FIVE decades after former Argentine President Juan Domingo Peron nationalized many of the country's industries, Argentina is close to wrapping up one of Latin America's most ambitious privatization programs.
The program, which began four years ago, soon after President Carlos Saul Menem was elected, has netted the federal treasury more than $9 billion in cash, and has allowed it to shed more than $4 billion in debt. Dozens of companies have passed through the government auction block: television stations, a horse-racing track, utilities, railroads, shipyards, and even a luxury hotel near the Andes mountains. Argentine investors have grabbed the largest portion of the privatized companies, with segments going to consortiums from Spain and the United States.
Bureaucrats have been remarkably thorough in finding enterprises to sell. Buenos Aires officials may even let private investors manage the capital city's municipal cemeteries - including the famous Recoleta Cemetery where Eva Peron is buried.
But the downside of the new business environment is the painful social disruption caused by new managers trying to cut costs and modernize enterprises.
Many companies have dismissed workers who were doing duplicate work, as well as employees who were on the payroll but did not show up for work. Some companies estimate that 10 percent to 20 percent of their staffs were noquis (no-shows). Unemployment will continue to rise as hundreds of thousands of people lose their government positions.
``The social problem is very complicated. It's going to be worse this year as people can't find jobs,'' says Hector Pessah, head of a Buenos Aires-based political consulting group. ``You have people who worked all their life in one job and don't have any other skills. The problem is the government is not doing anything.''
``There are tremendous social implications'' to the privatization process, adds Elizabeth Jelin, a sociologist with the University of Buenos Aires. ``Some small towns have thousands of people who have been displaced.... You have a city of kiosks and taxis. What happens when some of these businesses go bankrupt?'' she asks.
Besides implementing programs to retrain displaced workers, the government must define a new role as a regulator of the newly privatized companies, Ms. Jelin adds. ``There's no reason why we can't have a modern, efficient state that is accountable for what it does. That's not what we have, but I still don't want the state out of the picture completely.''
The biggest privatization deal was last summer's sale of national oil company Yacimientos Petroliferos Fiscales to investors around the world for a total of $3 billion in a public-stock offering. The sale, preceded by a publicity campaign to woo European and US investors, did not arouse the nationalistic fervor usually generated in Latin America when an energy company is auctioned off. But it created some conflict at home as the government rushed the sale and used the proceeds to cancel a $2 billion debt to retirees.
Another controversial deal involves the debt-ridden state-owned airline, Aerolineas Argentinas. The government, which initially privatized 85 percent of the airline in 1990, was forced to take back 28 percent in 1992 when the original Argentine investors proved insolvent. The Spanish state carrier, Iberia, owns 30 percent of Aerolineas Argentinas, and has been pushing for a large cash injection to clean up the airline's balance sheet. Mr. Menem arrived in Spain on Monday, hoping to settle the lingering debate over the airline before he leaves today.
Lower-profile deals include the sell-off of portions of the state's petrochemical companies, the national shipyard, and public utilities including telephone, water, electricity, and gas.
ARGENTINA may begin privatizing its airports at the end of 1994 and become one of the first Latin American countries to privatize its air transport system. The Menem administration is expected to pull in several more billion dollars this year as it sells off its remaining stakes in the gas and electricity sectors, and an insurance company.
The privatization trend will likely shift to Argentina's provinces, as local properties - ranging from banks to utilities to casinos - are offered to the private sector.
While the government has been criticized for selling off state-owned properties and losing potential revenue streams, most business analysts here argue that the process is a good one for the public and the country as a whole. Most state-owned industries were money-losing enterprises that added nothing to the federal treasury while providing poor services, they say.
``It was only a source of revenue for those running and related to the company ... those involved in corruption,'' says Marcos Victorica, executive director of El Instituto de Estudios Contemporaneos, a Buenos Aires-based think tank.
Argentina benefits by capturing more international attention as overseas dollars flow in. Foreign governments whose multinationals have a financial stake in the country are more apt to watch its political affairs, analysts say.
The huge capital infusions from the privatization process have spurred a cycle of economic growth as other businesses emerge to meet the needs of the newly privatized companies. The overall standard of living also is improving as people enjoy better phone and utility service, and more efficient transportation systems, the analysts add.
``Businesses will have to become much more competitive,'' says Timothy Gibbs, president of Buenos Aires Capital Partners, an investment bank that has served as an adviser to several companies bidding on projects. ``Who offers the best quality or delivery or the lowest price will win. It will also reduce corruption by making the business process more transparent.''