Argentines Raise an Eyebrow As Their President Fumbles

Menem loses momentum in lead up to his second-term inauguration

WHEN a group of US members of Congress visited Argentina in May, they were wowed by the star of the show: Argentine President Carlos Saul Menem.

Fresh off a surprisingly comfortable reelection victory, Mr. Menem displayed a command of economic issues, a sense of direction about both his country's needed reforms and its place in the Americas, and a Latin charm that is his trademark.

Hosting this first visit from the Republican-controlled Congress, Menem provided reassurance that the United States policy of closer economic and political ties to Latin America could count on solid southern partners.

Today, many Argentines are wondering where the confident and decisive leader they elected to a second four-year term on May 14 has gone.

As Menem prepares for his inauguration Saturday, observers here say the president has lost much of the momentum from his reelection victory. His interim seven weeks have been characterized by confusion, Cabinet infighting, and a lack of initiatives for Argentina's economic malaise.

''Like many people, I'm surprised by the government's inability to move fast and profit from its electoral success,'' says Martin Krause, assistant dean of the Graduate School of Economics and Business Administration here.

''Menem's time to act was right after the shock of that victory - not after the inauguration two months later,'' he says. ''But the government has done nothing.''

One explanation may be that Argentina's sour economy and unresolved structural problems - basically, overgrown government and chronic fiscal imbalance - aren't yet allowing Menem to do with his second term what he had planned to do.

After a first term characterized by a rocky economic adjustment - which succeeded in taming the country's once-prodigious inflation while boosting economic growth - Menem wanted to give his second term more of a social theme.

He turned his attention to issues such as health, education, infrastructure improvements, and above all, job creation. But short- and long-term economic prospects may not allow such social change to take place, and instead, may require the government to focus on more of the same.

Most economists expect economic growth to fall to zero this year, even though Minister of the Economy Domingo Cavallo predicts a rosier 3 percent. And question marks still hang over payment of the country's public debt, with $5 billion owed in the second half of this year alone and annual payments rising to more than $10 billion in 1998.

In that context, observers expect privatizations to continue, public consumption to remain dampened - and thus job growth to be difficult. During the election campaign, Menem said he would ''pulverize'' unemployment, which now stands at more than 14 percent. But many economists actually expect joblessness to reach as high as 18 percent before falling.

Menem acted to calm rumors that the government was about to increase spending on social programs at the expense of further economic reforms when he declared to foreign journalists last week that it was not his intention to ''Peronize'' his economic plan. That reference to former President Juan Peron, known for his populist programs, was well-received in international finance circles. But Menem, who claims to be an updated Peronist, would never make such statements to the home audience.

Some observers say Menem, known to be decisive on the one hand but bored by drawn-out problems on the other, may simply have tired of the focus on economic challenges. Others say the death of his son Carlos Jr. in a March helicopter accident is catching up with him after the distraction of the campaign.

Still others say the absence of a strong political opposition has left the Menem government open to the luxury of internal battles over positions of power and influence

''There's a growing sense of concern that without a strong opposition pushing it to action, the government may continue fighting itself and do little about some of the problems worrying people, like education, the judiciary's independence, and income issues at the lower social end,'' says one foreign diplomat here.

But opposition leaders say the government's disorientation and recent budgetary problems have pitted Argentina's provinces against the federal government and opened the door for a strong opposition.

''We had to accept the May 14 [election] results as a clear victory for Menem and his direction,'' says Simon Alberto Lazara, congressman and spokesman for the Radical Civic Union party. ''But now that seems like two years ago, and the opposition is galvanized.'' The UCR is led by former president Raul Alfonsin.

The problem for the opposition is that the public still seems to be largely on the president's side. Menem's approval rating has actually gone up since the election, says Manuel Mora y Araujo, a pollster here. ''He is still seen as the leader who defeated inflation and brought back purchasing power, so despite the current hard times, people have positive expectations for his second term.''

Those expectations will be tested as Menem sets the tone of his second presidency tomorrow with a message that is likely to sound a lot like staying the course.

FINANCIAL UPHEAVAL: State employees, many of whom have not been paid for two months, protest during clashes with police in Cordoba, Argentina, June 23. Many provinces, for years cushioned by fat state handouts, are verging on bankruptcy.


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