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Argentina (10/02)For the most current version of this Note, see Background Notes A-Z. PROFILE OFFICIAL NAME: Geography People Government
Economy (2001) PEOPLE HISTORY From 1880 to 1930 Argentina became one of the world's 10 wealthiest nations based on rapid expansion of agriculture and foreign investment in infrastructure. Conservative forces dominated Argentine politics until 1916, when their traditional rivals, the Radicals, won control of the government. The Radicals, with their emphasis on fair elections and democratic institutions, opened their doors to Argentina's rapidly expanding middle class as well as to groups previously excluded from power. The Argentine military forced aged Radical President Hipolito Yrigoyen from power in 1930 and ushered in another decade of Conservative rule. Using fraud and force when necessary, the governments of the 1930s attempted to contain the currents of economic and political change that eventually led to the ascendance of Juan Domingo Peron (b. 1897). New social and political forces were seeking political power, including a modern military and labor movements that emerged from the growing urban working class. The military ousted Argentina's constitutional government in 1943. Peron, then an army colonel, was one of the coup's leaders, and he soon became the government's dominant figure as Minister of Labor. Elections carried him to the presidency in 1946. He aggressively pursued policies aimed empowering the working class and greatly expanded the number of unionized workers. In 1947, Peron announced the first 5-year plan based on the growth of industries he nationalized. He helped establish the powerful General Confederation of Labor (CGT). Peron's dynamic wife, Eva Duarte de Peron, known as Evita (1919-52), played a key role in developing support for her husband. Peron won reelection in 1952, but the military sent him into exile1955. In the 1950s and 1960s, military and civilian administrations traded power, trying, with limited success, to deal with diminished economic growth and continued social and labor demands. When military governments failed to revive the economy and suppress escalating terrorism in the late 1960s and early 1970s, the way was open for Peron's return. On March 11, 1973, Argentina held general elections for the first time in 10 years. Peron was prevented from running, but voters elected his stand-in, Dr. Hector Campora, as President. Peron's followers also commanded strong majorities in both houses of Congress. Campora resigned in July 1973, paving the way for new elections. Peron won a decisive victory and returned as President in October 1973 with his third wife, Maria Estela Isabel Martinez de Peron, as Vice President. During this period, extremists on the left and right carried out terrorist acts with a frequency that threatened public order. The government resorted to a number of emergency decrees, including the implementation of special executive authority to deal with violence. This allowed the government to imprison persons indefinitely without charge. Peron died on July 1, 1974. His wife succeeded him in office, but a military coup removed her from office on March 24, 1976, and the armed forces formally exercised power through a junta composed of the three service commanders until December 10, 1983. The armed forces applied harsh measures against terrorists and many suspected of being their sympathizers. They restored basic order, but the human costs of what became known as "El Proceso," or the "Dirty War" were high. Conservative counts list between 10,000 and 30,000 persons as "disappeared" during the 1976-83 period. Serious economic problems, mounting charges of corruption, public revulsion in the face of human rights abuses and, finally, the country's 1982 defeat by the United Kingdom in an unsuccessful attempt to seize the Falklands/Malvinas Islands all combined to discredit the Argentine military regime. The junta lifted bans on political parties and gradually restored basic political liberties. On October 30, 1983, Argentines went to the polls and chose Raul Alfonsin, of the Radial Civic Union (UCR), as President. He began a 6-year term of office on December 10, 1983. In 1985 and 1987, large turnouts for mid-term elections demonstrated continued public support for a strong and vigorous democratic system. The UCR-led government took steps to resolve some of the nation's most pressing problems, including accounting for those who disappeared during military rule, establishing civilian control of the armed forces, and consolidating democratic institutions. However, failure to resolve endemic economic problems, and an inability to maintain public confidence undermined the effectiveness of the Alfonsin government, which left office 6 months early after Peronist candidate Carlos Saul Menem won the 1989 presidential elections. Despite having campaigned as a traditional populist candidate, as president, Menem launched a major overhaul of Argentine domestic policy. Largescale structural reforms dramatically reversed the role of the state in Argentine economic life. A decisive leader pressing a controversial