When I heard earlier this month that former Argentine President Carlos Saúl Menem had died on Valentine’s Day at age ninety, I immediately remembered the days leading up to his decade-long reign. I recalled standing in line to take a bus and thinking that the bill I was holding in my hand to pay the fare, and from which I would get scant change in return, just five years earlier had been worth a thousand dollars. That had been at the outset of the first democratic administration following the more than seven-year nightmare of bloody military rule.
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| Carlos Saúl Menem |
I’m talking about the administration of President Raúl Alfonsín, for
which I had held out such high hopes for the dawn of a brand new Argentina, or
rather, for a return to the country’s salad days of the end of the nineteenth
and beginning of the twentieth centuries when the world saw it as one of the
Western nations most likely to succeed. Alfonsín had overwhelmingly won the
1983 election from the ever-popular Justicialist Party, founded by the late
Argentine strongman, General Juan Domingo Perón. And indeed, he hadn’t
disappointed true democrats at a purely political and philosophical level. Alfonsín
had headed up one of the most decent, democratic and human administrations in
Argentine history. He had won renewed respect for the country worldwide, after
the horrific history of the military regime that had slaughtered thousands of
opponents and involved the country in a ten-week war with Britain. His
administration made human and civil rights its centerpiece and championed the
rule of law as a universal norm for just government.
But if there was ever a case to be made for the idea that “It’s the
economy, stupid!” Alfonsín’s five and a half years in office were it. All the
good he had done made no real difference where the rubber met the road, once
the bottom fell out of the economy.
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| Raúl Ricardo Alfonsín |
Then again, it wasn’t like anybody prior to Alfonsín had been able to
handle the recalcitrant economy either. Take, for example, the preceding military
regime. Many conservative international economists tried to strike a balance in
their criticism between the brutal nature of the Armed Forces government and
the apparent “seriousness” of the junta’s economy team headed up by Cambridge-educated,
“Chicago school” economist José Alfredo Martínez de Hoz—known to his friends in
the Anglo business community as “Dr. Joe”. Turns out the only thing “serious”
about Dr. Joe and his team was that they weren’t given to smiling.
And before that, it was the last administration of General Perón, who came
back from Spain after almost eighteen years in exile, following his overthrow
in a bloody 1955 military uprising. I arrived in Argentina in October of 1973,
right about the same time Perón returned. And so it was that I got my first
lessons in Argentine politics and economics.
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| General Juan D. Perón |
When I first arrived in Argentina, two currencies—new pesos (or pesos ley) and old pesos—circulated
simultaneously and prices were often exhibited in both. Most people on the
street talked in old pesos. I recall that, at the time, the cost of a newspaper
or a cup of coffee was one peso ley, or a thousand old pesos. In other words,
the devaluation had clipped three zeros off of the currency. I remember Whitie,
my father, at some point in god-knows-what year, being nonplussed by the fact
that in some sort of Argentine currency, my monthly pay was six million pesos. My son the millionaire! Whenever one of
his friends would ask me “how I was doing down there”, Whitie would grin slyly
and say, “Tell him how much you make, Dan!”
More surreal still, however, was the fact that under the last Peronist
administration headed by Perón himself, my pay at the Buenos Aires Herald, the newspaper where I was a reporter, was
equivalent to well under fifty dollars a month, but my wife and I could live
modestly well on that. In fact, I was feeling quite flush by then, since the
two jobs I held during my first eight months in the country were, first, as a night
bellhop in a downtown four-star hotel, and then as a rental agent for Avis
Rent-a-Car near the city’s port district. In neither of those jobs did my pay
reach thirty dollars a month. So landing a job as a reporter at forty-odd
dollars a month was not only about having the job of my dreams, but also about
moving up in the world economically.
I think the managing editor at the paper only made a little over a
hundred dollars a month at that time. But it was like Monopoly money. As long
as you remained on the game board in Argentina, your pesos had real-economy
value. So we all moonlighted as free-lance correspondents for international
publications to make some real-world money because, if not, we were basically
held hostage by the Argentine economy and couldn’t afford to travel outside of
the country’s borders.
At one point during the year that Perón once again reigned before dying
and plunging the country into chaos, I recall a rally at which he complained
that he couldn’t understand why everyone seemed to be so preoccupied with the
dollar-peso parity. Who cared, he asked the crowd, what the dollar exchange
rate was? This was Argentina, he pointed out, where people earned and spent
pesos. Then pointing to a laborer in the crowd, he asked rhetorically, “How
about you, pal, when was the last time you saw a dollar?”
