that had been abandoned by owners and then subsequently taken over by the employees. The movement’s slogan is “Occupy. Resist. Produce.”

The recovered business movement followed the economic crash in Argentina starting in 2001. “Starting in 2000 and 2001 [at the time of the crash], unemployment was about 20 percent, but under-employment and informal employment had risen by 50 percent,” says Raúl Zibechi, an expert on social movements at the Multiversidad Franciscana de América Latina in Montevideo. “Hundreds of thousands of factories had closed, sending their workers into the street. For many, the closing of a factory was a type of death sentence.”

On the morning of March 21, 2003, Ruarte and his colleagues had pulled together a group of 80 people — former BAUEN employees, as well as community activists and workers from other recovered enterprises. They cut padlocked chains and broke into the hotel. The workers stayed in the hotel 24 hours a day, seven days a week, in part to ensure security now that the locks had been cut. They spent an entire year preparing it to be re-opened. Flooring materials were donated from Zanon, another company that had been successfully taken over by its workers, but much of the remainder of the effort was financed from the BAUEN workers’ own pockets.

A judge granted the workers a limited right of tenancy over the building. In Buenos Aires’ post-crisis atmosphere, it was likely given as a practical matter, out of concern that without this right, the workers and their supporters would demonstrate in the streets as workers at other recovered enterprises had done. However, the tenancy was limited to occupying the building, not to running it as a business.

The hotel re-opening was less than grand. The first day, they opened only the theater and one of the meeting rooms. Over the next year, floor by floor, they gradually made overnight rooms available, and then a restaurant. Today, 160 out of the total 240 rooms are available, and quite often, all of these rooms are booked.

The rooms are clean and comfortable, and because the peso has been devalued, prices are very reasonable for anyone with dollars or other foreign currencies (about $45 a night for a double room). In the evenings, the lobby is usually packed with people arriving for the hotel’s theater shows, tango performances and parties.

The hotel is now run as a cooperative. Its 105 employees vote to decide budgeting, staffing and operational decisions. Currently, all the profits from the hotel are reinvested, although the employees hope to be able to divide some of the profits among themselves in the coming years. All employees earn the same base salary, with bonuses for those with seniority and for those who spent time and money preparing the hotel for its re-opening.

Arminda Palacios is a seamstress at the hotel. She says the hotel takeover has had a profound effect on her and her co-workers. “It changed everything,” she says. “We don’t have a boss, but we aren’t owners either. We work for ourselves. We put all of our energy into our work because it’s ours and we really want it to work.”

The cooperative kept the name BAUEN, a German word meaning “contribute.” However, they turned it into an acronym: “Buenos Aires Una Empresa Nacional” (Buenos Aires, a nationalized business) — an expression of a longer-term desire to create a city economy based on a network of worker-owned businesses.

Working in what was once Yurkovich’s office, Ruarte, who is now the president of the hotel cooperative, seems somewhat unsure of just what his group has accomplished. The former owners removed much of the equipment and other items of value from the hotel (some of which were taken by the owners after they declared bankruptcy in December 2000), and the office is still quite sparse. There are no computers or fax machines, just an old manual typewriter, an electric fan, a telephone and an intercom to the hotel’s front desk. Nonetheless, there is a flurry of traffic through the office at virtually all hours of the day.

Ruarte notes that, unlike most recovered businesses that are in the manufacturing sector, BAUEN has certain advantages as a player in the tourism industry. “Because the country’s currency is weak, tourism is doing well,” he notes. “Also, other businesses have costs for commercializing and advertising that we don’t have.”

Nonetheless, for the BAUEN workers, commercial success is not enough. Because they operate the hotel without owning it, they are in a constant state of legal limbo. Banks will not lend them money, and the police can evict them at any time. The hotel continues to operate, with city officials too worried about social disruption to close it down, but with hotel employees uncertain about what the future holds.

“Our situation is fragile,” says Ruarte. “We are operating illegally. This was closed and we just came in and started working.”

Ruarte and other members of the cooperative are driven by a strong belief that they have a right to work, and that the state should be on the side of workers rather than absentee business owners.

“We just want a place to work to support our families,” he says.

He also argues that the government has the right to transfer ownership of the hotel, and that it should therefore hand the business over to the workers.

While Marcello Yurkovich headed the business until the mid-1990s, legal ownership was unclear at that time.

