As Argentina’s Economy Sinks, Firebrand’s Stock Is on the Rise

For months, the news here has been dominated by a recurring image: the harried faces of Argentine officials explaining again and again what their country must do to please the technocrats at the International Monetary Fund, seemingly the only force capable of rescuing this troubled nation from economic catastrophe.

As the country sullenly waits with hat in hand for an IMF bailout, many Argentines are looking for another kind of savior. And they think that they’ve found one in a chain-smoking, twice-divorced single mother who promises to restore Argentina’s wounded honor.

“It’s embarrassing to see our government officials in Washington, getting on their knees and acting submissive,” said Elisa “Lilita” Carrio, a deputy in Congress from Argentina’s impoverished north and the leader in recent polls. “A country with even a minimum amount of dignity cannot allow this.”

Carrio’s quick rise from backwater lawmaker to presidential front-runner is a measure of the growing anger here toward the IMF, the Bush administration and the Argentine political elite--three forces that Carrio is famous for skewering with wit and eloquence.

In a country where few establishment politicians can step out in public without being booed or worse, Carrio is happy to accept the mantle of outsider. She revels in being “a fat woman” and “a provincial who never shuts up.” And unlike the current president, Carrio says, she would never kowtow to the United States.

With Argentina’s banking system in ruins and a quarter of the work force unemployed, the government of President Eduardo Duhalde has been trying since January to secure an emergency loan from IMF officials. Those Washington-based administrators, echoing the policies of the Bush administration, are demanding sharp budget cuts and key legal reforms in exchange for bailout funding.

“They’re telling us to do things that would never be done in the United States,” said Horacio Verbitsky, a columnist with the daily newspaper Pagina 12. “They want us to cut government spending in the middle of a recession.”

When the Argentine Senate debated one of the reforms demanded by the fund last month, several legislators wondered aloud who was really running the country: Duhalde, the nation’s beleaguered president, or Anne Krueger, a top IMF official whose comments on the Argentine crisis are a fixture in the media here.

“Day after day, the United States demonstrates its decision to keep an imperial control over the world,” said former President Raul Alfonsin, now a senator for the centrist Radical Party.

The IMF was demanding that Argentina revoke the law of economic subversion, which Argentina’s military dictatorship used in the 1970s to prosecute alleged supporters of leftist guerrillas. Now the law is being used to prosecute bankers charged with spiriting money out of the country as the financial system collapsed last year.

IMF officials have said that such prosecutions are politically motivated and chill the investment climate. But many here see the IMF’s insistence on repealing the law as an attempt to help its friends in the banking community, including a handful of jailed executives.

Eight senators from Duhalde’s Peronist party abandoned the president and voted to keep the law--despite Duhalde’s threats to resign if it wasn’t revoked. The Senate eventually overturned the law by a single vote.

Protest Inside Congress

During fierce debate on the law in the lower house of Congress, the Chamber of Deputies, a lawmaker rushed to the podium and placed an American flag on the rostrum in protest.

“Let those people who’ve transformed our Congress into nothing more than clerks of the IMF lower our national flag and replace it with this one,” yelled the deputy, Alicia Castro, amid insults and cheers.

Carrio has said she would reinstate the law because the IMF has “coerced” Congress into revoking it.

In the most recent polls here, Carrio is far ahead of the candidates of the Peronist party. A Marxist activist, Ruben Zamora, isn’t far behind in second place. Zamora has called on Argentina to break off all negotiations with the IMF.

But Duhalde believes that he has little choice but to implement the IMF program, including its deep cuts in outlays to the country’s provinces.

Already hit hard by cuts last year, some provincial governments owe their employees many months in back pay.

‘Fewer Cards to Play’

“Every day the crisis becomes more grave, and every day Duhalde has fewer cards to play,” said Eduardo Rodriguez Diez, an economist with Fundacion Capital, a think tank here. “He has become a more isolated figure.”

