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Poor politics brought on Argentine crisis

by Cesar Chelala

NEW YORK — Argentina is a country under siege. The attackers, however, are not foreign armies. They are corrupt and incompetent politicians, who are responsible for the dire state the country is in. The resignation of four presidents — three of them interim caretakers — in less than two weeks is proof of the seriousness of the situation.

The election of President Eduardo Duhalde offers some hope for improving the situation. It is now up to him — who also is not blameless — to rise to the occasion and take the drastic steps that are necessary to avoid total chaos.

Why is Argentina, one of Latin America’s most resource-rich countries with a highly educated middle class, in such dire straits? The answer lies in party politics.

Duhalde belongs to the Peronist Party — officially known as the Justicialist Party — which for more than half a century has been the most important player in Argentine politics. The last Peronist president to carry out a full mandate was Carlos S. Menem. A former provincial governor, he has been accused of leading a corrupt government. His economic policies — widely lauded by international financial institutions — are responsible, to a large extent, for the serious economic situation the country is now going through.

Menem used privatizations of state industries as a way of political patronage and control, perverted the judicial system and reportedly siphoned hundreds of millions of dollars into his and his minions’ pockets. On the advice of his minister of economy, Domingo Cavallo, he pegged the Argentine peso to the dollar, which immediately helped to drastically lower runaway inflation but which in the long run made Argentine exports too expensive to compete in global markets.

Menem’s failed economic policies were not helped by those of his successor, former President Fernando de la Rua, from the Radical Civic Union Party — a centrist party despite its name. Recession worsened under de la Rua, and thousands of people lost their jobs and homes. De la Rua also asked for Cavallo’s help. Despite Cavallo’s policies, the situation got out of control; unemployment dramatically increased; and following popular upheavals, de la Rua had no other alternative but to resign.

Although the government of de la Rua didn’t reach the same level of widespread corruption as Menem’s administration, it shared with it the same incapacity to adequately respond to the challenges posed by an economy that every day became more dependent on foreign loans. This predictably led to a bigger foreign debt in a vicious circle from which both administrations were unable to escape. Argentine politicians proved that their main concern was keeping their own privileges rather than responding creatively to the crisis.

De la Rua’s replacement, former provincial Gov. Adolfo Rodriguez Saa, was unable to gather minimal support within his own Peronist Party — which has a majority in both chambers of Congress — and was forced to resign after a few days in power.

He did himself in by naming among his closest advisers people already heavily tainted by corruption. His own chief of staff, former Buenos Aires Mayor Carlos Grosso, responded to the accusations of corruption (he had been criminally indicted 38 times) by saying, “I wasn’t chosen for my background, I was chosen for my intelligence.”

After World War I, Argentina was one of the world’s fastest developing countries. Will it ever regain the rate of development it once had? A lot will depend on Argentina’s new president.

Duhalde promised to lead a coalition government with members of other political parties. He has already indicated that he will create a ministry of production, provide financial help to a million Argentines in absolute poverty and implement a food program to ensure the nutritional needs of the poorer sectors of the population are met. These are all necessary measures, but perhaps the most important action needed is to put the country’s needs ahead of party interests. Party politics has already done enough damage to Argentina.