On Perón’s death, the country entered a new and ever darker phase in the highly incapable hands of his third wife and former vice-president, “Isabelita” Perón (née Martínez)—who this month turns ninety, and, with Menem’s death, has become Argentina’s oldest living former president. Violence between squabbling bands within the politically eclectic Peronist movement was wreaking havoc, with Isabelita being manipulated like a hand-puppet by the extreme right, in the person of a former Federal Police corporal and part-time dabbler in the occult called José López Rega—a.k.a. “El Brujo” (The Sorcerer)—a sinister character who had been a faithful servant to Perón. The economy was left basically rudderless, with a succession of wildly ineffectual economy ministers. By the time Isabelita’s government was overthrown in 1976, annual inflation was nearing a thousand percent and real wage values were plummeting.
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| "Isabelita" Perón |
Americans will ask me, “How could you possibly survive?” But the truth
is that such situations are never black and white. For instance, we had bought
our first apartment—a little two-room in an enormous efficiency apartment
block—with a ten-year mortgage loan provided by the finance company that
belonged to the same firm that had constructed and sold the building. By the
time the Peronist administration was overthrown, mortgage loans were almost
non-existent, but if you got one, payments were indexed. In a country with
hyper-inflation the result is that people who buy anything with an indexed loan
are likely to lose it, because wages never keep pace with inflation and it
eventually becomes impossible to keep up the loan payments.
In our case, however, the loan contract we signed was payable in nominal
(not indexed) pesos and at a fixed interest rate. What this signified was that,
with inflation soaring to astronomical levels, the fixed terms of our contract
made our monthly payments and interest laughably low. Although we had only been
paying for less than two years on a ten-year mortgage, when I got my yearly bonus
at the end of 1975, I was able to walk into the finance company and settle the
rest of my debt in cash, and still have money left over. So what was a tragedy
for some was a bonanza for us.
This period was followed by a new economic revamp under the military
junta that replaced the Peronist government, following a coup d’état and the
introduction of the “peso fuerte”
with which several zeros were again knocked off of the currency. This time it
was pegged to a floating exchange system created by the previously mentioned
conservative economist José Martínez de Hoz as economy minister.
But that system also had disastrous results, despite all the flattery
that Dr. Joe received from international economists, bankers and business
people. I recall that after making the equivalent of under six hundred dollars
a year less than five years earlier, I was now making over forty thousand
dollars a year working at the same newspaper, at a time when, in the US, a new
Chevy Impala cost under five thousand dollars, and a good dress shirt ran eight
dollars. Thanks to the convoluted monetary exchange system that Martínez de Hoz
introduced (and which I doubt anybody but he understood fully), in Argentina an
equivalent car cost forty thousand and a similar dress shirt one hundred. Ever
quick on their feet from years of practice shadow-boxing with the economy, middle-class
Argentines took advantage of the fact that they were suddenly affluent
everywhere but at home and started traveling the world, bringing back
everything imaginable from abroad. Their battle cry on these foreign shopping
sprees was “dame dos” (give me two).
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| Alfonsín and Menem - peaceful transition |
Opposition analysts argued at the time that it was all well and good for
the US-style Constitution to be updated to introduce such popular and necessary
guarantees as an anti-discrimination clause and eleven articles specifically
safeguarding human rights. But they were concerned that Menem was employing
these and other amendments to facilitate his own reelection aspirations and to
provide himself with an entire decade in power. The two-term clause shouldn’t,
his opponents argued, be applicable to the president whose own administration
had promoted the change, or who had been elected under the terms of the former
Constitution. He should have to leave office after his original six-year term.
Menem doubled down and not only won re-election, but also had his legal
team argue that he should be able to run for third term in 1999 as well, precisely
because he had first been elected under the old Constitution. His second
election had been carried out under the norms of the new Constitution, which
permitted him to run for a second term. But the fact that the Peronists lost
the mid-term congressional elections in 1997, and that his programs were
showing signs of irreversible wear and tear by 1999, made any intention of running
again a moot point.
Some of Menem’s fans have tried to cast him as “the Argentine Reagan”.