Since Duhalde assumed the presidency in January in the wake of riots and political chaos that drove four predecessors from office in just two weeks, Argentina’s economy has plunged further into recession. The national currency, the peso, has lost two-thirds of its value. Its rapid devaluation, in turn, has driven up the price of gasoline, utilities and basic foodstuffs.

Millions of Argentines have had their savings frozen by a government decree designed to prevent a run on the banks. Frustrated depositors protest outside banks in central Buenos Aires every working day, often vandalizing the banks--including U.S. institutions such as Bank Boston and Citibank--with hammers and spray paint.

In the mid-1990s, Argentina embraced the neoliberal economic policies advocated by the IMF and proponents of free trade. Railroads, utilities and even the nation’s oil reserves were all sold to the private sector.

“The people who are angriest now are the ones who believed most in the [neoliberal] economic model,” Verbitsky said. They put their money in U.S. and European banks because they believed that it would be safer there. They supported the “convertibility” plan that made the peso equivalent to a dollar, even as the government went slowly bankrupt trying to keep the peso strong.

Now the economic model of the 1990s is in shambles. The peso is worth 27 cents. And Argentina must endure the harsh criticisms of U.S. officials such as Secretary of State Colin L. Powell and Treasury Secretary Paul H. O’Neill. The latter said in an interview that Argentina doesn’t have an export economy because “they like it that way. Nobody forced them to be what they are.”

The war of words continued last week, with IMF Managing Director Horst Kohler declaring that he was irritated with Argentina’s delay in reaching a budget agreement with its provincial governments.

“If the IMF wants us to work quicker, then it should help us quicker,” retorted a Duhalde aide.

Duhalde has, in fact, worked for months to push through the IMF program in the face of opposition from nearly every sector of Argentine society.

His approval rating, according to a recent Gallup poll, has sunk to an abysmal 24%. Last month, he reportedly agreed--in private talks with provincial governors--to step down long before December 2003, when his term is scheduled to end.

Most observers anticipate a presidential election some time this year.

A Nationalistic Climate

Dismissed by many as an annoying gadfly just a few months ago, the 45-year-old Carrio is gaining support in the tense, increasingly nationalistic climate. She is the politician most closely identified with the argument that Argentina’s economic crash was caused by corrupt politicians and businessmen.

“This country has to choose between truth or lies, between justice and impunity, between the hard way or the easy way,” said Carrio, who led a congressional committee that investigated money-laundering by Argentina’s business elite. “We have to choose whether it’s worth fighting for this country.”

Carrio is a colorful and controversial figure with a reputation for integrity and toughness. The daughter of a lifelong Radical Party activist, she was married and became a mother at 17. By the time she was 24, she had gone to law school and become a judge.

These days, Carrio often stages impromptu street-corner news conferences denouncing corruption--on a few occasions, her charges later proved false.

Even people who dislike her acknowledge, using a popular Argentine phrase to describe strong women, that Carrio “has ovaries.”

Carrio calls herself “a liberal democrat” who believes that wiping out corruption can provide the stimulus to turn around Argentina’s moribund economy. She repeats this mantra over and over in this nation’s many nightly news talk shows, in which she is a frequent and popular guest.

“Elisa Carrio is well-placed to win the next presidential elections ... because she represents a utopian hope in a moment of social frustration and instability,” pollster Rosendo Fraga wrote this month in the magazine Veintitres.

Whether Carrio can govern Argentina--and not just inspire its people--remains an open question, Fraga wrote.

Carrio has heard such doubts before. Asked what qualifications she has to run this nation of 37 million people, she rattled off a list of her accomplishments during eight years in Congress.

Elected as a member of the Radical Party, she and two other deputies formed a dissident party in 2000, Argentines for a Republic of Equals.

“At first, we were three deputies, and now we are 30,” she said. In October, her newly formed political party finished third in congressional elections.

“I was able to build a party,” she said. “I was able to form alliances with other parties in Congress. I got laws passed unanimously.”

She paused, took a drag on her second cigarette in half an hour, and then thought of another qualification that has prepared her to be president: “And I am a woman!”