Carlos Menem & the Peronists: From Populism to Neoliberalism

Against the Current, No. 37, March/April 1992

James Petras and Pablo Pozzi

FROM PETERSBURG TO Pretoria to San Salvador, we are informed by the ideologues of the economic elites, privatization and the free market are the wave of the future In this essay James Pctras and Pablo Pow take a closer look at the Argentine success story. Petras, profressor of sociology at SUNY Binghamton, a frequent contributor to ATC and author of numerous works on Third World economics and politics, is working on a new book on U.S. global power and domestic decay. Pozzi is a professor of history at the University of Buenos Aires, the author of a major study of the Argentine working class and editor of a bock on the U.S. working class (both in Spanish).

This article was written prior to the Fall 1991 elections in Argentina, in which Menem’s Peronist party was relatively successful, despite the overall economic crisis. This success may be attributed to the regime’s one success: reducing monthly inflation to single-digit rates. The electoral result, combined with the continued power of an intact union bureaucracy, has enabled the Menem regime toxc4erate the privatization program and to dismantle the job protection and social legislation won by the trade unions since the 1940s. Another significant fact is that extreme rightist candidate Aldo Rico won ten percent of the vote in Buenos Aires, gaining support both among lower classes and some professionals for a pseudo-nationalist authoritarian alternative to the dominant liberal free-market ideology.

 WHEN CARLOS MENEM was elected President of Argentina on 15 May 1989, most people believed that this right-wing Peronist politician, who had been imprisoned during the last military dictatorship (19761983), would honor at least some of the tenets of the Peronist tradition. Historically Peronism found adherents amongst workers, the poor and middle-class businessmen linked to the internal market.

In this sense, though they sounded demagogic, Menem’s promises to carry out a “productive revolution,” based on a boost in real wages (the “salariazo”) that would reactivate the internal market, struck a chord in people who felt desperate after six years of economic crisis under the Radical Party President Raul Alfonsin. Thus the warnings by the left of a sellout sounded out of place to most ears.

Once Menem became president, however, it soon became clear that he had little intention of carrying out his promises. What is more, the new government clearly broke with traditional Peronist redistributional economic policy by adopting a neo-liberal agenda. Few old-line Peronists were appointed to the cabinet Foreign Relations was given to Domingo Cavallo, a former appointee of the last military regime; Miguel Roig, an executive of the multinational Bunge and Born Corporation, was appointed Minister of Economics; Jorge Triace, a union leader who had split with Peronism in order to support the military regime, was appointed Minister of La- bce; the Catholic Church placed its candidate Antonio Salonia in the Ministry of Education.

In addition, well-known neo-fascists were appointed as undersecretaries and to embassies throughout the world: Julio Barbaro became Under Secretary for Culture; Raul Matera for Science and Technology; Carlos Ruckauf became Ambassador to Italy, Jorge Asis to UNESCO, Julian Licastro to Peru, Victor Massuh to Belgium. When Roig suddenly died, he was replaced by another Bunge and Born executive, Nestor Rapaneffi, who was on trial in Venezuela for illegal business practices. Finally, Alvaro Alsogaray, leader of the neo-conservative traditionally anti-Peronist Democratic Center Party (UCD), became a key advisor to the president.

Literally, shock waves went through Peronism. Old activists tried to explain things as a masterful tactical play geared toward unbalancing the enemy before Menem returned to tradition. The new president quickly stood up to clear up any confusion. He met Admiral Isaac Rocas, who had overthrown Peron in 1955, to effect a “national reconciliation.” Menem also announced that the “productive revolution” would have to wait until much-needed reforms were carried out. Then he declared that the state was inefficient, thus many of its functions would have to be privatized in order to restore market mechanisms to the economy.

Privatization, Corruption

Over the following eighteen months, state enterprises such as telephones, highways, airlines, railroads, coal and petroleum deposits, and steel factories were sold to foreign corporations (including Spanish, French and Italian state corporations, much to the chagrin of average Argentines) at a fraction of their worth. The income has been used to pay foreign debt interests.

Thus the profitable state telephone (ENTEL), valued at $5 billion, was sold for $214 million cash, plus $4,030 million in foreign debt bonds worth $255 million, and $998 million to be paid in interest owed to creditors. In short, the buyers acquired $5 billion in property for $469 million.

Many of these state enterprises had been setup under the first Peronist government That they were sold under Menem’s Peronist government can be seen as representative of the changes over time, especially since both workers and unions were not included in any of the stages of privatization. The orgy of privatization has given way to large-scale corruption. Corruption is nothing new in Argentina; the difference from the classic Peronist era lies both in the sheer scale on which it is now practiced, and in its prominence in the very core of the political and economic system.

