Presidency of Raúl Alfonsín

Presidency of Raúl Alfonsín 10 December 1983 – 8 July 1989
President	Raúl Alfonsín
Party	Radical Civic Union (UCR)
Election	1983
Seat	Casa Rosada Quinta de Olivos
← Reynaldo Bignone (de facto) Carlos Menem →
Standard of the president

Raúl Alfonsín was the president of Argentina from 1983 to 1989.

New beginning

Chief among Alfonsín's inherited problems was an economic depression stemming from the 1981-82 financial collapse and its resulting US$43 billion foreign debt, with interest payments that swallowed all of Argentina's US$3 billion trade surplus. The economy recovered modestly in 1983 as a result of Bignone's lifting of wage freezes and crushing interest rates imposed by the Central Bank's "Circular 1050;" but inflation raged at 400%, GDP per capita remained at its lowest level since 1968 and

Appointing renowned playwright

Alfonsín had leading members of leftist groups prosecuted, leading to jail sentences for, among others, Montoneros leader Mario Firmenich. He sought to improve relations with Peronists by pardoning former President Isabel Perón in May 1984 for her prominent role in the early stages of the Dirty War against dissidents and for her alleged embezzlement of public funds, though his introduction of legislation providing for secret ballot labor union elections led to opposition by the CGT, Argentina's largest, and handed his administration its first defeat when the Senate struck it down by one vote.

Relations with the United States suffered when Alfonsín terminated the previous regime's support for the Contras. Two meetings with U.S. President Ronald Reagan failed to bring economic concessions towards Argentina. Alfonsín initiated the first diplomatic contact with the United Kingdom since the Falklands War two years earlier, resulting in the lifting of British trade sanctions. Proposing a Treaty with Chile ending a border dispute over the Beagle Channel, he put the issue before voters in a referendum and won its approval with 82%.^[2]

Tackling inflation and impunity

Inheriting a

Sharp budget cuts were enacted, particularly in military spending which, including cutbacks in 1984, was slashed to around half of its 1983 level. Responding to financial sector concerns, the government also introduced a mechanism called desagio, by which debtors whose installments were based on much higher built-in inflation would receive a temporary discount compensating for the sudden drop in inflation and interest rates; inflation, running at 30% in June, plummeted to 2% a month for the remainder of 1985. The fiscal deficit fell by two-thirds in 1985, helping pave the way for the first meaningful debt rescheduling since the start of the crisis four years earlier. Sharp cuts in military spending fed growing discontent in the military, and several bomb threats and acts of sabotage at numerous military bases were blamed on hard-line officers, chiefly former 1st Army Corps head Gen. Guillermo Suárez Mason, who fled to Miami following an October arrest order.^[3]

Unable to persuade the military to court martial officers guilty of

These developments contributed to a strong showing by the UCR in the

Economic concerns continued to dominate the national discourse, and sharp fall in global commodity prices in 1986 stymied hopes for lasting financial stability. The nation's record US$4.5 billion trade surplus was cut in half and inflation had declined to 50% in the twelve months to June 1986 (compared to 1,130% to June 1985). Inflation, which had been targeted for 28% in the calendar year, soon began to rise, however, exceeding 80% in 1986. GDP, which had fallen by 5% in 1985, recovered by 7% in 1986, led by a rise in machinery purchases and consumer spending.^[1] Repeated wage freezes ordered by Economy Minister Sourouille led to an erosion in real wages of about 20% during the Austral Plan's first year, triggering seven general strikes by the CGT during the same period. The President's August appointment of a conservative economist, José Luis Machinea, as President of the Central Bank pleased the financial sector; but it did little to stem continuing capital flight. Affluent Argentines were believed to hold over US$50 billion in overseas deposits.^[5] Alfonsín made several state visits abroad, securing a number of trade deals.^[6]

The President's international reputation for his human rights record suffered in December 1986, when on his initiative Congress passed the

