Dateline Argentina: Hello, Democracy

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Dateline Argentina: Hello, DemocracyAuthor(s): Martin AndersenSource: Foreign Policy, No. 55 (Summer, 1984), pp. 154-172Published by: Washingtonpost.Newsweek Interactive, LLCStable URL: http://www.jstor.org/stable/1148386 .

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DATELINE ARGENTINA: HELLO, DEMOCRACY

by Martin Andersen

Easily the best news out of South America in a decade was the stunning triumph of Radical Civic Union party candidate Radil Alfonsin in the first Argentine presidential contest in 10

years. The balloting October 30, 1983, produced a sea change in the political landscape of this once-beaten and desperate country of

nearly 29 million people, strategically located

along the South Atlantic Ocean. A seemingly perpetual electoral dominance by the fractious and frequently authoritarian Peronist party was shattered. The once-feared military, rent

by internal divisions, weary of administering a

country they had brought to the brink of financial collapse, and humiliated in the war with Great Britain over the Falkland Islands (Islas Malvinas), tried unsuccessfully to wring some face-saving concessions, then staggered back to the barracks.

In the months following his inauguration on December 10, 1983, Alfonsin has struggled mightily to re-establish civilian control over

society and return Argentina to the rule of law. His government has launched an unprec- edented attack on the institutions and person- alities responsible for leading Argentina to disaster. Beyond meting out specific legal sanctions against wrongdoers, the charismatic

57-year-old president has sought to break what the late ruler Juan Domingo Per6n used to call the pendular play of Argentine politics-the swings between military and civilian rule that have marked the country for the last half

century. In that time only two elected presi- dents have served out their 6-year terms, and both were generals.

Yet while the opportunity for establishing stable constitutional government has never been greater, the problems facing the new administration, especially its more than $43- billion foreign debt, have never been more

MARTIN ANDERSEN reports for Newsweek maga- zine from Argentina and Uruguay.

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severe. The role of international financial institutions and the policies of the United States are seen in Argentina as crucial to that country's struggle for economic recovery and political health.

Unlike its counterparts in neighboring Chile and Uruguay, the Argentine military has a long tradition of meddling in politics. The army's charter even claims that its ranks are the country's moral reserve. Since 1955, the year the Liberating Revolution led by the military overthrew Per6n's national populist government, the generals have controlled Ar- gentina's political course. Their primary ob- jective was to keep the Peronists out of power. By 1973, however, pressure from an increas- ingly combative working class and militant students brought the aging, ailing Per6n home from 18 years in exile and back to the presi- dency one last time. Yet he died before com- pleting a year in office. The constitutional but hopelessly inept government of Per6n's wid- ow, the former cabaret dancer Isabel Martinez de Per6n, quickly became mired in internal party divisions and inflationary economic policies and faced a difficult challenge from leftist guerrillas. The military ousted her regime in March 1976.

The Panorama of Chaos The Argentina Alfonsin inherited from the

military is as changed a country as that which Per6n snatched from a mean-spirited and fatuous oligarchy in the 1940s. Nearly 8 years of labor peace imposed by the generals weak- ened the once-dominant Peronist unions, whose military-approved leaders lost a good deal of their claim to legitimacy. The brutal antiguerrilla struggle led by the military, popularly known in Argentina as the "dirty war," successfully decimated the ranks of the revolutionary Left. Currently no extreme leftist ideology attracts more than a handful of followers. No serious Argentines now ques- tion the value of "bourgeois democracy" or "formal democracy." At the same time the dirty war, with its toll of 10,000-20,000 people missing and believed killed by Argentine security forces, has left a general feeling of revulsion for the military among the populace.

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That campaign plus the generals' disastrous free-market economic policies and the Falk- land Islands conflict have utterly discredited the Argentine Right.

