The Alfonsín Era
Raúl Alfonsín’s government took steps to account for the disappeared, established civilian control of the armed forces, and consolidated democratic institutions. The members of the three military juntas were prosecuted and sentenced to life terms.
The previous regime’s foreign debt, however, left the Argentine economy saddled by the conditions imposed on it by both its private creditors and the IMF, and priority was given to servicing the foreign debt at the expense of public works and domestic credit.
Alfonsín’s failure to resolve worsening economic problems caused him to lose public confidence. Following a 1989 currency crisis that resulted in a sudden and ruinous 15-fold jump in prices, he left office five months early.
The Menemist Decade
Newly elected President Carlos Menem began pursuing privatizations and, after a second bout of hyperinflation in 1990, reached out to economist Domingo Cavallo, who imposed a peso-dollar fixed exchange rate in 1991 and adopted far-reaching market-based policies, dismantling protectionist barriers and business regulations, while accelerating privatizations.
These reforms contributed to significant increases in investment and growth with stable prices through most of the 1990s; but the peso’s fixed value could only be maintained by flooding the market with dollars, resulting in a renewed increase in the foreign debt.
Towards 1998, moreover, a series of international financial crises and overvaluation of the pegged peso caused a gradual slide into economic crisis. The sense of stability and well being which had prevailed during the 1990s eroded quickly, and by the end of his term in 1999, these accumulating problems and reports of corruption had made Menem unpopular.
The New Millenium Crisis
President Fernando de la Rúa inherited diminished competitiveness in exports, as well as chronic fiscal deficits. The governing coalition developed rifts, and his returning Cavallo to the Economy Ministry was interpreted as a crisis move by speculators. The decision backfired and Cavallo was eventually forced to take measures to halt a wave of capital flight and to stem the imminent debt crisis (culminating in the freezing of bank accounts).
A climate of popular discontent ensued, and on December 20, 2001, Argentina dove into its worst institutional and economic crisis since the 1890 Barings financial debacle. There were violent street protests, which clashed with police and resulted in several fatalities. The increasingly chaotic climate, amid riots accompanied by cries that “they should all go”, finally resulted in the resignation of President de la Rúa.
Three presidents followed in quick succession over two weeks, culminating in the appointment of interim President Eduardo Duhalde by the Legislative Assembly on January 2, 2002. Argentina defaulted on its international debt, and the peso’s 11 year-old tie to the U.S. dollar was rescinded, causing a major depreciation of the peso and a spike in inflation.
Duhalde, a Peronist with a centre-left economic position, had to cope with a financial and socio-economic crisis, with unemployment as high as 25% by mid 2002, and the lowest real wages in sixty years. The crisis accentuated the people’s mistrust in politicians and institutions. Following a year racked by protest, the economy began to stabilize in late 2002, and restrictions on bank withdrawals were lifted in December.
Kirchners’ Governments
Benefiting from a devalued exchange rate the government implemented new policies based on re-industrialization, import substitution and increased exports and began seeing consistent fiscal and trade surpluses. Governor Néstor Kirchner, a left-wing Peronist, was elected president in May 2003.
During his administration, Argentina restructured its defaulted debt with a steep discount (about 66%) on most bonds, paid off debts with the International Monetary Fund, renegotiated contracts with utilities and nationalized some previously privatized enterprises. Kirchner and his economists, notably Roberto Lavagna, also pursued a vigorous incomes policy and public works investment.
Argentina has since been enjoying economic growth, though with high inflation. Néstor Kirchner forfeited the 2007 campaign, in favor of his wife Senator Cristina Fernández de Kirchner, who became the first woman to be elected President of Argentina. She saw controversial plans for higher agricultural export taxes defeated by Vice President Julio Cobos’ surprise tie-breaking vote against them in July 2008, following massive agrarian protests and lockouts from March to July.
The global financial crisis has since prompted Mrs. Kirchner to step up her husband’s policy of state intervention in troubled sectors of the economy.
On July 15, 2010, Argentina became the first country in Latin America and the second country in the Southern Hemisphere to legalize same-sex marriage.