Sagging Argentina awaits outcome of economic blitz
Argentina is the great tragedy of Latin America.Skip to next paragraph
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With a highly educated citizenry, bountiful natural resources, a magnificent climate, and a long list of other advantages, it is the one country above all others in the hemisphere that ought to be making it economically.
Yet for years, as its neighbor nations improved their economic performances, Argentina's economy went from bad to worse.
For the past generation, governments have come and gone with no resolution to the economic problems. Most left a legacy of worsening economic conditions to their successors.
At the moment, as the three-month-old government of Gen. Leopoldo Fortunato Galtieri wrestles with the economic travail, Argentina has the world's highest inflation rate. The peso has been tumbling in value on the foreign exchange market, dropping 13.7 percent against the United States dollar on one day alone last month (March 15). Moreover, Argentina is mired deep in recession. The economy is shrinking more than 5 percent a year.
And Argentines, who once prided themselves on one of the world's highest living standards, worry that their life styles are becoming frayed. The average Argentine, middle class by world standards, is earning less today than he did 10 years ago - not a surprise when the Argentine peso is worth one-fifth of its value a year ago.
General Galtieri, in taking over in December, immediately named a free-market economist, Roberto T. Alemann, as the country's economic czar. No sooner was he in office as economy minister than Mr. Alemann froze public wages and pensions, cut the military budget 10 percent, and announced plans to sell off state enterprises to the private sector. That, however, was only the beginning.
Spurred by a determined Alemann, the government is bent on reversing Argentina's economic malaise within the next three years. Alemann has other plans that he expects to put into operation during the course of 1982. He knows the solution to the malaise won't be easy and that he and his associates have their work cut out for them.
And he knows that he inherits not only the legacy of poor economic performance over the past 30 years, but also the legacy of economy ministers coming and going ''like flies,'' to quote the Buenos Aires newspaper Clarin.
Previous governments were always introducing new programs aimed at resolving the difficulties, but often, even before the ink was dry on some new program, a new minister was appointed and new programs were being worked out.
A number of years ago, former Argentine President Arturo Frondizi complained to this writer that it was hard to get acceptable solutions to Argentina's economic trauma. Most Argentines, he said, have solutions -- some of them very valid -- but no Argentine would listen to another's solutions. Mr. Frondizi during his presidency in the early 1960s did listen -- and the economy improved.
The person he listened to was Mr. Alemann, who served as something of an economic czar, with wide powers to handle the economy. It was probably Argentina's best economic hour in the past 30 years and one that Argentines today look back upon with enthusiasm.
This time, Alemann was again assured that he would have power over all economic matters, including -- and this is something new -- authority over considerable military spending.
After his initial curbs on government spending, freezes on wages, and other stringent measures, Alemann reduced the printing of money, ended government-sponsored wage indexation, and allowed the peso to trade freely in foreign exchange markets.
It will take time to tell just how effective these measures are, but with bumper harvests of grain this late summer out on the Argentine pampas and a bountiful meat surplus -- both good trading items for Argentina -- the immediate prospect for the economy is good, and Alemann has some time to maneuver.
He does not expect to waste much time, however, rejecting the gradualist approach of his two immediate predecessors, Jose Alfredo Martinez de Hoz and Lorenzo Sigaut, during the past six years of military rule. He believes in drastic measures.
''You combat inflation head-on and rapidly,'' he says in speeches to anyone who will listen, ''or you don't combat it.''