Menem's Argentina : Economic Reform and Democracy in the Late Twentieth Century Mariano J

Florida International University FIU Digital Commons FIU Electronic Theses and Dissertations University Graduate School 6-29-1995 Menem's Argentina : economic reform and democracy in the late twentieth century Mariano J. Beillard Florida International University DOI: 10.25148/etd.FI14050475 Follow this and additional works at: https://digitalcommons.fiu.edu/etd Part of the International and Area Studies Commons Recommended Citation Beillard, Mariano J., "Menem's Argentina : economic reform and democracy in the late twentieth century" (1995). FIU Electronic Theses and Dissertations. 1476. https://digitalcommons.fiu.edu/etd/1476 This work is brought to you for free and open access by the University Graduate School at FIU Digital Commons. It has been accepted for inclusion in FIU Electronic Theses and Dissertations by an authorized administrator of FIU Digital Commons. For more information, please contact [email protected]. FLORIDA INTERNATIONAL UNIVERSITY Miami, Florida MENEM'S ARGENTINA: ECONOMIC REFORM AND DEMOCRACY IN THE LATE TWENTIETH CENTURY. A thesis submitted in partial satisfaction of the requirements for the degree of MASTER OF ARTS IN INTERNATIONAL STUDIES by Mariano J. Beillard 1995 To: Dean Arthur Herriott, Ph.D College of Arts and Sciences This thesis, written by Mariano Javier Beillard, and entitled MENEM'S ARGENTINA: ECONOMIC REFORM AND DEMOCRACY IN THE LATE TWENTIETH CENTURY, having been approved in respect to style and intellectual content, is referred to you for judgement. We have read this thesis and recommended that it be approved. Mar ansek, Ph.D Br ce Kelly, Ph.D Dario Moreno, Ph.D, Major Professor Date of Defense: June 29, 1995 The thesis of Mariano Javier Beillard is, approved. Dean thur Herriott Colle of Arts and Sciences Dr. R'chard Campbell Dean of Graduate Stu ies Florida International University ii ©COPYRIGHT 1995 by Mariano J. Beillard All rights reserved iii I dedicate this thesis to Florencia. Without whose patience, understanding, support, and most of all love, the completion of this work would not have been possible. iv ACKNOWLEDGEMENTS I wish to thank not only the members of my committee, but also my parents for their helpful comments and especially patience. I also want to thank the various staff members of the Argentine Consulate General at Miami, as well as Gabriel Volpi and Miguel Angel De Simone for their timely comments, guidance, and clarifications with not only the historical facts and issues, but also with the statistical data gathering process. I must also thank the Argentine community resident in Miami, Florida, for having allowed me to survey them and without whose help the present endeavor could not have been realized. A special thanks must go to my Major Professor, Dr. Dario Moreno, for his kind support and encouraging comment's, and especially for having the confidence in me to give me the chance to undertake this project. v ABSTRACT OF THE THESIS MEMEM'S ARGENTINA: ECONOMIC REFORM AND DEMOCRACY IN THE LATE TWENTIETH CENTURY by Mariano J. Beillard Florida International University, 1995 Miami, Florida Professor Dario Moreno, Major Professor A study of the possible correlation between drastic neo- liberal economic reform and the undermining of democratic mechanisms in late twentieth century Argentina. The adoption of free market mechanisms, within the Modern Political Economy theoretical perspective, may tend to erode the workings of western style democracy leading to a situation of increased domestic sociopolitical and economic tensions in Argentina. The foregoing is especially applicable as the continues to endeavors to maintain its neo-liberal economic reform program on track. vi TABLE OF CONTENTS CHAPTER PAGE INTRODUCTION ....................................... 1 I. NEO-LIBERALISM & TENSIONS IN ARGENTINA..............9 Key Tensions within the Argentine System...........11 Modern Political Economy Theory....................16 An explaination of the Political, Economic and Social Tensions...........................................24 Political Tensions.................................43 Economic Tensions..................................63 The Issue of Economic Stability....................67 Concluding Summary ................................ 72 II. THE ARGENTINE STATE: A CASE OF SOCIOPOLITICAL DEVE- LOPMENT IN TANDEM WITH ECONOMIC DEVELOPMENT ....... 75 Past Policies ..................................... 76 After Peron's fall from grace and the years leading to Menem .......................................... 78 The efeects of drastic Economic Reform on Argentine Democracy: Constitutional Reform .................. 92 The possible threat to Argentine Democratic Mecha- n ism s ............................................. 97 The groundwork for Constitutional Reform ......... 