agenda, Menem was not reluctant to use the presidency's extensive powers to issue decrees when the Congress was unable to reach consensus on his proposed reforms. The so-called Olivos Pact with the opposition Radical Party led to the constitutional reform of 1994 that opened the way for Menem to seek and win reelection, winning 50% of the vote in the three-way 1995 presidential race. Late in Menem's second term, fears began to build among foreign investors about Argentina's ability to service its large public sector debt, especially in the wake of Russia's debt default in 1998 and Brazil's currency devaluation in January 1999. These fears were exacerbated when Argentina's fiscal deficit ballooned during 1999, Menem's final year in office. Fernando de la Rua, of the Radical Party, running on an anti-corruption platform, defeated Peronist candidate Eduardo Duhalde in the 1999 presidential election. Upon taking office, he increased taxes to eliminate the huge fiscal deficit he had inherited, but the tax increase choked off economic growth and intensified the recession leading to a decline in government revenues. Political infighting hindered adoption of thoroughgoing reform measures by the government, and the economy continued to stagnate. The political situation deteriorated further when Vice President Chacho Alvarez (of the junior partner in the coalition) resigned, alleging a lack of support from other members of the executive branch to investigate charges of corruption within the administration. Even a large IMF-led stabilization package in December 2000 was insufficient to prevent a looming crisis, given the De la Rua administration's inability to get a handle on the fiscal situation. Throughout 2001, production fell from already low levels, and unemployment continued to rise. By late 2001, depositors in Argentine banks were withdrawing funds as a run against the peso developed. The government's restrictions on depositors' access to their accounts only fueled popular discontent. Supermarket sackings and property damage proliferated, first in the provinces and then the Federal Capital. De la Rua resigned on December 20, 2001, after violence claimed several lives during riots in and around the plaza directly facing the seat of government. A legislative assembly on December 23, 2001, elected Adolfo Rodriguez Saa to serve as president and called for general elections to elect a new president within 3 months. Rodriguez Saa announced immediately that Argentina would default on its international debt obligations, but expressed his commitment to maintain the currency board and the peso's 1-to-1 peg to the dollar. Rodriguez Saa, however, was unable to rally support from within his own party for his administration and this, combined with renewed violence in the Federal Capital, led to his resignation on December 30. Yet another legislative assembly elected Peronist Eduardo Duhalde president on January 1, 2002. Duhalde--differentiating himself from his three predecessors--quickly abandoned the peso's 10-year-old link with the dollar, a move that was followed by currency depreciation and inflation. In the face of rising poverty and continued social unrest, Duhalde also moved to bolster the government's social programs. GOVERNMENT AND POLITICAL CONDITIONS In late 2001, however, Argentina experienced more of the tumultuous political change characteristic of much of its past. President De la Rua was forced to resign in December 2001 because of largescale public discontent over the government's economic policies, and some demonstrations deteriorated into lawlessness and violence. A legislative assembly elected Adolfo Rodriguez Saa to serve out the remainder of De la Rua's term, but he too failed to garner political support in the face of continued unrest and resigned that same month. Yet another legislative assembly then chose Eduardo Duhalde to succeed Rodriguez Saa. Duhalde took office on January 1, 2002, in the midst of a profound economic crisis and a widespread public rejection of the "political class" in Argentina, a rejection directed at all three branches of government. Another factor contributing to the perception of institutional instability in Argentina was conflict between the three branches of government in early 2002, culminating in the legislature's attempt to impeach the members of the Supreme Court. Argentina's constitution of 1853, as revised in 1994, mandates a separation of powers into executive, legislative, and judicial branches at the national and provincial level. Each province also has its own constitution, roughly mirroring the structure of the national constitution. The president and vice president are directly elected to 4-year terms. Both are limited to two consecutive terms; they are allowed to stand for a third term or more after an interval of at least one term. The president appoints cabinet ministers, and the constitution grants him considerable power, including authority to enact laws by presidential decree under conditions of "urgency and necessity" and the line-item veto. Since 2001, senators have been directly elected, with each province, including the Federal Capital, represented by three senators. Senators