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Diplomacy in Action

Argentina (10/16/09)


October 16, 2009

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For the most current version of this Note, see Background Notes A-Z.

PROFILE

Geography
Area: 2.8 million sq. km. (1.1 million sq. mi.); about the size of the U.S. east of the Mississippi River; second-largest country in South America.
Climate: Varied; predominantly temperate, with extremes ranging from subtropical in the north to arid/sub-Antarctic in far south.

People
Nationality: Noun and adjective--Argentine(s).
Population (July 2007 est.): 40.3 million.
Annual population growth rate (2001): 1.05%.
Ethnic groups: European 97%, mostly of Spanish and Italian descent; mestizo, Amerindian, or other nonwhite groups 3%.
Religions: Roman Catholic 70%, Protestant 9%, Muslim 1.5%, Jewish 0.8%, other 2.5%.
Language: Spanish.
Education: Compulsory until age 18. Adult literacy (2001)--97%.
Health: Infant mortality rate--16.16/1,000. Life expectancy (2000 est.)--75.48 yrs.
Work force: Industry and commerce--35.8%; agriculture--9.5%; services--54.7%.

Government
Type: Republic.
Constitution: 1853; revised 1994.
Independence: 1816.
Branches: Executive--president, vice president, cabinet. Legislative--bicameral Congress (72-member Senate, 257-member Chamber of Deputies). Judicial--Supreme Court, federal and provincial trial courts.
Administrative subdivisions: 23 provinces and one autonomous district (Federal Capital).
Political parties: Justicialist (Peronist), Radical Civic Union (UCR), numerous smaller national and provincial parties.
Suffrage: Compulsory universal adult.

Economy (2008)
GDP (2008): $326.7 billion.
Annual real growth rate (2008): +6.8%.
Per capita GDP (2008 estimate): $8,219.
Natural resources: Fertile plains (pampas); minerals--lead, zinc, tin, copper, iron, manganese, oil, and uranium.
Agriculture (10% of GDP; including agribusiness, about 58% of exports by value): Products--oilseeds and by-products, grains, livestock products.
Industry (21% of GDP): Types--food processing, oil refining, machinery and equipment, textiles, chemicals and petrochemicals.
Trade: Exports ($70.6 billion)--oilseed by-products, vegetable oils, cars, fuels, grains. Major markets--MERCOSUR 23%; EU 19%; NAFTA 10%. Imports ($57.4 billion)--machinery, vehicles and transport products, chemicals. Major suppliers--MERCOSUR 35%; EU 17%, NAFTA 16%. Imported goods from the United States totaled approx. 12% of Argentine imported goods.

PEOPLE
Argentines are a fusion of diverse national and ethnic groups, with descendants of Italian and Spanish immigrants predominant. Waves of immigrants from many European countries arrived in the late 19th and early 20th centuries. Syrian, Lebanese, and other Middle Eastern immigrants number about 500,000 to 600,000, mainly in urban areas. Argentina's population is overwhelmingly Catholic, but it also has the largest Jewish population in Latin America, estimated at between 280,000 and 300,000. In recent years, there has been a substantial influx of immigrants from neighboring countries, particularly Paraguay, Bolivia, and Peru. The indigenous population, estimated at 700,000, is concentrated in the provinces of the north, northwest, and south. The Argentine population has one of Latin America's lowest growth rates. Eighty percent of the population resides in cities or towns of more than 2,000, and over one-third lives in the greater Buenos Aires area.

HISTORY
Europeans arrived in the region with the 1502 voyage of Amerigo Vespucci. Spanish navigator Juan Diaz de Solias visited what is now Argentina in 1516. Spain established a permanent colony on the site of Buenos Aires in 1580, although initial settlement was primarily overland from Peru. The Spanish further integrated Argentina into their empire by establishing the Vice Royalty of Rio de la Plata in 1776, and Buenos Aires became a flourishing port. Buenos Aires formally declared independence from Spain on July 9, 1816. Argentines revere Gen. Jose de San Martin--who campaigned in Argentina, Chile, and Peru--as the hero of their national independence. Following the defeat of the Spanish, centralist and federalist groups waged a lengthy conflict between themselves to determine the future of the nation. A modern constitution was promulgated in 1853, and a national unity government was established in 1861.