This phenomenon increased significantly during and since the 1976-83 military regime. A 1982 Argentine joke reflected this: The Brazilian Minister of Economy met with his Argentine colleague in Brazil. The host went to the window and showed the Argentine a bridge. “Fifty percent profit for me,” he said. A year later the Brazilian went to Buenos Aires. The Argentine Minister took him to the window. “But there is nothing there,” said the Brazilian. “A one hundred percent profit for me,” replied the Argentine.

Under the (post-military) Alfonsin government there were several well-publicized cases of corruption. But past experience pales by comparison today. The Minister of Social Works, Eduardo Bauza, has been publicly accused of skimming on school purchases. President Menem’s brother, Senator Eduardo Menem, was caught illegally transferring thousands of dollars to a bank account in Uruguay. Peronist politicians were caught buying votes with state-issued food stamps. President Menem openly accepted a $250,000 Ferrari sports car as a gift from a businessman who wanted certain favors. The Peronist Party whip in Congress was accused of graft to the tune of $14 million to ease the privatization of the Bahia Blanca Petrochemical complex. Millions of dollars seem to have changed hands in the privatization of the telephone company, thanks to the state-appointed manager Maria Julia Alsogaray.

By 1991 the level of corruption had gotten totally out of hand; even traditionally cynical Argentines were shocked by it. U.S. Ambassador Terence Todman had written in December 1990 to the Minister of Economics and Rapanelli’s successor, Erman Gonzalez, about Presidential Advisor and Menem’s brother-in-law, Erman Yoma, who was demanding $1 million from Swift Corporation to ease some bureaucratic problems it had with the government. When Todman received no answer, he went public Menem grew furious; Swift denied the charges; but the U.S. State Department had backed its ambassador and showed proof of the accusation. There-suits were immediate. Minister Gonzalez resigned, and was appointed Minister of Defense; Emir Yoma also resigned, but remained close to the president.

A short while later, presidential appointees and Menem in-laws Amira Yoma and Ibrahim al Ibrahim were accused by a Spanish judge of laundering drug money. That investigation had hardly gotten underway when the government official in charge of the Argentine pavilion at Disney World was arrested for the same crime. Another case exploded when politicians and actors were arrested for buying cars which had been imported with reduced rates for handicapped persons.

Not even the military escaped unscathed. The colonel commanding the 601 Battalion in southern Buenos Aires was arrested together with several officers and non-commissioned officers, for operating a highway hijacking band and using the military base to stow stolen goods. Finally, the Chief of the High Command, Air Force Brigadier Jose Julia, was accused together with twenty other high-ranking officers of operating a smuggling ring.

This accusation was complicated by the fact that the air force brigadier in charge of Ezeize National Airport suspiciously committed suicide while investigating the smuggling, and after being pressured by his superior officers and comrades-in-arms to desist This was only part of huge smuggling, involving national Customs officials, which began coming to light Clearly, neo-liberal deregulation is the root of uncontrolled corruption.

Unemployment and Economic Crisis

Neo-liberal private pillage has set up a system where individual wealth depends on public decay and economic regression. According to the daily Pagina 12 (14 April 1991), there were 520,000 hidden unemployed, 910,000 registered unemployed, and 3,600,000 underemployed persons in Argentina. This represents roughly 40% of the economically active population. The GNP has had negative rates of growth since 1988 with a decreasing yearly rate of investment.

In addition, according to the United Nations Development Program, 614% of the twelve million inhabitants of the Buenos Aires metropolitan area are not connected to the sewer system. This has generated water contamination problems and the spread of sicknesses that had been eradicated decades ago such as tuberculosis, cholera and poliomyelitis.

In terms of wages the situation in 1990 was also critical, though many people were thankful just to have a job. Inflation for 1990 was a whopping 582% while wages barely went up 132%. A skilled metallurgical worker’s salary covered about 50% of a family of four’s basic needs; a teacher’s salary covered about 20% of those same needs; a university professor’s covered 30%. This implied that most people work at two jobs, accepting any and all overtime, and that the entire family, including children, seek employment.

The consequences of this situation are obvious, from the breakdown of family links to an extension of the workday to ten and fourteen hours, to generalized malnutrition and hunger. The deterioration is not evident in the affluent neighborhoods of downtown Buenos Aires, where the upper middle class is concentrated. However, in the working-class suburbs and in the poorer northern provinces of the interior, malnutrition and disease have become commonplace.

Labor Bureaucrats and Labor Struggles

Argentina’s Peronist labor leadership has elected to commit suicide. Instead of defending both the jobs and wages of the union membership, most trade unionists are collaborating with the government. As a result, union membership declines as unemployment and disaffiliation by the rank-and-file increase.