100 Constitutional Reform in Argentina ............... 105 Constitutiional Safeguards ....................... 111 Conclusions ...................................... 118 III. STRUCTURAL ADJUSTMENT AND DEMOCRACY .............. 123 The issues of Argentine Labor & International Comp- titiveness ....................................... 125 Labor Reform and what it may come to imply ....... 136 Assuring Continuity .............................. 145 Conclusions ...................................... 156 IV. TENDENCIES OF THE LOCAL ARGENTINE ELECTORATE RESIDENT IN THE CITY OF MIAMI, FLORIDA .................... 166 The Survey: its purpose & methodology ............ 168 Analysis ......................................... 183 Conclusions ...................................... 195 V . CONCLUSION ....................................... 199 BIBLIOGRAPHY .......................................... 207 vii LIST OF TABLES & FIGURES TABLES PAGE TABLE N * 1.........................................12 TABLE N* 2.........................................15 TABLE N* 3.........................................81 TABLE N 4 .................................................. 103 TABLE N * 5........................................105 TABLE N 6 .................................................. 128 TABLE N* 7........................................135 TABLE N* 8........................................140 TABLE N* 9.........................................170 FIGURES FIGURE No 1.......................................55 FIGURE N* 2......................................171 FIGURE N* 3......................................172 FIGURE No 4 ............................................ 173 FIGURE No 5 ............................................ 174 FIGURE No 6 ............................................ 175 FIGURE No 7 ............................................ 176 FIGURE No 8 ............................................ 177 FIGURE No 9 ............................................ 178 FIGURE No 10 ..................................... 179 FIGURE No 11 ..................................... 180 FIGURE No 12 ..................................... 181 FIGURE No 13 ..................................... 182 FIGURE No 14 ..................................... 184 FIGURE No 15 ..................................... 185 FIGURE No 16 ..................................... 185 FIGURE No 17 ..................................... 186 FIGURE No 18 ..................................... 188 FIGURE No 19 ..................................... 189 FIGURE N 020 .........................................190 FIGURE N0 21 ..................................... 191 FIGURE N0 22 ..................................... 193 FIGURE N* 23 ..................................... 194 viii INTRODUCTION When Carlos Saul Menem assumed the Argentine presidency in 1989, he was immediately faced with the necessity of addressing the paramount issues associated with his country's economic stagnation and hyper-inflation. Carlos Menem's electoral success over his party's traditional political rival, the Uni6n Civica Radical (UCR), was largely the result of the Argentine electorate's disillusionment with the ineffective economic policies implemented by not only the preceding Radical government of Raul Alfonsin, but also with the economic development policies of the past fifty years. Interestingly enough with regards to the preceding Carlos Menem ran a traditional populist campaign in order to be elected, but once in office he subsequently changed course in favor of neo-liberal economic policy.' Recall that Alfonsin's Austral Plan, Latin America's first heterodox attempt to control inflation without economic contraction, collapsed after a year and a half under the pressure of affected interest groups. The Austral Plan included a wage-price freeze, de-indexation of the economy, a new currency, a tough stance with creditors, and commitments to a realistic exchange rate, a reduced budget deficit, and no inflationary financing. Unfortunately for the Alfonsin government economic stagnation in 1985 and a decline in real wages led to insistent demands for relief. By late 1987 the budget deficit was rising and inflation had past 300 percent. This contributed directly to the Radicals midterm election defeat. Presidential elections in October 1988 were won by the Peronist candidate Carlos Menem who took office in December 1988. Yet, once in office Menem reneged on his populist past 1 Required by political expediency to address the these issues, Menem a year and half after his election turned to Domingo Cavallo in the hope of arresting the endemic hemorrhaging of the Argentine national economy. During the greater part of their term in office the Menem/ Cavallo team has been able to successfully implement a

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