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 from Britain, 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.

From 1880 to 1930, Argentina became one of the world's ten wealthiest nations as a result of the 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 created the Partido Unico de la Revolucion, which became more commonly known as the Peronist or Justicialista party (PJ). He aggressively pursued policies aimed at empowering the working class and greatly expanded the number of unionized workers. In 1947, Peron announced the first five-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 exile in 1955. 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 domestic 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 ten 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 violent 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 those they considered extremists and many suspected of being their sympathizers. While they were able to gradually restore basic order, the human costs of what became known as "El Proceso," or the "Dirty War," were high. Official sources have identified approximately 9,000 persons who were "disappeared" during the 1976-83 military dictatorship, while some human rights groups put the figure as high as 30,000. 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.

Democracy returned to Argentina in 1983, with Raul Alfonsin of the country's oldest political party, the Radical Civic Union (UCR), winning the presidency in elections that took place on October 30, 1983. He began a six-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 six months early after Justicialista Party (PJ) candidate Carlos Saul Menem won the 1989 presidential elections.

President Menem imposed peso-dollar parity (convertibility) in 1992 to break the back of hyperinflation and adopted far-reaching market-based policies. Menem's accomplishments included dismantling a web of protectionist trade and business regulations and reversing a half-century of statism by implementing an ambitious privatization program. These reforms contributed to significant increases in investment and growth with stable prices through most of the 1990s. Unfortunately, widespread corruption in the administrations of President Menem and his successor President Fernando De la Rua, who won election in 1999 at the head of a UCR-led coalition of center and center-left parties known as the "Alianza", shook confidence and weakened the recovery. Also, while convertibility defeated inflation, its permanence undermined Argentina's export competitiveness and created chronic deficits in the current account of the balance of payments, which were financed by massive borrowing. The contagion effect of the Asian financial crisis of 1998 precipitated an outflow of capital that gradually mushroomed into a four-year depression that culminated in a financial panic in November 2001. In December 2001, amidst bloody riots, President De la Rua resigned.

After a period of political turmoil and several provisional presidents, a legislative assembly elected Eduardo Duhalde (PJ) President on January 1, 2002 to complete the term of former President De la Rua. Duhalde assumed office in the midst of a widespread public rejection of the "political class" in Argentina. Duhalde--differentiating himself from his three predecessors--quickly abandoned the peso's ten-year-old link with the dollar, a move that was followed by a sharp currency depreciation and rising inflation. In the face of increasing poverty and continued social unrest, Duhalde moved to bolster the government's social programs and to contain inflation. He stabilized the social situation and advanced presidential elections by six months in order to pave the way for a president elected with a popular mandate.

In the first round of the presidential election on April 27, 2003, former President Carlos Menem (PJ) won 24.3% of the vote, Santa Cruz Governor Nestor Kirchner (PJ) won 22%, followed by RECREAR candidate Ricardo Lopez Murphy with 16.4% and Affirmation for an Egalitarian Republic (ARI) candidate Elisa Carrio with 14.2%. Menem withdrew from the May 25 runoff election after polls showed overwhelming support for Kirchner in the second round of elections. After taking office, Kirchner focused on consolidating his political strength and alleviating social problems. He pushed for changes in the Supreme Court and military and undertook popular measures, such as raising government salaries, pensions, and the minimum wage. On October 23, 2005, President Kirchner, bolstered by Argentina's rapid economic growth and recovery from its 2001/2002 crisis, won a major victory in the midterm legislative elections, giving him a strengthened mandate and control of a legislative majority in both the Senate and Chamber of Deputies.

Although Kirchner enjoyed approval ratings of over 60%, he announced in July 2007 that he would not seek reelection and declared his wife, then-Senator Cristina Fernández de Kirchner, to be a candidate to succeed him. Fernández de Kirchner has a decades-long pedigree in politics, having served in the Chamber of Deputies and the Senate. She won 45% of the vote in the October 2007 presidential election and defeated her closest competitor, Elisa Carrió of the Civic Coalition, by 22.25 points. Thus, Cristina Fernández de Kirchner became the first Argentine woman elected to the presidency. "Cristina," as Argentines often refer to her, was sworn into office on December 10, 2007.