The military's clumsy and ill-conceived economic program proved noxious for an industrial plant that had bloomed in the post- World War II era thanks to high tariffs and

heavy subsidies. Before the 1976 coup, Argen- tina's economy featured a curious mixture of

instability and growth. In the last year of Isabel Per6n's government labor unrest and inflation spiraled out of control. A huge state sector sapped vitality and needed foreign exchange from the domestic economy, driving up prices and interest rates. The proliferation of domestic industries that sprang up behind the high tariff walls preserved jobs but created

surplus industrial capacity that produced goods both more expensive than and inferior to their foreign competition. Despite the panorama of shabbiness and chaos, however, one fact stood out above all: The economy continued to grow.

The military initially achieved impressive success. By cowing the unions and putting a lid on wage demands, they cut inflation while

increasing investment. But the generals' achievements soon inspired a more grandiose, and eventually ruinous, free-market scheme. Tariffs were slashed, suddenly leaving domestic industry at the mercy of more attractive

imports. And the very nature of military rule vitiated the possibility of reducing the state sector enough to create a truly free market.

During the generals' reign, government spending grew. The military's determination to prop up the Argentine peso in order to curb inflation ended up promoting speculation and

capital evasion. And the generals' spoils sys- tem, in which the economy was divided

among the three services, gave the men in uniform limitless opportunities for corruption. As economist Milton Friedman would later admit, the undemocratic nature of prae- torian regimes makes them poor executors of a free-market program.

Since 1976 Argentina's blue-collar work force has shrunk from 1.8 million to 1.3 million. Unemployment and underemploy-

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ment are spiraling past the 15 per cent mark. Inflation, brought to below 100 per cent

during the military's recessionary policies, is

again zooming above 450 per cent. Between 1975 and 1982 Argentina's debt to private banks increased sevenfold while overall production essentially stagnated. At the same time, the generals extended their influence

deep into the civilian economy. The military owned huge tracts of land, and

by the late 1970s the industrial behemoth Fabricaciones Militares was estimated to ac- count for 2.5 per cent of Argentina's GNP.

Military officers, both retired and active, sat on the boards of directors of or ran nearly all the country's most important businesses, in-

cluding the state-owned airline, air- and sea- ports, maritime interests and customs, the national oil company, steel mills, petrochemi- cal plants, and mining centers. Even before the military's political performance became

unpopular, Argentine businessmen com- plained bitterly about these officers' corruption, inefficiency, and nepotism.

The changing composition of the work force and some recent history help explain Alfonsin's dramatic reversal of recent voting trends. In 1973 Radical party presidential candidate Ricardo Balbin won only 24 per cent of the vote against 62 per cent for Per6n; in 1983 Alfonsin came out on top, 52-40 per cent. Much of that shift reflects the many workers who left factory jobs and who are now self-employed. The values of these workers differ from those of their counterparts who remain in the thousands of small, labor-inten- sive shops and who loyally voted for Per6n for more than 25 years. The new working-class attitudes about the state's role in society, in particular, appear to have shifted markedly. Where the blue-collar worker still views the state as an intrusive but beneficent and protec- tive agent, the typical taxi driver or newspa- per vendor associates government with regula- tions and taxes.

Alfonsin also benefited from the Argentine gender gap. Women's suffrage came to Argen- tina through the efforts of Per6n's first wife, Eva. One of the pillars of the tripartite Peron- ist movement is a women's branch, theoreti-

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cally coequal with the party's political and union wings. In addition, some feminists believe that the power of Eva Per6n, and to a lesser extent Isabel, reflected a certain enlight- enment on the part of Per6n and his followers concerning women's roles in this still highly male chauvinist society. These factors, cou- pled with the Peronists' emphasis on family income and social justice, gave the party overwhelming support among women. In 1983, however, several factors tarnished the Peronists' appeal among women, workers, and others. Alfonsin and others on the Radicals' slate never ceased to recall that the ugly repression unleashed in Argentina was begun not under the first military junta of General Jorge Rafael Videla, but under Isabel Per6n.

Another issue related to violence, Argentine foreign policy, played into the hands of the more moderate Radical party. Many voters, women in particular, mindful of the Falkland Islands debacle were somewhat frightened by the Peronists' highly nationalistic rhetoric. The machismo and swaggering arrogance of some Peronist candidates backfired as well; the party's unsuccessful candidate for the governorship of traditionally Peronist Buenos Aires province, Argentina's most populous, bragged about his proficiency with weapons.