This was highlighted when Yurkovich initiated a sale of the business to a Chilean firm, Solari S.A. After an initial payment of $4 million, Solari backed out of the purchase due to uncertainty about the hotel’s ownership. It turns out the city government provided a loan to Yurkovich to build the hotel — a loan that was never repaid even when the hotel was making money — and there were unpaid taxes owed by the hotel. As a result, Solari halted the deal, although it stayed involved by managing the hotel’s operations. City officials recognize that ownership issues around the hotel remain unresolved.

(Yurkovich died in a Canadian hospital following bypass surgery in April 2003, a month after the hotel takeover. He left his business interests to his sons, who are still in Argentina.)

BAUEN employees rely to some extent on the broad public support for both their cause and the takeover movement generally. Even many small- and medium-sized business owners, tired of the Argentine government’s historical bias toward helping large multinational corporations, support the movement.

In fact, there are few public voices against the takeover movement. Argentine business magnates rarely speak to journalists, and some may fear having their own businesses taken over. The U.S. Chamber of Commerce, which maintains an office in Buenos Aires, failed to respond to repeated interview requests on the topic.

Right-wing politicians, such as former president Carlos Menem, generally don’t address the issue of takeovers directly, but speak instead of restoring law and order, and improving the business climate, which the takeover workers understand to mean placing their workplaces back in the hands of the original owners.

Not surprisingly, the movement draws significant support from the left of the political spectrum. Diego Kravetz, a Buenos Aires lawyer, was among the original group that met in 2002 to discuss taking over the BAUEN hotel. Today, he is a member of the Buenos Aires municipal council. In 2003, he successfully passed a bill that expropriated 13 other private businesses and granted them to workers that had taken them over. He is now sponsoring a bill to give the BAUEN workers legal title to the hotel for two years. But he recognizes that this would only be a temporary solution for them.

“Longer term, there are only two other options. The first is permanent expropriation, which requires a two-thirds majority on the [Buenos Aires City] Council. There is little chance for this right now. The other is for the workers to buy the hotel. But they have little money, and the courts would first have to figure out who actually owns the business.”

Surprisingly, the workers have received little support from their former union, which agreed with the hotel’s management on the closure in 2000. This situation is not unlike many other takeover efforts in Argentina.

“Many workers have had to struggle against their unions to be able to occupy businesses,” according to the Multiversidad Franciscana de América Latina’s Raúl Zibechi. “In many cases, the unionists support the owners against the workers.”

The movement has instead been led by individual groups of workers from each recovered enterprise. These workers, in turn, have formed a national association, the Movimiento Nacional de Empresas Recuperadas, to help with takeover efforts.

The association, once headed by a president, is now directed entirely by a board made up of representatives from 44 successfully recovered businesses.

Fabio Resino is BAUEN’s representative on the board. “The [Movimiento Nacional] allows people to defend their right to work,” he says. “But more than that, it is fundamentally questioning the notion of private property.”

It is this ideology that places the takeover movement at odds with modern-day capitalism. However, while individual business owners are fighting to regain control of their businesses, it is clear that the movement has not yet grown to a point where it can effectively challenge Argentina’s business class at a larger scale, and some argue the takeover movement is now in decline.

Rosendo Fraga is an analyst with the Centro de Estudios Nueva Mayoria, an Argentine think tank that monitors political developments and public opinion. The takeovers, he argues, “were expressions of protest and social survival that had their maximum expression in 2002 in the worst moment of the crisis, but afterward, they lost their drive because the economy was recovering. With three successive years of strong economic growth, the ‘recovery’ of enterprises is losing importance.”

Diego Kravetz recognizes that the environment has changed for recovered enterprises.

“Earlier was a period of struggle,” he says. “Now, we need to consolidate the movement. For businesses that lack legal status, now is the time to get it. They need capital to increase production.”

But looking to the future, he adds, “These workers will be able to compete with businesses anywhere. We’re optimistic — or maybe a bit crazy — but considering what we’ve already struggled to accomplish, what is ahead is easy by comparison.”

This spirit is shared by the BAUEN workers.

“We run lots of risks,” says seamstress Arminda Palacios. “They could throw us out. But we’re never going to leave.”

Aaron Freeman is an independent policy consultant and co-author of the recently released book, The Laws of Government: The Legal Foundations of Canadian Democracy, published by Irwin Law.