Argentina held mid-term congressional elections in June 2009, in which the ruling Victory Front (FpV) lost its majority in both houses of Congress. The new Congress will convene in December 2009.

GOVERNMENT AND POLITICAL CONDITIONS
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 four-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 and the Federal Capital represented by three senators. Senators serve six-year terms. One-third of the Senate stands for reelection every two years. Members of the Chamber of Deputies are directly elected to four-year terms. Voters elect half the members of the lower house every two years. Both houses are elected via a system of proportional representation. By decree, one-third of the candidates for both houses of Congress must be women. As a result, Argentina's female representation in Congress ranks among the world's highest, with representation comparable to European Union (EU) countries such as Austria and Germany.

The constitution establishes the judiciary as an independent government entity. The president appoints members of the Supreme Court with the consent of the Senate after a public vetting process. 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
The two largest traditional political parties are the Justicialist Party (PJ--also called Peronist), founded in 1945 by Juan Domingo Peron, and the Union Civica Radical (UCR), or Radical Civic Union, founded in 1891. Traditionally, the UCR has had more urban middle-class support and the PJ more labor support, but both parties have become more broadly based. Although both parties are currently undergoing a process of dramatic change and restructuring, they have maintained their nationwide structures. New political forces, like the Civic Coalition (CC) and the Republican Proposal (Propuesta Republicana, or PRO), are concentrated in the urban centers and are working to build national party structures. PRO is mostly based in the city of Buenos Aires, where its leader, Mauricio Macri, won the mayoral elections in June 2007.

Historically, organized labor--largely tied to the Peronist Party--and the armed forces also have played significant roles in national life. However, the Argentine military's public standing suffered as a result of its perpetration of human rights abuses, economic mismanagement, and defeat by the United Kingdom during the period of military rule (1976-83). The Argentine military today is a volunteer force fully subordinate to civilian authority.

Principal Government Officials
President--Cristina Fernández de Kirchner
Minister of Foreign Affairs--Jorge Taiana
Ambassador to the United States--Hector Timerman
Ambassador to the Organization of American States--Rodolfo Gil
Ambassador to the United Nations--Jorge Arguello

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.

ECONOMY
Argentina's economy sustained a robust recovery following the severe 2001/2002 economic crisis, with five consecutive years of over 8% real growth in gross domestic product (GDP). In 2008, local and international factors undermined local activity, which resulted in an official real growth rate of 6.8%. Official figures show that Argentine GDP reached U.S. $326.7 billion in 2008, approximately U.S. $8,219 per capita, with investment increasing an estimated 9% for the year and representing approximately 23% of GDP. Government of Argentina statistics showed unemployment was 8.4% in the first quarter of 2009. Poverty dropped in the aftermath of the economic crisis of 2001/2002, after it reached a record high of over 50%. In the last half of 2008, the official poverty level was 15.3% in the 31 largest urban areas. Some unofficial estimates suggest that unemployment and poverty levels may be higher.

Argentina benefits from rich natural resources, a highly educated population, a globally competitive agricultural sector, and a diversified industrial base. Argentina's post-crisis move to a more flexible exchange rate regime, along with sustained global and regional growth, a boost in domestic aggregate demand via monetary, fiscal, and income distribution policies, and favorable international commodity prices and interest rate trends were catalytic factors in supporting renewed growth between 2003 and 2007. The economic resurgence also enabled the government to accumulate substantial official reserves (over $44.9 billion as of late August 2009) to help insulate the economy from external shocks. A higher tax burden, improved tax collection efforts, and the recovery's strong impact on tax revenues supported the government's successful efforts to maintain primary fiscal surpluses since 2003.

Global financial turmoil and rapid declines in world commodity prices and economic growth during 2008 and 2009 brought Argentina's rapid rate of economic expansion to an end. In 2009, Argentina has experienced a deterioration of both domestic and international demand, complicating the fiscal situations of both the federal government and the provinces. The global economy’s recovery could ameliorate those pressures.