Alfonsin, a moderately progressive politi- cian in the mold of West European social democrats, was also helped by his long-time role as a reforming gadfly within the once- moribund Radical party. In 1972 he brashly challenged ineffectual old caudillo Balbin for the party's leadership before the presidential elections. Alfonsin lost but secured the loyalty of the party's left-leaning and well-organized youth. Alfonsin also avoided identification with the rabid anti-Peronism associated with the 1955 coup, which launched a wholesale assault on legitimate gains achieved by the working class under Per6n.

These political and economic changes helped redefine the balance of forces within Argentine society. In the past all the major parties, especially the Radicals, attempted to induce military uprisings against the established order to further their own political designs. But the degree to which military

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prestige has sunk has all but closed off "knock-

ing on the barracks door" as a political option for many years to come. Moreover, the size of the Radical party's win in one of Argentina's cleanest recent elections gives the new government considerable legitimacy. Gone was the idea that Peronist spokesmen were almost by definition the sole voice of the masses. In voting October 30, Argentines acted as politically rational beings, rejecting a Peronist party still in the throes of a leadership crisis precipitated by the death of the conductor in 1974. Per6n, one observer wryly noted, died in 1974, but he was buried in 1983.

Signals of Change

During the campaign Alfonsin repeatedly stated that the first 100 days of his administration would be crucial for setting down the institutions of a democratic Argentina. In contrast to previous constitutional leaders Alfonsin has set out to prosecute the military hierarchy for its errors and crimes. Less than one month after taking office he drummed one-half of the generals out of the army-the only branch of the armed forces that had avoided a post-Falkland Islands self-purge. Alfonsin also cashiered nearly as many admi- rals and air force brigadiers. Keeping an election promise that had set him apart from his Peronist opponent, Alfonsin struck down a bitterly disputed self-amnesty law that the military had dictated in September, granting itself immunity from prosecution for acts committed during the dirty war. The nine members of the first three military juntas that had ruled since 1976 were charged with mass murder. The head of the third junta, retired army general and former president Leopoldo Galtieri, and his two ruling colleagues are also being court-martialed for their role in the Falkland Islands war. Galtieri, who has admit- ted he was caught unprepared for the war in which more than 1,000 people were killed, could be sentenced to death. Alfonsin has restructured the military high command, abol- ishing the highly politicized position of armed forces commander in chief and bringing the three services under civilian control. He has slashed the number of military personnel

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holding civilian positions to next to nothing. And in early February Alfonsin appointed civilian directors over Fabricaciones Militares.

The government's efforts to try the former military leaders for atrocities have been attacked by human rights groups on several grounds. The military reform package passed by the Argentine Congress in January allows the accused military personnel to be tried before armed forces courts, although a review

by a civilian court is mandatory. The government also has tried to limit the damage to the armed forces as an institution. During the

campaign Alfonsin drew three lines of responsibility for the dirty war: the officers who conceived and orchestrated the repression; overzealous subordinates who went beyond their orders; and soldiers who, given what Alfonsin himself calls a state of understand- able confusion in the country, merely carried out orders.

The rights groups charge that the reform circumvents constitutional provisions mandat- ing equality before the law by allowing mili-

tary personnel to be tried for past crimes by their peers. They also point out that people directly affected by the repression are reluc- tant to appear in the closed military court setting, out of fear or skepticism that justice will be done.

Alfonsin's position draws attention to the

conflicting exigencies of advocacy and gov- ernance. Although the new president was himself an early human rights advocate during the darkest days of the repression, Alfonsin and his advisers are known to be worried that an avalanche of protracted court probes into individual officers' responsibility for atrocities could destroy morale within the ranks. More- over, government officials say, even the most

vigorous investigations may not produce con- victions because the outgoing military leaders ordered the destruction of pertinent records. The government faces a similar dilemma in its efforts to help the relatives of missing persons find out what happened to their loved ones, a key demand of the human rights activists. The matter has taken on a particular urgency with the discovery in early 1984 of hundreds of corpses buried in unmarked mass graves.

