Wednesday, May 22, 2024

OPINION AND ANALYSIS | 14-05-2022 00:01

The maybes of May

Today’s anniversary is nowhere in the current agenda with plenty of issues to absorb our attention, yet stopping to recall the Menem years would not go amiss.

One of the increasingly few common denominators between the president and the vice-president of this country is that neither of them are likely to mark or even recall today’s anniversary (and nor will hardly anybody else for that matter). And what might that anniversary be? This day in history includes such momentous landmarks as the start of the United States constitutional convention in Philadelphia (1787), the first vaccination (for smallpox, in 1796) and the birth of Israel (1948) but no general search engine will give you a more local happenstance – both Carlos Menem’s 1989 election and his 1995 re-election fell on today’s date of May 14 (due to the last six-year presidential term in Argentine history for now since Sundays and any other weekday fall on the same date every six years, given leap years).

In times when one of the most persistent iron laws of Argentine political analysis – that only Peronists can run this country, whether for better or worse – is starting to crumble, it might be useful to recall that period. There is a widespread perception that the hyperinflation of the closing months of Raúl Alfonsín’s Radical presidency in 1989 was halted by Menem’s convertibility giving rise to a prolonged cycle of economic growth (and more permanent damage to the social fabric in the eyes of critics), which came to a shuddering halt under the Alliance government following Menem with the 2001-2002 meltdown until first the caretaker Peronist president Eduardo Duhalde and then Néstor Kirchner gradually placed the country back on track. A version amply favouring the interpretation that things are always more normal (even if not necessarily better) under Peronist rule and nor is it inaccurate by the standards of the broad brush of history, but it omits certain details which are far from minor.

Some of these details centre on Domingo Cavallo, economy minister during both half the Menem decade and the closing months of the Alliance administration in 2001 and hence widely seen as both the alpha and omega of the final decade of the last century (and millennium) by first giving birth to convertibility and then killing it off with his corralito freeze on bank deposits. Again an acceptable account of events within the broad brush of history, but also flawed upon closer scrutiny.

Firstly, Menem did not kick off in mid-1989 with either Cavallo or convertibility. The fall of the Berlin Wall was still a few months away but with Ronald Reagan already having completed his two presidential terms and Margaret Thatcher in her penultimate year of office, the signs of the times were already clear enough to Menem who thought that his massive switch to privatisation and deregulation policies warranted a correspondingly drastic choice of economy minister – the executives of the Bunge & Born conglomerate, who would be poachers turned gamekeepers in most Peronist eyes. Yet this U-turn in economic policy did not immediately turn the corner on hyperinflation, with the first full year of Menem’s presidency (1990) ending with four-digit inflation of 1,343 percent. In terms of general anxiety over persistent inflation that period was quite similar to today’s Argentina, even if both the president and vice-president were very different with Menem a far more forceful leader than Alberto Fernández while Duhalde was then primarily interested in becoming Buenos Aires Province governor (a turf to which Cristina Fernández de Kirchner might also be switching her focus) although there was also not so friendly fire from the Group of Eight left-wing dissident Peronist deputies along the lines of La Cámpora now.

While convertibility was indeed a game-changer, it did not kick in until the April Fool’s Day of 1991 so that, even if spared a coronavirus pandemic, the first two years of the Menem presidency were almost as confused as the first two of Frente de Todos – the Bonex Plan at the turn of the decade with its forcible conversion of bank deposits into state bonds was actually far more noxious than the corralito freeze. The general perception of a hyperinflationary night being turned into a new dawn by the change of government (widely accepted even by many strongly critical of Menem) thus does not stand up to a strict chronology.

Cavallo’s corralito has been demonised in the folk memory but was distinctly less confiscatory than either the Bonex Plan preceding convertibility or the corralón under the Duhalde caretaker government at the other end of it – the corralito simply blocked the exit of bank deposits rather than altering their ownership or value whereas the corralón in 2002 forcibly “pesofied asymmetrically” all dollar deposits at an exchange rate of 1.40 pesos per greenback (in 2006 the Supreme Court retrospectively estimated a just exchange rate at over three pesos). Of these three bank raids emanating from the state, the corralito was the only one ruled by a non-Peronist administration but despite being the mildest of the three, all the blame was successfully pinned there in the public mind, thus confirming the preconception that major financial crises only arise when the Peronists are out of power, no matter what else they might do wrong – an assumption also shared by many anti-Peronists.

Elected twice on this day in what increasingly seems the past century, Menem died 15 months ago today and is a forgotten figure when not repudiated by his own movement – thus that controversial “Neoliberalismo nunca más (never again)” exhibition in the Memory Museum at the former ESMA concentration camp lumps him together with the 1976-1983 military dictatorship and Mauricio Macri as championing economic policies supposedly antithetical to human rights. Yet his ghost still lurks at several levels. A fortnight ago this column sought to show how much of that onslaught against the Judiciary widely assumed to be a uniquely personal obsession of Cristina Fernández de Kirchner was replicated by a manipulative Menem. If we look at the dozen mostly northern provinces which voted for the Menem comeback bid in 2003, surprisingly little has changed in many of them in the last two decades and any one of them could serve as a new launching-pad for a reincarnation like La Rioja in 1989.

Today’s anniversary is nowhere in the current agenda with plenty of issues to absorb our attention, like April inflation and the hearings on public service billing, yet stopping to recall the Menem years would not go amiss.

Michael Soltys

Michael Soltys

Michael Soltys, who first entered the Buenos Aires Herald in 1983, held various editorial posts at the newspaper from 1990 and was the lead writer of the publication’s editorials from 1987 until 2017.


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