Argentina's exchange rate policy is based on a managed float, with an average exchange rate of 3.16 pesos per dollar in 2008, and 3.87 pesos per dollar in early September 2009. Market analysts considered the peso's real exchange rate undervalued in previous years, which, along with historically high global commodity prices, helped lift export volumes and values to record levels, resulting in a $13.2 billion trade surplus in 2008. Foreign trade was approximately 39% of GDP in 2008 (up from only 10% in 1990) and played an increasingly important role in Argentina's economic development. Exports totaled approximately 22% of GDP in 2008 (up from 15% in 2002), and key export markets included MERCOSUR (23% of exports), the EU (19%), and NAFTA countries (10%). Two-way trade in goods with the U.S. in 2008 totaled about $13.3 billion according to the U.S. International Trade Commission. Total two-way trade in services in 2008 was $3.4 billion (according to the Bureau of Economic Analysis, U.S. Department of Commerce). The production of grains, cattle, and other agricultural goods continues to be the backbone of Argentina's export economy. High-technology goods and services are emerging as significant export sectors. The decline in global commodity prices, slower global and domestic growth, and some changes in trade policy in late 2008 and in 2009 had an impact on foreign trade, with imports and exports falling 39% and 21% annually, respectively, in January-July 2009.

Nearly 500 U.S. companies are currently operating in Argentina, employing over 155,000 Argentine workers. U.S. investment in Argentina is concentrated in the manufacturing, information, and financial sectors. Continuing Argentine arrears to international creditors and a large number of arbitration claims filed by foreign companies are legacies of the 2001/2002 economic crisis that remain to be resolved. Outstanding debts include over $20 billion in default claims by international bondholders and between $7 billion and $8 billion owed to official creditors. President Cristina Fernandez de Kirchner announced in September 2008 that the government intended to pay debts to Paris Club creditors using Central Bank reserves. The Government of Argentina is at present launching a debt swap of up to ARS8.3 billion in inflation-linked debt for a new 2014 floating rate bond.

NATIONAL SECURITY
The president, through a civilian minister of defense, commands the Argentine armed forces. The Justice and Security Ministry controls the Federal Police, the Gendarmeria (border police), the Prefectura Naval (coast guard), and the Airport Security Police. The Argentine armed forces maintain close defense cooperation and professional military education relationships with the United States. Other countries also have military relationships with the Argentine forces, including Israel, Germany, France, Spain, Italy, Brazil, Chile, and Venezuela.

The current Minister of Defense has pursued an aggressive restructuring program based on the Argentine 1988 defense law. Priorities include emphasis on joint operations and peacekeeping. There has been minimal recapitalization due to budget constraints experienced over the past 5 years.

FOREIGN RELATIONS
Argentina's foreign policy priorities are focused on increasing regional partnerships, including expanding the MERCOSUR regional trade bloc by integrating Venezuela as a new full member, and institutionalizing the Union of South American Nations (UNASUR). Argentina has played a positive role in promoting human rights and democratic institutions in the hemisphere, particularly in Haiti. Argentina currently has nearly 600 peacekeeping troops in Haiti in support of MINUSTAH, reflecting its traditionally strong support of UN peacekeeping operations. As a member of the Board of Governors of the International Atomic Energy Agency, Argentina has been a strong voice in support of nuclear non-proliferation efforts.

U.S.-ARGENTINE RELATIONS
The positive bilateral relationship between the United States and Argentina is based on many common strategic interests, including non-proliferation, counternarcotics, counterterrorism, the fight against human trafficking, and issues of regional stability, as well as the strength of commercial ties. Argentina is a participant in the Three-Plus-One regional mechanism (Argentina, Brazil, Paraguay, and the U.S.), which focuses on coordination of counterterrorism policies in the tri-border region where Argentina, Brazil, and Paraguay meet. Argentina supports the Container Security Initiative to ensure that cargo bound for the United States is secure, and it operates a Trade Transparency Unit with support from the U.S. Department of Homeland Security/Immigration and Customs Enforcement (ICE) to identify trade-based money laundering. In 2004, Argentina signed a Letter of Agreement with the Department of State opening the way for enhanced cooperation with the U.S. on counternarcotics issues and enabling the U.S. to begin providing financial assistance to the Government of Argentina for its counternarcotics efforts. In recognition of its contributions to international security and peacekeeping, the U.S. Government designated Argentina as a major non-NATO ally in January 1998. The Office of the Secretary of Defense and the Argentine Ministry of Defense hold an annual Bilateral Working Group Meeting, alternating between Argentina and Washington, DC. Furthermore, the two nations exchange information through alternating annual Joint Staff Talks, military educational exchanges, and operational officer exchange billets.