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Barring the discovery of a military roster of the bodies, morgue officials say, identification of most victims will be impossible.

The current government also argues that permitting the military courts to handle these cases can forestall charges from within the ranks of a civilian witch hunt. Further, Alfon- sin's military reform puts civilians out of reach of military tribunals in the future and makes armed forces personnel liable for prosecution in civilian courts for common crimes. Government officials add that Argentina's recent decision to sign an Organization of American States covenant on civil and political rights gives Argentines an important international safeguard.

In addition to changes in the armed forces code, Alfonsin wants to slash defense expendi- tures from 5 per cent of GNP to 2 per cent. The Radicals say they plan ultimately to cut the 150,000-strong army in half. Initial personnel reductions for 1984 will total 12 per cent. A programmed 40 per cent 1984 military spending cut, however, has prompted criticism within more reformist sectors of the Alfonsin government. They point out that the relatively small 1984 personnel cuts will probably result in many undertrained and under- equipped conscripts. In addition, these critics point out, Alfonsin's goal of professionalizing the services requires an initial outlay of cash to modernize the forces. Yet budget constraints have already been drawn even tighter by the discovery of tens of millions of dollars in arms contracts already in the pipeline.

The government has also taken some sym- bolic steps meant to signal a change in the military's mission from internal security to defending national territory from outside attack. The senior general commanding troops, for example, has been stationed in the far south, where tensions occasionally flare with both British and Chilean forces, rather than in Buenos Aires, a post from which many coup attempts in the past have been launched.

Control of the military has also influenced the reform of Argentine foreign policy. Under the military Argentina's international reputa- tion sank to an all-time low as a result of the dirty war and the surprise attack on the

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Falkland Islands. A regime that took power swearing to defend Western, Christian civili- zation found itself seeking diplomatic support from Cuban President Fidel Castro and Pales- tine Liberation Organization leader Yasir Ara- fat. The Alfonsin government has sought to defuse regional tensions both to calm neighbors' fears and to strengthen the case for

military cutbacks.

The new president has been trans- formed into arguably the most important democratic leader in Latin America.

Diplomats in Argentina say the century-old border dispute with Chile over the Beagle Channel at the southern tip of the continent, which nearly led to war in 1978, is close to resolution as a result of mediation efforts

begun 6 years ago by the Vatican. Such an

agreement, although attacked by Peronist and

military ultranationalists as a sellout, is considered essential if Alfonsin is to cut back on defense spending and conscription, as well as secure international help on the Falkland Islands negotiations. A draft treaty awards three disputed islands, each with 12-mile offshore zones, to Chile, with Argentina having jurisdiction over offshore waters in the Atlan- tic beyond that limit. A March 1984 proposal by Pope John Paul II that the channel itself be

designated a shared economic zone may nar- row the diplomatic gap further, although important differences still remain.

Two years after the debacle over the Falk- land Islands, the status of this windswept South Atlantic archipelago still preoccupies Argentina's military and diplomats. Since Al- fonsin's inauguration, Argentina and Great Britain have been discussing through Swiss and Brazilian intermediaries a resumption of both diplomatic and commercial ties. The Argentines are demanding that negotiations return to their prewar state, which includes talks on sovereignty. British Prime Minister Margaret Thatcher, who has maintained a rather hard-line attitude toward Buenos Aires

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despite the change in government and Alfon- sin's opposition to the war, may be losing ground even among her supporters in Parlia- ment on the issue.

Argentine foreign ministry officials say serious negotiations on the islands with Great Britain are vital in the near future if the

government is to retain public support, especially in view of the sacrifices it will probably have to ask for in order to repay the debt and to restore economic health. Buenos Aires will also need a consolation prize for ceding the three Beagle Channel islands to Chile. British failure to negotiate, they say, will require maintaining high levels of military strength and will leave Alfonsin vulnerable to leftist criticism. It will also cause greater Argentine dependence on nonaligned and Soviet-bloc countries for demonstrations of support in international contests of strength such as votes at the U.N. General Assembly.