serve 6-year terms. One-third of the Senate stands for reelection every 2 years. Members of the Chamber of Deputies are directly elected to 4-year terms. Voters elect half the members of the lower house every 2 years. Both houses are elected via a system of proportional representation. The constitution establishes the judiciary as an independent government entity. The president appoints members of the Supreme Court with the consent of the Senate. The president on the recommendation of a magistrates' council appoints other federal judges. The Supreme Court has the power to declare legislative acts unconstitutional. Political Parties Government Policy Principal Government Officials Argentina maintains an embassy in the United States at 1600 New Hampshire Ave. NW, Washington DC 20009; tel (202) 238-6400; fax (202) 332-3171. It has consular offices in the following locations: 245 Peachtree Center Ave., Suite 2101 Atlanta, GA 30303 Tel: (404) 880-0805; Fax (404) 880-0806 205 North Michigan Ave., Suite 4209 Chicago, IL 60601 Tel (312) 819-2610; Fax (312) 819-2612 1990 Post Oak Blvd., Suite 770 Houston, TX 77056 Tel (713) 871-8935; Fax (713) 871-0639 5055 Wilshire Blvd., Suite 210 Los Angeles, CA 90036 Tel (323) 954-9155; Fax (323) 934-9076 800 Brickell Ave., PH1 Miami, FL 33131 Tel (305) 373-7794; Fax (305) 371-7108 12 West 56th St.New York, NY 10019 Tel (212) 603-0400; Fax (212) 541-7746 1600 New Hampshire Ave. NW, Washington, DC 20009 Tel: (202) 238-6460; Fax (202) 238-6471 ECONOMY While most observers recognized by late 2001 that a devaluation and default had become almost inevitable, the manner in which the devaluation was implemented has significantly increased the damage done to the economy. Strict limitations on cash withdrawals from bank accounts (the "corralito") imposed in December 2001 after a prolonged bank run were followed in January 2002 by the freezing of almost all dollar-denominated bank accounts and their conversion to pesos at an artificial rate of 1.4 pesos to the dollar. Subsequent floating of the peso in February 2002 increased depositors' sense of expropriation. Meanwhile, almost all dollar-denominated loans within Argentina were converted to pesos at 1 to 1. This "asymmetric pesification" has destroyed banks' balance sheets as well as their reputations. The banking system, once one of the strongest in Latin America, has been hollowed out. The number of banks and the scale of banking operations is shrinking, with most domestic banking now limited to transactional operations. After 3 years of price deflation, Argentina is once again experiencing high inflation. Cumulative year-to-date consumer price inflation topped 30% for the first half of the year, and many expect annual inflation to be 70%. Meanwhile, the recession has intensified. GDP fell by nearly 9% between 1999 and 2001, and will likely fall by a further 10%-15% in real terms in 2002. Devaluation should have made Argentine exports more competitive. However, an export-led recovery is almost impossible in the absence of domestic or international credit to finance it. Imports, including inputs essential to an export drive, have collapsed. Argentine domestic investment has fallen far below the minimum amount needed to maintain infrastructure. Potential investors are often discouraged by constantly changing rules of the game. Unemployment is now more than 20%, and poverty is increasing. Argentina still has enormous natural resources, adequate infrastructure, and abundant human capital but currently lacks the conditions to take advantage of its these assets. One consequence of the economic crisis has been largescale emigration, especially of young Argentines. Although no reliable figures are available, consular information indicates that Italy and Spain (and the United States before the end of the Visa Waiver Program in April 2002) are the principal destinations for emigration. Foreign Trade The United States recorded trade surpluses with Argentina every year from 1993-2001, as Argentina's firms increased purchases of capital goods during that period. This trend reflects the Argentine Government's policy of encouraging modernization and improved competitiveness of industry through relatively lower tariffs on capital goods. Although Argentina's trade patterns may be affected by the factors outlined above, its major export markets are likely to remain MERCOSUR countries, NAFTA countries, and the European Union. These same areas are likely to remain the principal sources of Argentina's imports as well. MERCOSUR Trade Pact Argentina adheres to most treaties and international agreements on intellectual property. It is a member of the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO). The Argentine Congress ratified the Uruguay Round agreements, including the provisions on intellectual property, as Law 24425 on January 5, 1995. However, extension of adequate patent protection to pharmaceuticals has been a highly contentious bilateral issue. In May 1997, the U.S. suspended 50% of Argentina's generalized system of preferences (GSP) benefits because of its unsatisfactory pharmaceutical patent law. In November 2000, after years of protracted debate, a new patent law