A Huge Task in Argentina

Argentine President Fernando de la Rua resigned Thursday, driven from office by the collective rage of hungry peasants from the “Villas Miseria” slums, cash-strapped merchants and thousands of middle-class women who protested the nation’s obscenely high cost of living by marching through the streets clanking pots and pans. Four days of mayhem killed 20 people and toppled an unpopular government that had failed to lift this South American country so rich in natural resources from the depths of economic chaos.

It will take time for the skeptical citizenry to regain faith in the political establishment, which has been notoriously corrupt. Once the rule of law is restored, Argentina must begin hacking through a tangle of crippling woes.

To reactive the economy, mired in a three-year-old recession, the new government must bring down unemployment, now at a staggering 20%. It must also find a way to manage a public debt of $155 billion while reducing a fiscal deficit that this year hovers around $8 billion.

A recent article in an Argentine newspaper illustrates how imperative it is for the new government to overcome the political elite’s devastating corruption and inefficiency. According to the story, the Argentine Congress boasts thousands of employees who are known not so affectionately as gnocchi. Gnocchi, you see, are the potato dumplings that Argentines eat on the 29th day of each month, a custom that is supposed to bring good luck. The employees got that nickname because they show up to work only once a month--always on payday. Civil service law prohibits their firing. But if forced to show up more often, they’d have nothing to do.

Such is the state of affairs that led to this week’s rioting. Now the people must channel their anger into legitimate change. Institutions such as the International Monetary Fund have promised to lend Argentina billions if it will come up with a strict austerity plan.

What Argentina needs now is a grace period during which the government and the people--at least the 50% who are not dirt-poor--can come to grips with the fact that they need such a plan and then create one. The nation may have to devalue its currency. It may have to stop paying interest on that massive debt.

Most important, the new government will need to prove to the international financial community that it is trustworthy, and to do that it must first earn the people’s trust.