Beyond the territorial questions, Alfonsin has moved quickly to end the country's previous role as an international pariah. In a matter of months the new president has been trans- formed into arguably the most important democratic leader in Latin America. The new

government has strongly endorsed the efforts of the Contadora group of Latin American countries seeking a negotiated end to the fighting in Central America, and Alfonsin has

expressed his concern over turning the region into a superpower battlefield when most of Latin America's troubles are social and economic.

In the southern cone of South America, in

particular, Argentina under Alfonsin has

gained a prestige and influence that eluded both Per6n and the generals. In shaking off its authoritarian past Argentina has upstaged its traditional geopolitical rival Brazil, with its troubled experiment in "guided democracy." But Argentina's democratization has also prompted regional military leaders to close ranks. Paradoxically, Alfonsin's efforts to make Argentina's military pay for their crimes may make the generals in already democratic countries think twice about coups while inhib- iting officers in power from restoring civilian rule.

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Alfonsin's victory might also reorient Ar- gentina's stance on nuclear questions. Argenti- na's nuclear energy pre-eminence in Latin America has been a source of special nationalistic pride while frightening its hemispheric neighbors. Yet Buenos Aires's refusal to sign the nuclear test ban treaty or ratify the treaty of Tlatelolco, which bans the development or use of atomic weapons in Latin America, must be understood in the context of Argentine history. In this remotely situated country, dominated for so long by messianic national- ists who often virtually monopolized the mass media, several articles of faith have sprung up, never to be seriously challenged. Nuclear power is one. The Alfonsin government has

already transferred the atomic program out of

military hands and plans to cut by 30 per cent its $800-million budget. Some Radicals support ratifying the Tlatelolco pact but point out that without help on questions such as the debt and the Falkland Islands, accepting the treaty would constitute political hara-kiri. One solution, Argentine officials suggest, would be to put forth another accord that does not go into effect until it is ratified by all the countries in the region. This plan, they say, will help put the spotlight on another Tlatelol- co nonparticipant: Cuba.

Avoiding Default The biggest problem facing the new gov-

ernment is economic. The more than $43 billion in foreign debt bequeathed by the

generals is the third largest total in the devel-

oping world. In 1984 Argentina must pay or reschedule roughly $20 billion of this debt: $14 billion in capital repayments; $4-5 billion in interest; and the remaining overdue repayments from 1982 and 1983. Alfonsin must

satisfy his international creditors enough to preserve access to credit markets while provid- ing the economic development needed to avert social unrest and to buttress democracy.

The Radicals argue that traditional recessionary measures such as those normally advo- cated by the International Monetary Fund (IMF) are neither relevant to nor politically feasible for Argentina. Argentine officials argue that Argentina's debt, which under mili-

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tary rule went from $8 billion to more than $40 billion in an economy whose total GNP is estimated at $70 billion, was contracted by an illegitimate government that did not use the money for growth. In fact, the GNP in 1982 was 2.5 per cent lower than in 1974, the country's historical high point.

Where the money went is still a matter of bitter dispute. Most reliable studies show that much of it went to sustain the artificially overvalued exchange rate and high interest rates that attracted speculative capital. Mili- tary purchases alone between 1976 and 1981 are variously pegged at between $9 billion and $11 billion. Nearly all of the remainder can be traced to luxury imports, foreign tourism, subsidies for royalty payments, profit remis- sion by foreign companies operating in Argen- tina, and official corruption.

The lending brought about no improve- ment in real capital formation, growth, unemployment, real wages, or ability to repay- facts that Argentine officials assert put their country in a special class of debtors. More- over, international bankers privately agree with Argentine charges that competition between the banks for syndication of petrodol- lars, not sound investment criteria, motivated much lending to the generals.

