Falklands dispute is most visible of Argentine crises that won't go away
Buenos Aires — No matter what happens in its conflict with Britain, Argentina is likely to face crises on both its economic and political fronts before the year is out.
To be accurate, this South American nation of 28 million people is almost always in the midst of an economic crisis. Most observers think the conflict with Britain will aggravate matters. Hopes that inflation could be kept below a rate of 100 percent this year are already being shaken.
On the political front, persistent demands within Argentina for a return to civilian rule have been muted by the conflict with Britain over the Falkand Islands. Most critics are reluctant to attack a government that may be on the point of armed confrontation with a foreign power.
But all the indications are that Argentina's military rulers have gained from the Falklands conflict only a temporary truce in their battle with opposition politicians and trade unions. They have not gained greatly in popularity.
On the economic front, meanwhile, many Argentines are showing signs of panic. For the past week or so, thousands have been withdrawing their savings deposits. This may not yet be what could be called a run on the banks, but it seems to reflect a lack of confidence in the economy and a fear that the government might freeze deposits and impose a war tax.
Putting the best possible face on the situation, Economy Minister Roberto Teodoro Alemann insists the country is still far from having to shift to a war economy. Mr. Alemann acknowledged that panic had led many people to withdraw their money from the banks and to put it ''under their mattresses.'' But he expressed the hope that inflationary pressures on the economy could be controlled.
The government was reported to be looking for ways to finance its military operations on and around the Falkland Islands through the existing budget instead of through printing new money.
Cracks were beginning to show, however, in the armor of Alemann's tight ''monetarist'' policies. On April 16, the government announced measures aimed at stabilizing the financial market. These included: (1) a reduction of 1 percent in the minimal reserve requirement, (2) a doubling of rediscount margins, and (3 ) an easing of central government controls over credit.
Alemann had earlier contended that such measures would be unnecessary and that the market itself would deal with the problem.
Alemann has been pursuing an unpopular economic and financial policy, but it has been viewed as necessary because of the magnitude of Argentina's economic plight. The policy has required a freeze on wages and pensions.
The country has one of the largest foreign debts in the world. At nearly $35 billion, it exceeds that of Poland. Prices have risen more than 100 percent annually in seven of the last eight years. Unemployment is estimated at about 13 percent.
Because Argentina has great natural wealth, this situation has astonished many foreign visitors to the country. Argentina has plenty of land -- it is the eighth largest national territory in the world -- and is largely self-sufficient in food and in oil. Argentina has a homogenous population. Unlike many developing nations, it is not torn by racial or religious strife. Most of its people are Roman Catholics, and most of them are literate.
When one asks Argentines how such a people could have made such a mess of their economy, the answer invariably comes down to politics. It is because of political instability, a lack of democracy, and mismanagement by the country's leaders, Argentines frequently say. Economists add that another problem has been a lack of consistent economic policies. Such policies have changed as frequently as the country's governments.
Aldo Ferrer, a well-known Argentine economist and critic of the military government's economic policies, contends that Argentina faces a turning point.
In a paper prepared for the School of Advanced International Studies (SAIS) of the Johns Hopkins University in Washington, D.C., several weeks ago, Mr. Ferrer charged that Argentine monetarists ''deserve the prize for the worst disaster in the contemporary world economy.''
''Social and economic tensions are becoming unbearable under the present regime and the time for basic decisions is approaching,'' said Ferrer. ''In my view, and that of many observers of the Argentine scene, the era of military regimes is coming to an end.
''The question is whether political parties and other institutions representative of the majority of the Argentine people can avoid the mistakes of the past and set the ground for a return to democracy, freedom, and the rule of law. . . .''
According to Ferrer, one thing is clear: Democracy is a precondition for the economic development and political stability that have so long eluded this potentially rich country.
The social and economic tensions of which Ferrer speaks were evident only a few days before the government decided to invade the British-held Falkland Islands on April 2.
On March 30, in Buenos Aires, government riot police savagely attacked demonstrators organized by Argentina's General Labor Confederation (CGT). More than 1,000 persons were arrested.
In the city of Mendoza, six persons were wounded during a CGT demonstration after police opened fire, according to Argentine press reports.
The CGT was demanding, among other things, a return to elected government.
The main political parties, as well as the CGT, are expected to renew their demands once it is clear how the crisis over the Falkland Islands is to be resolved. The Peronist political party is already calling for the ''normalization'' of political activity.
An Argentine newspaper editor said that although the political parties fully supported the takeover of the Falkland Islands, or the Malvinas Islands, as they are known here, the parties would at some point ''present a bill'' to the government asking some kind of repayment for that support.
''In a few months, we will have a different situation here,'' said a member of a leading Argentine human-rights organization.
''People will forget the euphoria over the Malvinas takeover, and everyone in the society will be making some kind of demand on the government.''