In 1989 Carlos Menem, the presidential candidate of the Peronist Party, won a landslide election victory. Before Menem took office, another wave of hyperinflation struck, and mobs of poor people looted supermarkets in the Buenos Aires metropolitan area. Facing more outbreaks of military unrest and renewed leftist activity, Alfonsín abandoned his office before his term expired, and Menem was sworn in as president. As president Menem set a new direction for Argentina’s economic policy. Campaigning for the presidency, he appeared to be an old-style Peronista, promising more government control and higher wages. However, Menem changed his position in response to hyperinflation.
To rescue the economy, he had to seek external financial support from organizations such as the International Monetary Fund (IMF). He could only obtain such support by promising to undertake drastic economic reform. Menem announced a cabinet dominated by so-called neoliberals, who supported a free-market economy and minimal government interference.
The neoliberals argued that the main cause of Argentina’s long economic decline lay in the excessive role of government in the economy. They argued that cuts in the public sector were essential first steps to restore the country’s economic health. A growing public acceptance of such ideas represented a revolutionary change of attitude in Argentina. From Perón’s time, the country stood out as a model of state ownership and government intervention. State corporations dominated large areas of the economy, including many manufacturing sectors as well as transportation and utilities.
National and local governments provided the main source of employment. The government regulated wages and prices and protected manufacturing through high tariffs. The government also influenced social development through numerous subsidies to social welfare programs.
Cavallo also sponsored an initiative to try to control inflation. The government linked the exchange value of the Argentine peso to the U.S. dollar on a one-to-one basis. Known as convertibility, this plan attempted to eliminate inflation by linking the supply of local currency to dollar reserves. To make convertibility work, the government had to stop printing money and devaluing the peso.
Privatization and convertibility gained popular acceptance during a period of rapid economic growth in the early 1990s. However, they lost popularity later in the decade as the growth rate fell. Critics argued that privatization substituted foreign-owned private monopolies for public monopolies and that convertibility intensified the recession by overvaluing the peso. Attempts to reduce public spending proved unpopular from the start.
In 1994 Argentina revised its constitution to allow the president to seek a second consecutive term. Menem won reelection in 1995, and he served as president for a longer stretch than any of his predecessors. He displayed great skill in steering the Peronistas into accepting policies directly opposite to those of Perón. Under Menem the standard of living of many Argentines either fell or stagnated. Critics denounced Menem’s government as corrupt and depicted the regime as a new oligarchy, a government in which power is vested in a few individuals. Nevertheless, the president retained much of his popularity until his term ended in 1999. "Argentina" © Emmanuel BUCHOT, Encarta, Wikipedia
Photos of European countries to visit
Photos of Asian countries to visit
Photos of America