Latin Democracies Imperiled by Debt, Alfonsin Asserts

President Raul Alfonsin, his own nation drowning in inflation as elections draw near, warned Friday that Latin America’s worsening economic crisis poses grave dangers to the future of democracy in the region.

In a speech to business executives, Alfonsin likened the developed world’s treatment of Latin America to the Allies’ harsh policies toward Germany after World War I. The punitive Versailles Treaty after the war, Alfonsin said, paved the way for the rise of dictator Adolf Hitler.

“Democracies have been reborn in our region in a framework of truly devastated economies, as if they had emerged from a war,” Alfonsin said. “Here, they are applying to us the doctrine of Versailles, and our people are subjected to tremendous tensions.”

Engulfed in Inflation

Argentina has been engulfed by a tidal wave of inflation, estimated at 25% to 40% for April alone, just weeks before the May 14 election to choose Alfonsin’s successor. Several leading politicians, including the populist front runner, Peronist candidate Carlos Saul Menem, have said they fear that the crisis, if unresolved, could give rise to a social explosion.

The chances of Eduardo Cesar Angeloz, the candidate of Alfonsin’s ruling party, the Radical Civic Union, seemed to decline each day this week with the constant leaps in inflation and interest rates, and the slide of the austral, Argentina’s currency, against the dollar.

Prices for some basic goods have doubled and even tripled in the last couple of weeks, in part over election uncertainty but also because of structural economic problems and currency speculation. Supermarkets clerks hurried all week to put new price tags on goods on the shelves. Long lines of people formed at currency exchange houses to cash australs into dollars. Many stores stopped accepting credit cards.

Little Danger of Coup

Few analysts see any immediate danger of a coup on the eve of what would be Argentina’s first election of a successor to a sitting president since 1928. Alfonsin has weathered three military uprisings and a leftist attack on a military base. Some observers have noted that the economic crisis is as grave now as it was in 1976, when the military deposed President Maria Estela Peron, wife of the late Gen. Juan D. Peron. However, unlike that period, there is neither wide-scale left-wing guerrilla activity nor apparent civilian support for military intervention.

Nevertheless, Alfonsin told the gathering: “You all know very well what can happen to poor democracies when no answer is given to unsatisfied expectations. This region runs the risk not simply of alternating the parties in power within the system, but the grave risk of seeking a solution outside the system.”

The victorious Allies of World War II learned from their post-World War I errors and showed “imagination, creativity and solidarity” in devising the Marshall Plan to rebuild Europe, Alfonsin said. A similar approach toward Latin America now could lead to productive changes, “before that change becomes catastrophic,” he added.

Alfonsin’s critics maintain that domestic policy errors, principally the failure to trim the inflation-feeding government budget deficit, have played a greater role in creating the crisis than the foreign debt. Argentina has not made any substantial interest payments on its $60-billion foreign debt in the past year, and no new foreign loans have been forthcoming.

Dollar Rises Again

The dollar rose again Friday from 69.50 to 72 australs, and interest rates surged to as much as 700% annually.

The frantic economic climate was apparent at the Hogar Obrero (Workers’ House) supermarket cooperative branch on Maipu Avenue in Vicente Lopez, a middle-class suburb north of the capital.

A frustrated clerk threw up her hands as a supervisor handed her yet another price list to remark the products on the shelves, the second price rise of the day, she said.

The clerk pasted labels showing 26 australs (37 cents) over the previous day’s tags of 18.50 (26 cents) for a one-pound bag of macaroni. Across the aisle, a 1.3-pound bag of detergent bore a tag for 39.50 australs (56 cents), while underneath was a label for 25.90 (37 cents).

Emilia Teresa Hartmann, a 57-year-old executive secretary whose husband is retired, said she was barely coping on her salary of 5,000 australs ($71.94) a month. Argentina’s middle class, she said, is vanishing.

Another shopper, a 64-year-old nurse, said she hopes things will calm down after the election. She doesn’t want another coup, since military governments had done no better in the past. Yet she added, “freedom, yes, but you can’t eat freedom.”