In runup to elections, Argentine leader stands tough on inflation
Eight weeks before congressional and municipal elections, a major public debate has broken out in Argentina. The focus: President Ra'ul Alfons'in's efforts to curb the country's 1,000 percent inflation. On one side are the international financial community and local businessmen, who support the measures President Alfons'in introduced in June: a wage-and-price freeze, introduction of a new currency at a fixed parity with the dollar, and sharp cuts in public spending. Since June, Argentina's monthly inflation rate has been cut from more than 30 percent to under 6 percent.
On the other side are Argentina's opposition parties, headed by the powerful trade union federation, the General Confederation of Labor (CGT), which accuses the government of plunging the country into deep recession as the price for curbing inflation.
The two sides of the debate were symbolized last week. On Tuesday commercial bankers in New York signed a $13.9 billion debt-rescheduling agreement with Argentine Economy Minister Juan Vital Sourrouille and pledged a further $4.2 billion in new loans. (In all, Argentina's foreign debt stands at $48 billion.) Two days later, the CGT drew a crowd of 100,000 to a protest rally in Buenos Aires as part of a 12-hour national strike.
According to a local opinion poll published by Gallup last week, President Alfons'in is still riding a wave of popularity. His support has nearly doubled since he introduced his austerity package.
But last week's strike showed many Argentines to be divided rather than convinced of this. Buenos Aires has seen bigger progovernment rallies and more successful strikes. Many factories closed for the day, but trains and buses kept going. Nevertheless, the fact that the protest took place at all was a sharp reminder to the government that it cannot afford to be complacent in the runup to November's election.
Argentine trade unionists, the opposition Peronist party, and an assortment of small left-wing groups continue to accuse the government of increasing the social cost of its anti-inflation package.
``The conditions to which Argentine workers are currently exposed are both cruel and tragic: salaries are falling and unemployment is reaching an immoral level,'' said Saul Ubaldini, a trade union leader whose supporters organized Thursday's protests.
A combination of high inflation and recession pushed unemployment in Argentina up to 6.3 percent in May, the highest rate in more than 10 years.
However, trade unionists say the unemployment rate could soon top 10 percent because of an increase in layoffs and a decrease in working hours since the anti-inflation package was introduced in June.
Trade unionists also say that real salaries have been falling and that the minimum wage is insufficient to pay for the cost of the ``shopping basket'' of essential foodstuffs.
The opposition parties have combined these grievances into an ``alternative economic program'' that focuses on the nonpayment of Argentina's foreign debt and the rechanneling of funds owed to banks toward productive investment.
Government officials remain inflexible. They insist that there can be no investment unless inflation is brought down first, and they warn that a repudiation of the country's debt obligations would risk renewed political and financial chaos.
The president of the American Chamber of Commerce is optimistic, however. Federico Dodds says that top managers of United Staes companies operating in Argentina are now looking for new markets here.