A rank-and-file activist seems to sum the general view of the militants: “Most leaders prefer to grow rich by collaborating with government and management, while looting the union treasury, rather than take chances in struggles.” Luis Barrionuevo, the top bureaucrat of the Restaurant and Food Workers Union and one of Menem’s first labor supporters, candidly revealed to the press the bureaucratic mind set. “You don’t think I made all my money by working do you? I made my money by making good deals as a union leader. Deals that benefit me … and the union of course.”

During 1989-91 a series of hard-fought strikes were led by shop stewards and rank-and-file committees. In spite of legal constraints and the lack of organizational support, many workers preferred fighting the Peronist bureaucrats and the Menem regime to passive capitulation. Dozens of wildcat strikes and factory occupation took place. The daily Nuevo Sur (2 November 1989) calculated that at the end of 1989 about a million workers were involved in different types of conflict.

Several of these conflicts turned violent, as in Cordoba, involving clashes between state employees and the police leaving wounded on both sides. The rage of Salta province state employees turned against the Old Guard Peronist leader of the local General Confederation of Labor (CGT), forcing him to march around the town square screaming “I am a traitor,” after having him sign a declaration against Menem’s economic policies.

The most demonstrative strikes were held by the transport, telephone and railroad workers. The transport workers struck on November 7, 1989 demanding wage increases. Organized by a rank-and-file committee, the strikers succeeded in stopping all public transportation in Buenos Aires and, after a week, secured their demands.

A few months later, in March 1990, the telephone workers struck against the privatization of the state telephone company after defeating a collaborationist in the union election. The new leadership, with massive rank-and-file support, ordered the walkout after a meeting and a vote by thousands of telephone workers. The government mobilized all its resources, ordered the army into offices and work sites, and succeeded in defeating the strike.

In March 1991, several railroad machinist locals struck seeking wage increases. The strikes soon spread to seventy-eight locals, including signalmen and railroad workers. The government responded by firing about 4000 striking workers. The leadership of the machinists, signalmen and railroad workers union opposed the strike and supported the government Led by a rank-and-file committee which unified the different local unions, the strike held for forty-seven days, winning a raise and reinstating the fired workers.

Major conflicts between labor and the Peronist state revealed the profound break between the local union leadership and the rank and file. The workers’ traditional Peronist loyalty did not extend to accepting Menem’s policies.

Class Conflict and State Repression

Menem’s conflict with organized labor is only part of a general picture of increasing class conflict and polarization. The last few weeks of the Alfonsin government saw hunger riots in the cities of Buenos Aires and Rosario. Thousands of people, without any apparent organization, sacked supermarkets and stores.

Upon election, the new Menem government increased police repression in working class and poor neighborhoods. By the end of August 1989, over 6000 persons were arrested “to see if they had a record” and 92,000 more had their identity documents checked in the Greater Buenos Aires area. Of these, only forty were shown to have a criminal record. According to eyewitnesses, the criterion for arresting someone was whether or not they had dark skin.

This type of police harassment generated a high level of popular resentment, especially since most people despise the police for their corruption and inefficiency in dealing with criminals. There were popular protests in townships such as Tres Arroyos in Buenos Aires province, where a child was raped and murdered while the local police refused assistance “because we are celebrating New Year.” The enraged neighbors attacked the police station, setting fire to several patrol cars and succeeded in getting the “busy” policemen replaced.

An even more explosive situation grew out of police complicity in a rape-murder in the province of Catamarca. In mid-1990 a young woman was taken to a party, drugged, raped and mutilated. Sons and relatives of prominent politicians, including the provincial governor and the chief of police, were involved. The ensuing cover-up set off a series of “Marches of Silence” led by a nun who ran the secondary school attended by the murdered young woman. Every Thursday for six months thousands of local people marched for justice in spite of harassment by the provincial government.

The scandal became national when Menem supported the governor. It became known that Guillermo Luque, son of right-wing Peronist Congressman Angel Luque, a personal friend of Menem and of Catamarca’s Governor Ramon Saadi, was one of the accused. In spite of the disappearance of witnesses, changed testimonies, intimidation, dubious autopsies and the resignation of several judges charged with investigating the case, popular mobilization forced the national government to re-examine the case. Angel Luque threatened the government, accusing the investigating judge of corruption, and declaring that if his son had been involved he “could have made the body disappear.”

