New President to Inherit Old Problems : Argentine Election to Do Little to Remedy Worsening Economy

From Financial Times

On May 14, Argentina will vote for a new president. The race will be close, and the result will almost certainly leave confusion in its wake. The ensuing squabbles, recriminations and in-fighting will further confirm the maliciousness of history; one of the world’s potentially richest nations will take a further nose dive into Third World status.

Fear of the future haunts the cafes and restaurants of bustling Buenos Aires. Only politicians keep their campaign smiles rigidly fixed in place. The rest of the population is calculating the cost of voting for either main candidate, both of whom lack the unanimous support of their parties.

The main cause for concern is that no candidate looks like he will win easily, cleanly or with a handsome majority. Nor do any of the candidates or their party supporters appear genuinely interested in working toward a government of national unity or consensus.

The new president will be forced to govern from a position of minority weakness in the face of almost overwhelming problems. Those include a restless and poverty stricken army, a shattered domestic economy in its most serious recession for a decade, isolation from the International Monetary Fund and commercial banks and, most debilitating of all, cynicism from the two-thirds of the country that voted in another direction.


Between now and December--when the newly elected president is due to take office--Argentina will face its most difficult days since the 1982 Falklands War. Such is the legacy of President Raul Alfonsin--whose surprising election in 1983 was intended to eliminate both fear and fecklessness.

‘Productive Revolution’

Leading the polls is the Peronist candidate, Carlos Saul Menem. He offers the voter what he calls a “productive revolution,” a vacuous promise of improved living standards and restored national self-respect. Precisely how that is to be achieved has yet to be clarified.

As such, Peronism’s offer is little different from when it last won national power under Gen. Juan Peron in 1973. Peronism is as riddled with internal factional disputes as ever, with the degrading spectacle of a hundred different functionaries squabbling with one another over who is best placed to properly and accurately interpret what Menem actually stands for.


As always, what a Peronist leader promises and what he might actually do are two very different things. But the “productive revolution” is likely to include a foreign debt moratorium, greater public spending and a fiesta for trade unions. Those pledging their vote for Peronism do so in a fog of mythology and in a mood of vengeance for what is perceived to be five wasted years under Alfonsin of the Radical Party.

But if Menem’s promises are shrouded in fog, his main rival for the presidency--Eduardo Angeloz, nominated by Alfonsin for the Radical Party--is battling against an avalanche of already achieved failure. A recent authoritative opinion poll gave Menem 35% and Angeloz 31% of prospective votes, with 23% undecided and the other 11% divided among smaller parties. Given Peronism’s authoritarian past, its dismal record of managing a large economy and the rapidly diminishing personal credibility of its presidential candidate, why is Angeloz failing to romp ahead?

He has made a successful job out of running the second most important province, Cordoba. He has an appealing personal image, untainted by rumors of corruption--a remarkable achievement for a contemporary Argentine politician. Yet he will still require a miracle to win sufficient votes to form a majority Radical administration after May 14.

The answer is to be found in the undisguised failure of five years of Radical Party government under Alfonsin. Angeloz’s chances of winning an outright majority were always slim, but his party’s worsening economic performance has brought a slump from its high-tide 1983 popularity to the mud flats of near universal contempt.


Alfonsin’s most serious failure is the lost opportunity to unite a volatile and battered nation and insert democratic instincts into its bloodstream. A major army rebellion every six of the last 18 months, increasingly widespread examples of high-level corruption, a failure to implement major economic reforms, provincial governors illegally printing their own money because they are broke and unable to pay wages in national tender, have brought the Radicals low.

Alfonsin promised to punish all military officers guilty of human rights abuses under the last military dictatorship. He vowed to professionalize and de-politicize the armed forces. He undertook to move the national capital 600 miles south to the small town of Viedma to break up the strangulating hold that Buenos Aires has over Argentine political, commercial and administrative life. He promised reform of the state by cutting massive overmanning and Ruritanian-style wasteful overspending. He expressed determination to reach a new and, for Argentina, more satisfactory accord on the country’s foreign debt.

Foreign Debt Up 25%

Most of those tasks have yet to get off the ground. Buenos Aires retains its garrote over Argentine commerce, Viedma is still sleepy, the foreign debt has grown by more than 25% and this year’s interest payments due on its $60-billion debt will perhaps be more than the country’s total foreign earnings.


While Alfonsin’s government achieved a peacefully negotiated settlement in 1984 with Chile over the Beagle Channel, the context in which he hands over government further postpones good relations with Britain, formerly one of Argentina’s best trading partners. Perhaps his most successful and socially valuable reform was to persuade Argentine politicians to pass legislation permitting divorce.

His place in history may owe nothing to any of these matters. His greatest achievement may simply be that he will be the first democratically elected Argentine president in six decades to successfully hand over the baton to another democratically elected president.

His failure is that much more surprising because when he took over from a caretaker military dictatorship in 1983, he did so with enormous domestic and international sympathy. A popular civil president, whose biggest claim to fame had been his work as a lawyer defending human rights activists, made it difficult for foreign politicians to brush aside either Argentina’s claim to the Falklands or its pleas for debt leniency. Doors--of the IMF, the United Nations, private business--began to open.

But Argentina’s complicated disease proved highly resistant to good intentions. A surgeon was called for and Alfonsin is now regarded by a majority of his countrymen as something of a quack. He looks set to pass on a nation lurching towards becoming ungovernable.


Relations with the IMF and commercial banks have rarely been worse. Argentina has paid only $100 million interest on its $60-billion foreign debt since April, 1988. In reality a debt moratorium is already in place.