But Reagan was never anything like as pragmatic as Menem. Reagan was a
conservative in a conservative party, who merely introduced a new and ever more
corporate elitist twist to what his party already championed. Menem, on the
other hand, was a populist from a classically populist pan-Argentine movement
that had always railed against Yankee imperialism and the evils of capitalist
multinationals, as well as against Marxism. Hence the slogan: Neither Yankees
nor Marxists. Peronists! But despite that fact, he reversed engines and
embraced not only the United States but also the major tenets of
neo-liberalism—privatization and an unfettered free market. (So...welcome to
the trickle-down fallacy...Argentine style).
Suffice it to say that Menem, a provincial caudillo from La Rioja, a
province with fewer than three hundred fifty thousand people, surprised
everyone at home and in the international community, by doing the political and
economic opposite of just about everything in General Perón’s playbook. But he
did so while still wrapping himself in the flag of Peronism and while still frequently
invoking the words and person of the late Argentine strongman, who, although
dead since 1974, still today casts a long and enduring shadow on Argentine
politics.
Instead of championing state control of the economy, nationalization of foreign assets and a position of non-alignment with the bipolar world powers of the Cold War era as Perón had done, Menem embraced the neoliberal bent of Reaganism, firmly aligned the country with the US, sent troops to be part of Coalition and UN peace-keeping forces in the Gulf and Kosovo, and introduced a wave of privatizations that stripped Argentina of practically every state enterprise that it had ever owned—an enormous state military-industrial complex that had been built over the course of the previous century and that had been expanded in the half-century from the days when Perón was in his heyday. And instead of prioritizing the Argentine worker and the labor unions that Perón had adopted as his own, he gave almost pandering priority to big business and its anti-labor whims.
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| The provincial caudillo |
Most of the privatizations floated former state companies on the international
market, which provided Argentina’s disgruntled international creditors with a
chance to acquire them, frequently under ridiculously advantageous terms. The
gem of the divestiture process was Argentina’s oil giant, YPF (Yacimientos
Petrolíferos Fiscales). I remember that, at the time, I was contracted to write
about the YPF sale for a New York Times
supplement on Argentina’s privatizations. As usual, I researched by carefully
choosing contacts to interview from my days working for Platt’s Oilgram. I
tried to find experts from both sides of what was indeed a controversial topic
so that I could then make an educated analysis. Most fairly glowed talking
about how great it was for the country, and indeed for YPF, that Menem’s
economy minister, Domingo Cavallo, had decided to divest YPF by going public
with it on the New York Stock Exchange in an IPO worth six billion dollars.
However, several nuts-and-bolts oil industry experts cautioned me not to
believe everything I heard. The IPO was “a gift” they said, “a fire sale”. And
they showed me how, if the Economy Ministry had bothered to take the time and
effort to do it, YPF could have been broken down into exploration, production,
services and other operations and sold in pieces to other oil industry players
for a total of at least nine billion dollars instead of six.
In writing the story, I was careful to give ample coverage to both sides
of the debate. Reporting, not editorializing, and permitting the reader to
reach his or her own conclusions. But the story came out in the Times the same day that the
Harvard-educated Cavallo arrived in New York City for the YPF launching, and he
was very likely one of the first to read it. Later that day, I got a call from
a contact in the press section at the Economy Ministry who told me that Cavallo
had specifically ordered him to “dis-invite me” from ever setting foot in the
ministry again as long as he was the minister in charge. (So I know how CNN
White House reporter Jim Acosta felt).
I’m no fan of Carlos Menem’s. I would be all too accurate if I were to
say that his political and personal life were fraught with controversy and
charges of corruption and criminal behavior.
Indeed, he was accused during his tenure and later tried for illegal
arms trafficking. Namely, the clandestine sale in 1991 of Argentine-made
military-grade weapons to Croatia, which, at the time, was at war with
Yugoslavia, and in 1996 to Ecuador, which the year before had been involved in
the brief Alta Cenepa War with its neighbor, Peru. After leaving office at the
turn of the century, he was held under house arrest from June to November of 2001,
on charges surrounding these arms sales but later fled with his second wife,
Cecilia Bolocco, and their infant son to her native Chile. By then under the
presidency of opposition politician Fernando de la Rúa, Argentina sought
extradition, which the Chilean Supreme Court eventually denied.
When in 2004, Argentina’s new Peronist President Néstor Kirchner had
warrants for Menem’s arrest canceled, the former president returned to the
country, where he faced new charges of embezzlement and failing to declare
funds that he had in a Swiss bank account. It wasn’t until 2013, under the
administration of Kirchner’s widow, Cristina Fernández, that he was acquitted
of those charges. He was, however, previously sentenced to seven years in
prison for the arms trafficking charge, and eventually to four and a half years
for embezzlement and bribery but was immune to incarceration on either sentence
due to his status as a member of the Senate.