U.S.-Argentine cooperation also includes science and technology initiatives in the fields of space, peaceful uses of nuclear energy, and the environment. In June 2007, the U.S. and Argentina modernized a bilateral civil aviation agreement to update safety and security safeguards and allow a significant increase in flight frequencies between the two countries, which hold excellent potential for increased tourism and business travel. An active media, together with widespread interest in American culture and society, make Argentina a receptive environment for the information and cultural exchange work of the U.S. Embassy. The Fulbright scholarship program has more than tripled the annual number of U.S. and Argentine academic grantees since 1994, and the U.S. Embassy is actively working to increase other education exchanges.

U.S. Embassy Functions
The U.S. Mission in Buenos Aires carries out the traditional diplomatic function of representing the U.S. Government and people in discussions with the Argentine Government, and more generally, in relations with the people of Argentina. The Embassy is focused on increasing people-to-people contacts, and promoting outreach and exchanges on a wide range of issues. Political, economic, and science officers deal directly with the Argentine Government in advancing U.S. interests but are also available to brief U.S. citizens on general conditions in the country. Officers from the U.S. Foreign Service, Foreign Commercial Service, and Foreign Agricultural Service work closely with the hundreds of U.S. companies that do business in Argentina, providing information on Argentine trade and industry regulations and assisting U.S. companies starting or maintaining business ventures in Argentina.

The Embassy's Consular Section monitors the welfare and whereabouts of some 34,000 U.S. citizen residents of Argentina and almost 400,000 U.S. tourists each year. Consular personnel also provide American citizens passport, voting, notary, 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 for tourism, studies, temporary work, or other purposes, and immigrant visas for persons who qualify to make the United States a permanent home.

Attaches accredited to Argentina from the Department of Justice (including the Drug Enforcement Administration and the Federal Bureau of Investigation), the Department of Homeland Security (including Immigration and Customs Enforcement, and Customs and Border Protection), the Federal Aviation Administration, and other federal agencies work closely with Argentine counterparts on international law enforcement cooperation, aviation security, and other issues of concern. 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
Ambassador--Vilma Martinez
Deputy Chief of Mission--Thomas Kelly
Political Counselor--Alexander Featherstone
Economic Counselor--John Fennerty
Public Affairs Counselor--Robert Howes
Commercial Counselor--James Rigassio
Consul General--Jennifer Noronha
Science, Technology and Environment Counselor--James Perez
Management Counselor--Dorothy Sarro
Defense Attache-Col. Mark Alcott
U.S. Military Group Commander--Col. Edwin Passmore
Legal Attache--Beth McConn
Drug Enforcement Administration Country Attache--John Cohen
Deputy Attache of Immigration and Customs Enforcement--Stephen Kleppe
Agricultural Counselor--David Mergen

The U.S. Embassy in Buenos Aires, Argentina, is located at 4300 Colombia Avenue in the Palermo district of Buenos Aires. Mission offices can be reached by phone at (54)(11) 5777-4533/34 or by fax at (54)(11) 5777-4240. Mailing addresses: U.S. Embassy Buenos Aires, APO AA 34034; or 4300 Colombia, 1425 Buenos Aires, Argentina.

Other Contact Information
American Chamber of Commerce in Argentina
Viamonte 1133, 8th floor
Buenos Aires, Argentina
Tel (54)(11) 4371-4500; Fax (54)(11) 4371-8400

U.S. Department of Commerce
Office of Latin America and the Caribbean
International Trade Administration
1401 Constitution Avenue, NW
Washington, DC 20230
Tel (202) 482-3872; Fax (202) 482-4157
Internet: http://trade.gov/
 



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