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Al-Ahram Weekly 22 - 28 June 2000 Issue No. 487 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 22 - 28 June 2000 Issue No. 487
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Focus Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters The ghosts of Peron
By Hisham El-Naggar
To some people last week's general strike in Argentina smacked of nostalgia. If you looked very closely you could almost see the graceful figure of Evita Peron standing on the presidential balcony. The reality of Buenos Aires, however, was less glamorous. Garbage piled up and public transport came to a grinding halt. The Plaza de Mayo was full of angry demonstrators protesting the latest austerity measures, but the government paid them little heed. Argentine President Fernando de la Rua, a seasoned politician, conveniently left the country on a world tour in a search for greater trade and investment. This week, he visited Egypt for the G15 summit apparently oblivious to the uproar back home.
There was a time when unions were all-powerful. Ten years ago, however, former President Carlos Menem began implementing aggressive pro-market reforms that have changed Argentina beyond recognition. Some have prospered. Others have not. The gap between the rich and the poor has never been greater. Currently, unemployment hovers around 14 per cent. Those who have work are wary of putting their jobs on the line. Resorting to pickets is dangerous. Furthermore, the break neck speed of market reforms have seriously discredited the union leadership. They barely had a chance to protest as Menem betrayed the corporatist social ideals that brought him to power. As the Peronist Menem became the darling of international financial organisations, the traditional social contract of Peronist power began to lose its meaning.
However, the economy lost steam and the Peronists lost support. Menem's successor, Fernando de la Rua of the leftist Alianza Party is confronted with an economy that is struggling merely to stand on its feet. A substantial budget deficit must be addressed or else even the most sanguine foreign investors will be frightened away .
The long-tried remedy of currency devaluation, used successfully in Mexico and Brazil, has been ruled out by de la Rua. The government is committed to maintaining a rigidly fixed parity between the Argentine peso and the American dollar. Although, this policy was a cornerstone of Menemismo, de la Rua is convinced that it is Argentina's best defence against the spectre of galloping inflation.
Realistically, de la Rua has very little room to maneuver and must continue to play the political heavy. The IMF came knocking on his door demanding far-reaching budget cuts. These measures will be implemented on top of the tax increases with which he courageously began his mandate.
Yet, his political acumen continues to shine. After waiting patiently for the results of the Buenos Aires municipal elections, which were quite favourable to his party, de la Rua imposed an unprecedented package of budget cuts. Public sector wages were chopped. Pensions were trimmed. State workers laid off. This was strong medicine, and the patient found the pill too bitter to swallow.
De la Rua knew that strikes were inevitable. Yet, he gambled that voters would not forget that union organisers were complicit in Menem's destruction of the Peronist legacy. Furthermore, the near-bankruptcy of the state is perceived to be due to Menem's personal profligacy and tolerance of corruption. De la Rua bet that his personal credibility was strong enough to weather the coming storm.
There are a couple of other factors which work in de la Rua's favour. First and foremost, the labour movement is divided. A new organisation, the General Confederation of Workers (CGT), is challenging the authority of traditional unionists. However, as fortune would have it, the rising star of the CGT is undercutting his own credibility as quickly as he is undermining the unionist old guard. Mr Moyano, the head of the truck-drivers' union and CGT big shot is widely perceived as power-hungry. His most profound public relations problem is his extravagant life style. People are starting to notice that it is well beyond what his official salary would permit.
Secondly, de la Rua has craftily combined unpopular budget cuts with more palatable reforms. His most adept stroke was to allow Argentines the option to freely choose any health insurance plan they wish. Previously, unions had the power to impose plans. Thus, two birds are killed with one stone. The health insurance reform seriously debilitates union finances, and the greater competition is expected to generate lower costs and better quality care.
In the end, the general strike inflicted no serious political damage. Despite the crowds in the Plaza de Mayo, opinion polls suggested popular support for the strike was lukewarm. Many workers simply took the day off because the public transit workers union had shut down the system. Still, it is unlikely that de la Rua will emerge unscathed from popular wrath once his IMF-inspired austerity measures take hold. He may have succeeded in portraying the unions as corrupt and convincing voters that the Peronists would be far more severe, but a country can not be governed indefinitely by insisting that you're the least of all possible evils.
The signs of future political problems are already beginning to show. Within the Alianza ranks, tension is beginning to rise. The left wing is being careful to distance itself from the more unpopular measures. Indeed, some Alianza deputies went so far as to join the protesters in the Plaza de Mayo. The Catholic Church, in keeping with the Pope's critique of capitalism, is calling for a social dialogue of reconciliation. De la Rua, ever the consummate politician, is by no means unwilling to talk. The trouble is weary Argentines suspect that politicians will talk themselves hoarse about the need for compromise but then deliver more budget cuts and tax increases.