The resulting crisis forced the national government to appoint a national caretaker displacing the provincial government while elections were held. Governor Saadi mobilized thousands of his supporters, accusing Menem and several prominent Peronists of being cocaine addicts and pointing out that the caretaker, former political prisoner Luis Pro!, was a “Montonero [guerrilla] who had become a millionaire while being a public official over the past couple of years.” To restore order, Menem was forced to send troops into the province.

Alternatives: Neo-Fascism and the Left

Despite the political and economic disintegration, political alternatives are scarce. The disarray of both major political parties, UCD and Peronism, has provided an opportunity for small leftist parties and provincial political formations to compete for electoral support. They offer few if any programmatic solutions.

On the left are myriad political groups and organizations. With the collapse of the world communist bloc and profound differences over domestic political issues, the Communist Party is in disarray having splintered into fragments. The Trotskyist Movement Toward Socialism (MAS) has grown over the past few years and has a sizeable number of working-class activists. And the Popular Socialist Party (PSP) has support particularly in Santa Fe province and within the universities.

The Marxist left was encouraged by a 4% showing in the 1989 elections, up from 0.8% in 1983, and by polls giving it between 8-12% for the September 1991 congressional elections. The PSP itself managed to win the mayoralty of Rosario in 1990 from the Radical Party. The overall strategy of the left is oriented toward an electoral alliance with other left and dissident Peronist groups; the main problem is their unwillingness to share power.

On the right there has been a resurgence of neofascist groupings. Several military officers who were at the head of the local and provincial governments during previous dictatorship have been successful in recent elections. The most notable of these is General Antonio Bussi, the military governor of Tucuman Province during the previous military regime and responsible for numerous human rights violations. He is frying to form a national organization including General Roberto Requeijo in Rio Negro Province and Navy Captain Roberto Ulloa in Salta Province.

At the same time, they are negotiating with several right-wing provincial caudillos such as Jose Romero Feris in Corrientes Province. With a demagogic populist law and order discourse, they are considered to be a threat over the next few years, taking advantage of public despair with the corruption in the major political parties and their incapacity to solve everyday problems.

Competing from the far right are Colonels Aldo Rico and Mohamed All Seneldin. Both were leaders of the several military uprisings during the Alfonsin and Menem governments and are trying to set up a political party. Both participated in repressive activities during the military dictatorship and have a substantial support within the armed forces, particularly among younger officers and non-commissioned officers. Rico has set up offices throughout Argentina, campaigning among right-wing trade unionists and shantytown dwellers. Though their support is still very limited, they are said to be making inroads as the economy slides backwards.

The right projects an image of incorruptible men who will bring order to a chaotic nation. Their support is drawn from those sectors of the middle and upper class who think what is needed is a strong hand, like Pinochet.” In addition, the right was encouraged by the amnesties, decreed first by Alfonsin and later by Menem, for those in the military guilty of gross human rights violations. Alfonsin first passed a law exonerating those officers who had “followed orders”; Menem amnestied the Junta Generals who had been condemned during the Alfonsin government Many right-wing officers encouraged by these concessions then entered the political arena, free from the danger of being accused of violating human rights. Impunity weakened the position of human rights advocates but also discredited the politicians responsible.

The Decay of Electoral Politics

The problems go beyond the politics of an individual politician. The problem is structural: A speculative economy, reinforced by a neo-liberal economic policy, which impoverishes most of the population while destroying Argentina’s internal market and productive capacity, and scarce resources has generated a Hobbesian world, a savage struggle to survive while the elite continue to reap windfall profits.

In this struggle the state has become an instrument for personal enrichment and a source of public pillage. Productive investment is nonexistent, and there is a permanent drain on capital due to foreign debt payments ($4 billion in 1990) and to private transfers to foreign banks. Public office has become the means to enrich oneself within an economy that does not reward hard work.

The civilian regimes of Alfonsin, then Menem, continued the social and economic strategies of the last military dictatorship. Free market policies have led to closing numerous factories without generating new enterprises; well-paid unionized industrial workers have been replaced by low-paid service employees. The numbers of unemployed have reached record proportions.

Shantytowns have proliferated. Professionals line up for exit visas. The middle class has been impoverished. National expenditures for health, education and welfare have reached all-time lows. Twenty of the twenty-six national universities could close their doors for lack of funds; and their graduates fail to find jobs. Moreover, we have a privileged minority whose wealth, level of consumption and standard of living have flourished. These new elites linked to the financial circuits are the supporters of the neo-liberal policies which have polarized Argentine society.

Most Argentines can remember better times within their own lifetimes. Many have lived a tradition of social solidarity linked to the Peronist trade unions. Yet while there is growing political alienation, it does not extend to the social and economic system, because a viable political alternative has not yet emerged.

March-April 1992, ATC 37