This turn for the worse helped to a significant setback for Alfonsín's UCR in local and legislative elections in September 1987. The UCR lost 13 seats in Congress (leaving 117). Though still enjoying a 12-seat advantage over Justicialists, this deprived the UCR of its absolute majority in the Lower House and, five seats short of a majority in the Senate, this effectively suspended much of the UCR's legislative agenda, particularly the planned transfer of the capital to the Patagonia region. UCR governors fared even worse: the 1987 mid-term election left only two, toppling, among four others, Governor Armendáriz of the paramount Province of Buenos Aires. Ongoing military discontent reached a flash point when Major Aldo Rico, the instigator of the Easter Rebellion, escaped from house arrest and promptly organized a second mutiny in January 1988; this mutiny was, again, quickly subdued. The resulting tension and continuing stagflation set the stage for Alfonsín's announcement that elections, scheduled for October 1989, would be moved up five months earlier.

The campaign made strange bedfellows of Alfonsín and the CGT during the May 1988 Justicialist Party convention. The CGT was averse to the frontrunner for the nomination, Buenos Aires Governor Antonio Cafiero. The President, in turn, preferred to see his struggling UCR (14 points behind in the polls) matched against Cafiero's rival, Carlos Menem, a little-known and flamboyant governor of one of the nation's smallest provinces. The primaries resulted in an upset, however, and Menem was nominated the Justicialist Party's standard bearer. The UCR, for its part, made a safe choice: Eduardo Angeloz, the centrist governor of Córdoba Province (Argentina's second-largest) and the most prominent UCR figure not closely tied to the unpopular Alfonsín.^[10]

The Austral Plan continued to disintegrate as the economy slipped back into recession. Inflation continued at 15-20% a month and in August, reached 27%. Foreign debt installments fell into arrears in April when Alfonsín ordered the Central Bank to curtail payments. Coinciding with the Southern Hemisphere's change of seasons, Economy Minister Sorouille announced a Plan Primavera ("Springtime Plan") on August 3, whose centerpiece was a price truce agreed on with 53 leading wholesalers. The plan also included a fresh wage freeze, however, triggering a September 9 general strike by the CGT that turned violent when police repressed demonstrators at the Plaza de Mayo.^[10]

Violent and

The economy had benefited only modestly from lower inflation, which had fallen from 27% in August to 5-10% monthly for the rest of 1988. Owing to the mid-year recession, GDP fell 2% in 1988 and inflation rose to 380% while real wages continued to slide.[12] Exports did recover and the trade surplus rose to nearly US$4 billion. The Springtime Plan, however, increasingly depended on its reserves to shore up the austral, whose stability guaranteed lower inflation rates. In so doing, the Central Bank shed almost all its US$3 billion in reserves and, in heavy trading on "Black Tuesday," February 7, 1989, the U.S. dollar gained around 40% against the austral. The sudden drop in the austral's value threatened the nation's tenuous financial stability and, later that month, the World Bank recalled a large tranche of a loan package agreed on in 1988, sending the austral into a tailspin: trading at 17 to the dollar in January, the dollar quoted at over 100 australes by election day, May 14. Inflation, which had been held below 10% a month as late as February, rose to 78.5% in May, shattering records and leading to a landslide victory for the Justicialist candidate, Carlos Menem. Polling revealed that economic anxieties were paramount among two-thirds of voters and Menem won in 19 of 22 provinces, while losing in the traditionally anti-Peronist Federal District (Buenos Aires).^[13]

The nation's finances did not stabilize after the election, as hoped. The dollar doubled in value that next week, alone and, on May 29, riots and looting broke out in the poorer outskirts of a number of cities, particularly Rosario. Inflation continued its dizzying rise: 114% a month in June and 197% in July. Income poverty leapt from around 30% to 47% during the debacle^[14] and the economy shrank by 7% in 1989, pushing per capita GDP to its lowest level since 1964.^[1] Having declared his intention to stay on until inaugural day, December 10, these events and spiraling financial chaos led Alfonsín to transfer power to President-elect Menem on July 8.

Cabinet

Presidential secretariats

References