Despite their investment errors foreign bankers in Argentina angrily reject Argentine suggestions that intransigence about repayment will hurt the government. The bankers say they will give Argentina until June 30 to put its financial house in order by signing a letter of intent with the IMF before they decide whether to shut down the country's vital imports entirely. The bankers point out that since October 1983 Argentina has de- ferred payment on the debt. Privately they complain that Argentina has taken advantage of a 180-day unilateral moratorium on payments both to find out what its real debt figures are and to build reserves that allegedly dipped below $200 million as the military left office. Some fear that Alfonsin may be prepar- ing to run the economy on a cash-and-carry basis while pushing the banks for a better agreement.

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my minister, Bernardo Grinspun, has revised projected reductions of the fiscal deficit from last year's 14 per cent of GNP to 9 per cent, rather than the initially hoped for 4 per cent. The 27th occupant of his position in the last 25 years, Grinspun hopes to curb interest rates, stimulate industrial production, cut defense spending, and crack down on tax evasion, which is estimated at half of all monies due to the state, or 15 per cent of GNP. In January the government ordered sweeping 40-day price controls covering consumer prices on many essential foodstuffs and other goods.

Grinspun is criticized in some quarters for

being almost totally absorbed with foreign debt at the expense of other pressing issues such as the budget, which was promised for January but only took shape in early May. Grinspun's defenders, however, note that when he took office there were no accurate data on the size of the debt and who held it, or on the size of the fiscal deficit. Grinspun is hampered by pledges by Alfonsin that workers' wages will not be sacrificed in Argentina's drive for economic recovery. Moreover, while reductions in the military budget will be much smaller than originally anticipated, the

government has undertaken a national feeding program for children, expanded public hous-

ing, and approved small increases in the real

wage. In a country historically proud of its

ability to feed even its poor, malnutrition and related diseases are fast becoming widespread. Some ultranationalists, pointing to the country's self-sufficiency in food and energy and strong trade links to the Eastern bloc, have

begun to urge Alfonsin to turn his back on the IMF. The government, however, says it plans to meet its international obligations--even if not at the rate the banks would wish.

The opening skirmish with the banks came in late March, when a 5-minutes-to-midnight rescue package was hammered out between Argentina, its overseas creditor banks, the United States, and four Latin American neighbors, which allowed Argentina to avoid defaulting on part of its foreign debt. The agreement, in which the Latin countries guar- anteed $300 million of $500 million for payment of overdue interest owed by Argentina,

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resembled a Mexican stand-off. On one hand, Argentina appeared to accept what most ob- servers considered inevitable and pledged to reach an austerity accord with the IMF. For-

eign bankers appear relieved by the participa- tion of Brazil, Colombia, Mexico, and Venezu- ela in the package, saying that their presence greatly diminishes the possibility that Argen- tina will repudiate its obligations and that Third World debtors will form a cartel.

Some fear that Alfonsin may ... run the economy on a cash-and-

carry basis while pushing the banks for a better agreement.

Argentine officials, on the other hand, say the agreement is a watershed in debt renegoti- ation. They point out that the accord high- lights the overriding importance of social and

political concerns in negotiations between Third World governments and their foreign creditors, which have traditionally focused exclusively on business considerations. The Alfonsin government also points to the singu- lar display of Latin American unity and the

easy terms set by the banks for repayment of the loan as portents of future opportunities in the debt renegotiations.

Although Argentina's identity rests heavily on its industrial capacity, it is its bountiful

agricultural sector that will pay, as it has many times in the past, for the economic mistakes of its rulers. Despite massive indus- trialization efforts, agriculture still contrib- utes more than 80 per cent of exports and 12 per cent of GNP. In 1983, when the country most needed it, Argentine grain farmers post- ed a record harvest of nearly 40 million tons. In 1984 nearly all the predicted $3.5-billion trade surplus will come from farm products, with $3 billion of that figure earmarked by the government for foreign debt payments.