took effect, and a number of pharmaceutical patents were issued. This law improved earlier Argentine patent legislation but provides less protection than that called for in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In April 2002, negotiations between the Governments of the United States and Argentina clarified aspects of the latter's intellectual property system, such as provisions related to the patentability of microorganisms and the import restriction regime. In addition, the Government of Argentina agreed to amend its patent law so as to provide protection for products obtained from a process patent and to ensure that preliminary injunctions are available in intellectual property court proceedings, among other steps. Finally, on the outstanding issues that remain, including data protection, the U.S. Government retains its right to seek resolution under the WTO dispute settlement mechanism. In return, the U.S. Government is committed to considering all Argentine requests to expand market access for Argentine products as soon as U.S. legislation reauthorizing trade preferences under the GSP is enacted. Investment NATIONAL SECURITY Lack of budgetary resources is the most serious problem facing the Argentine military today. Current economic conditions and the government's commitment to reduce public sector spending have slowed modernization and restructuring efforts. Under Presidents Menem and De la Rua, Argentina's traditionally difficult relations with its neighbors improved dramatically, and Argentine officials publicly deny seeing a potential threat from any neighboring country. MERCOSUR has exercised a useful role in supporting democracy in the region. FOREIGN RELATIONS Eager for closer ties to industrialized nations, Argentina left the Non-Aligned Movement in the early 1990s and has pursued a relationship with the OECD. It has become a leading advocate of nonproliferation efforts worldwide. A strong proponent of enhanced regional stability in South America, Argentina has revitalized its relationship with Brazil; settled lingering border disputes with Chile; discouraged military takeovers in Ecuador and Paraguay; served with the U.S., Brazil, and Chile as one of the four guarantors of the Ecuador-Peru peace process; and restored diplomatic relations with the United Kingdom. In 1998, President Menem made a state visit to the U.K., and Prince Charles reciprocated with a visit to Argentina. In 1999, the two countries agreed to normalize travel to the Falklands/Malvinas from the mainland and resumed direct flights. U.S.-ARGENTINE RELATIONS U.S. Embassy Functions Attaches accredited to Argentina from the Department of Justice--including the Drug Enforcement Administration and the Federal Bureau of Investigation--U.S. Customs, the Federal Aviation Administration, and other federal agencies work closely with Argentine counterparts on international crime and other issues of concern. An active, sophisticated, media environment, together with growing positive interest in American culture and society, make Argentina an uncommonly receptive environment for the information and cultural exchange work of the U.S. Embassy as well. The Fulbright fellowship program has more than tripled the annual number of U.S. and Argentine academic grantees since 1994. The embassy's consular section monitors the welfare and whereabouts of more than 20,000 U.S. citizen residents of Argentina and more than 300,000 U.S. tourists each year. Consular personnel also provide American citizens passport, voting, notarial, Social Security, and other services. With the end of Argentine participation in the visa waiver program in February 2002, Argentine tourists, students, and those who seek to work in the United States must have nonimmigrant visas. The Consular Section processes nonimmigrant visa applications for persons who wish to visit the United States as tourists, students, temporary workers and other purposes, and immigrant visas for persons who qualify to make the United States a permanent home. The Department of Defense is represented by the U.S. Military Group and the Defense Attache Office. These organizations ensure close military-to-military contacts and defense, and security cooperation with the armed forces of Argentina. Principal U.S. Embassy Officials The U.S. Embassy and Consulate General in Argentina are located at 4300 Colombia Avenue in the Palermo district of Buenos Aires. Mission offices can be reached at by phone at (54)(11) 5777-4533/34 or by fax at; fax (54)(11) 5777-4240. Mailing addresses: U.S. Embassy Buenos Aires, APO AA 34034; or 4300 Colombia, 1425 Buenos Aires, Argentina. Other Contact Information |
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Two forces combined to create the modern Argentine nation in the late 19th century: the introduction of modern agricultural techniques and integration of Argentina into the world economy. Foreign investment and immigration from Europe aided this economic revolution. Investment, primarily British, came in such fields as railroads and ports. As in the United States, the migrants who worked to develop Argentina's resources--especially the western pampas--came from throughout Europe.