Menem was also the subject of a probe into the 1995 explosion of a
munitions factory in Río Tercero, Córdoba Province, which killed seven people,
injured three hundred others and flattened part of the town. The explosion was
suspected of being intentional as part of an attempt to cover up the illegal
arms sales for which Menem was under investigation. This incident continued to
haunt him for the rest of his life. Menem was scheduled to attend related legal
proceedings earlier this month, but died before his court date.
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| Photo-journalist José Luis Cabezas |
And then there was the murder of photo-journalist José Luis Cabezas. A shadowy and erstwhile faceless figure called Alfredo Yabrán who worked closely with Menem’s government and operated international airport warehousing, was suspected of involvement in the illicit arms trafficking operations as well. After the reporter snapped a picture of the elusive businessman at a beach resort in 1997, Cabezas was kidnapped, tortured and murdered, and his body incinerated in his rented car. The ensuing scandal and reported connections between the president and Yabrán embarrassed Menem. Yabrán was suddenly a marked man. During a police raid on his home, Yabrán died of a shotgun blast to the face. His death was ruled “suicide”.
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| The pic that killed Cabezas |
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| Israeli Embassy bombing |
There is no way that any of this could be the subject of a “forgive and forget” attitude from civilized, democratic society, but the lasting legacy of Carlos Menem, despite all of his unforgivable failings, is that, for almost a decade, he provided the common citizens of his country with a kind of on-the-street economic stability like many had never known in their lifetime—if at significant future cost to the economy and to political stability. While one much-heralded plan after another had failed over the course of successive administrations since the nineteen-sixties, Menem, pragmatic as Perón himself, swiftly moved to strike a pact with the most diverse sectors of Argentine society, and then, while the honeymoon lasted, began opening up the economy to foreign investment, vastly expanded imports and foreign trade, initiated negotiations with international creditors and then tackled hyperinflation.
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| AMIA bombing |
This last, for the man and woman on the street, was the singularly most
important plank in his platform. He did it by returning to the peso (yet
another new peso), which he pegged to the dollar at a constant parity of one
peso equals one dollar. This parity was maintained through a policy of
so-called “convertibility”, by which pesos and dollars could be transacted,
paid, saved and spent interchangeably, thus taking all pressure off of the
exchange rate, and off of inflation as well.
What this meant was that, for the first time in at least a
quarter-century, Argentines knew what things cost, because the economy was
dollarized in terms of both prices and wages. It was a tremendous relief to a
population long accustomed to expecting bad surprises with every purchase and to
rushing out to buy dollars on the black market as soon as they were paid, before
their pesos could deteriorate—sometimes by the hour. A relief too for people
terrified of what could happen to loans, mortgages and other types of credit
that they might take out for longer than a month at a time. Suddenly, credit
was viable in Argentina, and the government moved to quickly “bankerize” the
economy with the introduction of bank accounts in both pesos and dollars and
the widespread use of credit and debit cards.
The one to one convertibility measure remained in effect for the entire
time that Menem was in office and created a kind of domestic confidence in the
economy that young to middle-aged Argentines had never known before. Many people,
including my wife and me, were able to earn and save dollars during that period
and for the first time found that we could afford to buy a new home, new cars,
new imported goods, and to also put some money away for a rainy day. The
country’s entrepreneurs and creatives were full of new and ambitious products,
and people with the right skills could find well-paying, meaningful work.
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| Frail and elderly Menem with daughter and faithful companion Zulemita |
For a decade in the nineties, Menem, then, made many middle-class Argentines
feel like they were living in the real Western world, that they were the proud citizens
of a swiftly emerging nation. Even large numbers of Argentine professionals, previously
lost to the “brain drain” of earlier decades, would come home from abroad to
enjoy the “Argentine miracle”. Some might call it “a long con”. They wouldn’t
be wrong. But for a decade until it all came crashing down, most of us had a
good run and didn’t want to look at the fact that Menem had sold the country to
the highest bidders in order to finance this party and that the pain of the
ultimate fall would be excruciating.
It was a matter of survival for Carlos Menem to remain politically
relevant. Ever the provincial caudillo,
he managed to cling tenaciously to his Senate seat—and his legal immunity—until
his death. Judgment now will be reserved for posterity.
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