The rural sector, however, is not without its problems. In the 1930s Argentina was the world's primary grain exporter, accounting for 25 per cent of the wheat, 65 per cent of the corn, and 38 per cent of the meat traded

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worldwide. In the aftermath of World War II, however, Per6n's industrial program, vigorous U.S. promotion of farm exports, and the European Community's Common Agricultur- al Policy reduced the aforementioned trade. The percentages were 4, 12, and 13 by the mid- 1970s. Argentine farmers complain about high taxes, nonexistent export incentives, and an enormous, inefficient state sector that saps strength from the economy. The government recently announced a multimillion-dollar fer- tilizer credit program designed to increase

yields. Aid to agriculture, however, is not

politically popular, especially as it is associated with the return of the country to an essentially pastoral economy. More important, critics also warn that a massive shift of resources away from industry will bring runaway un-

employment. Alfonsin still faces serious political prob-

lems as well. In particular, the Radicals may have badly overextended themselves while moving quickly to consolidate their election

victory. In March the Peronist-dominated Senate shot down a Radical bill to "democratize" labor, which would have challenged the country's powerful labor chieftains. Such a

step is still widely considered essential for the survival of Argentine democracy. But even

though Alfonsin ran strongly in working-class districts, where he attacked the bosses' record of corruption, connivance with the military, and thuggery, and even though the established union leadership suffered a string of defeats in union elections at the hands of more represen- tative younger Peronists and pro-Alfonsin factions, the Peronists were able to unite to defeat what they saw as a fundamental challenge.

Ironically, before the labor reform struggle the Peronists, who range from neo-Nazi Right to far Left, appeared on the verge of breaking up. Although they achieved a plurality in the Senate and a substantial number of provincial governorships, the shock of losing their abso- lute hegemony among the workers and their aura of electoral invincibility set the normally contentious factions at one anothers' throats. Many Peronists themselves agreed in the postelectoral bloodletting with much of Alfon-

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sin's critique of the party: It was neither responsible nor serious and contained ele- ments that no one could control. Despite the 6 million votes they garnered in the election, it is unclear whether Per6n's heirs will be able to pull together in time to contest effectively the 1985 congressional by-elections.

Making Argentina Democratic

A major overhaul of U.S. policy is needed to cope with Argentina's transformation. The emergence of the new Argentina under Alfon- sin has few parallels in the recent history of nations. Argentina has joined the community of Western countries in its most fundamental sense. For that radical realignment to take root permanently, however, the United States must show a heretofore unusual understanding of the intrinsic differences between the two countries, as well as Argentina's special needs. Enshrined wisdom about U.S. national security requirements in the hemisphere and U.S. foreign economic policy in particular will have to be thoroughly reviewed.

Relations between the Reagan administration and the new government began inauspi- ciously, to say the least. Alfonsin, a veteran human rights activist, remembers with grati- tude and not a little longing the human rights policy of President Jimmy Carter. For Alfon- sin, the Carter policy saved lives and allowed democratic forces that survived to fight another day. He has bitterly assailed the Reagan administration's Latin America policy, especially its emphasis on "quiet diplomacy" on rights questions with hard-line anticommunist allies in Argentina, Chile, and Uruguay. And like many of his compatriots, Alfonsin watched with growing dismay as the Reagan administration quickly warmed to the Argen- tine military, partly out of anticommunist kinship and partly out of strategic considerations. At a time when the secret war in Central America was still secret, the promise that Argentine military surrogates would en- force the administration's hard line in the region was the stuff of policymakers' fantasies come true. The vision faded only when the Argentine military turned its attention to a more popular theater: the Falkland Islands.

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Alfonsin, meanwhile, has strongly criticized what he sees as an excessive American reliance on military solutions in Central America.

U.S.-Argentine ties have also been strained by what Radical party leaders perceived as a pro-Peronist U.S. tilt in the 1983 election. A number of U.S. diplomats, notably Deputy Chief of Mission John Bushnell, told reporters and others that the Peronists, dominated by conservative labor bosses and traditionally the voice of the working class, would be a bulwark

against communism in the southern cone. Moreover, new U.S. Ambassador Frank Ortiz was appointed in part because of his long-time contacts with the Peronists.

