Argentina heads toward a second round of presidential elections May 18 in profound economic distress. Once South America's powerhouse, the country now struggles under a $155 billion foreign debt - a staggering 40 percent of gross domestic product. One in 4 Argentines is unemployed, much of the middle class has disappeared, 60 percent of the population lives on $2 a day - and the man many blame for it all is one of the two runoff candidates.
Carlos Menem, president from 1989 to 1999, instituted market reforms. But many remember him for running a corrupt government and allowing a spending spree that brought about economic collapse two years ago. Now Mr. Menem portrays himself as the only man who can straighten out the mess. How many Argentine voters agree is the question.
In an April 26 first-round election with five candidates, the former president captured only 24 percent of the vote, compared with 22 percent for his surviving rival, Nestor Kirchner, governor of Santa Cruz Province. Ironically, both are members of the populist Peronist Party. The center-right Menem promises further needed market reforms and foreign investment, but many Argentines think free trade is the problem and don't trust him to run a clean administration.
Mr. Kirchner is seen as a centrist, but he advocates increased protectionism and a return to state ownership of some enterprises, the very wrongheaded Peronist policies that drove Argentina into the abyss from its peak of prosperity 70 years ago. But his reputation for good government and his announcement that he'll keep on Economics Minister Roberto Lavagna, who worked out the interim debt deal with the International Monetary Fund, could work in his favor.
In the end, the election will likely turn on how many people vote against Menem. Whoever wins will immediately have to open negotiations with the IMF, private bondholders, and the international investors to whom Argentina owes billions.
But the country's real problem goes far deeper. It's a decline in civic culture. Some 40 percent of Argentines evade taxes, yet government spending is almost one-third of the economy. Demand for government services fuels corruption that further saps growth and drives away investors. Labor laws make it nearly impossible to lay off unneeded workers or cut wages. Every economic downturn is blamed on foreigners, yet Argentines want IMF bailouts. Unless the whole country acts more responsibly, its elections will make a difference only on the margins.