Newsweek,
3/19/84
The success that new Argentine president Raul Alfonsin has shown after his first 100 days of presidency is not only a good sign for Argentina, but has also strengthened the overall trend in Latin America towards democracy. While less than a decade ago there was military rule throughout most of the region, the number of “strongmen” left in power has dwindled and seems to be further diminishing. Forces fueled by recession, repression and disillusionment with the military (e.g. the Falklands) have handed power to civilians in Ecuador, Peru and Bolivia. Brazil is in the midst of just such a process; Surinam, Paraguay and Chile are currently the only exceptions to this democratic surge.
The grip of democracy in Argentina and its neighbors, however, are far from certain. South America’s chronic economic problems – inflation, low growth, high unemployment and widespread poverty – continue to plague the region with instability. Collectively the countries owe $350 billion to foreign creditors. To help pay off the interest on these debts, international lending agencies (most notably the IMF) and banks have pressured them into imposing austerity measures that further fuel the instability through popular discontent.
Since his election last fall, Alfonsin has been remaking Argentine politics; while attempting to forge bonds with the United States and with previous leaders such as Isabel Peron he has been quick to reduce the military’s power and budget and has put several members of previous military junta on trial for human-rights abuses. As a sign of evenhandedness, he has also ordered legal proceedings against seven left-wing terrorists.
So far, Alfonsin has placed top priority on labor reform. Until now, the labor leaders have been voted in indirectly and have catered to whatever side was in power in exchange for benefits and in some cases decision-making power. Now Alfonsin has introduced legislation that would force elections for labor leaders in hopes to give the labor unions more credibility.
The massive foreign debt of $45 billion that Argentina has is still ever looming and some people wonder whether Alfonsin can keep in place with his campaign promises (some people think that perhaps he has put too much effort into the labor dispute). He has pledged to increase economic activity by 5% and also raise real wages by 6-8% by trying to reduce inflation 100% (from last year’s 450%). Through price controls he has managed to somewhat control this inflation, but he must find a way to reduce that foreign debt before he is capable of any real economic changes.
Alfonsin faces some points of contention with foreign creditors and lending agencies. He claims that most of Argentina’s debt was inherited from previous administrations’ mismanagement and corruption and has therefore asked creditors to reschedule the debt “as a gesture of support for the new democracy.” The bankers have not agreed with this view, however, and have demanded austerity deals with the IMF before lending any more or reviewing current debts. Directly challenging the bankers is the fact that many of the funds that could be used for debt payment has been instead used to build up cash reserves. Some nationalists even favor purposefully defaulting on the loans and using these built up cash reserves “pay the bills.”
Alfonsin seems to have a firm grip on power in Argentina, so the big question is how much the rest of South America will follow in his lead. If he manages to make Argentina’s creditors view democracy as a “worthy cause, not just an excuse,” while at the same time imposing austerity and following through with his economic promises – all while keeping the military in check – then he will certainly give the rest of South America a role model in Argentina.