Back-channel U.S.-Argentine military contacts, which continued up to Alfonsin's inau-

guration, as well as the unsolicited lifting of a 1978 ban on U.S. arms sales, were interpreted in Argentina as continued connivance with the outgoing generals. Ortiz, however, has now ordered all embassy contacts with the

Argentine military cleared with civilian diplomats.

And the new government appears more than willing to forget past mistakes in an effort to reach an understanding with the "colossus of the north." Alfonsin's far-reach-

ing attempts to democratize Argentine life merit U.S. support for reasons of continental security alone. The outcome of such reforms, however, depends heavily on the amount of further economic hardship that Alfonsin will be forced to inflict upon the populace by austerity programs. That is where the United States can and must be most helpful. At the same time, Washington should abjure heavy- handed efforts to bring Argentina in lock step with U.S. foreign policies. While the experi- ences of the last decade have given Argentina a will for democracy not unlike America's, they have given Argentines some very different demons: militarism, national security doc- trines, dogmatic free-market competition. The example of Mexico, whose leaders are allowed a certain foreign-policy latitude while insur- ing domestic peace and responsible institu- tional rule, is instructive.

The Alfonsin government must soon show substantial progress on the Falkland Islands

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negotiations with Great Britain. The issue takes on added importance as the country's economy deteriorates. For democracy to work it has to mean something more than mere sacrifice. The U.S. government should be

using its special relationship with Great Brit- ain to make a stubborn British government aware of the intrinsically destabilizing effect of the "Fortress Falklands" policy, as well as the difficult position it causes the United States when Great Britain maintains on the Western Hemisphere's continental shelf what is essentially a colonial anachronism.

The Alfonsin government is likely to move slowly on the nuclear issue. But the Radicals have shown greater sensitivity to world opin- ion and the desirability of international safe-

guards to prevent the production of nuclear

weapons. Further progress on the issue is inextricably linked to continued civilian rule.

Alfonsin's recent decision to award the Nicaraguan Sandinistas $48 million in credits and aid was viewed with open displeasure by the Reagan administration. The Alfonsin government, however, while sharing none of the Sandinistas' Marxist orientation, is known to be concerned about the domination of the U.S.-supported rebels by members of the late dictator Anastasio Somoza Debayle's National Guard. The Radicals also believe that they can

compete with Cuba for influence in Nicaragua and maximize contacts for a peaceful resolution to the regional conflict. Should the Rea- gan administration decide to opt for serious

negotiations, or should the Democrats win in November, Argentina could serve as an im-

portant broker. Access to Argentina's good offices could be jeopardized by heavy-handed and shortsighted U.S. efforts to restrict Ar- gentine-Nicaraguan economic ties.

Argentina's debt crisis, like those of the rest of the countries of the continent, must be explicitly recognized by the United States as a problem laden with national security implica- tions. As such the debt crisis is too important to be left in the hands of private bankers alone. Current refinancing schemes have left countries such as Argentina on an eternal treadmill of repayment, in which capital desperately needed to reactivate their domestic economies

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FOREIGN POLICY

is tied up in paying off needlessly high interest rates-rates the banks have not been above

raising, despite the current liquidity crisis. A number of worthwhile proposals deserv-

ing serious study have been made for con-

fronting the current crisis. It is likely that the banks, once freed from orthodox constraints

by a sympathetic U.S. government, will have to give the debtors more time to repay princi- pal and interest charges. One intriguing idea is to link cuts in the interest rate to austerity measures taken on by the debtor countries. Another is to guarantee interest rates for selected developing countries at a rate slightly higher than the current U.S. interest rate. Since U.S. rates seem ready to take off again, a fixed rate could save Buenos Aires hundreds of millions of dollars. One promising structur- al innovation would be to create a new international bank, supported by the industrial

powers, that would provide developing countries with long-term loans at greatly reduced interest rates.

Growing U.S.-as well as West Europe- an-protectionism must be reconsidered because it prevents Argentina, and other countries, from boosting exports and thus paying their debts. The U.S. Congress and the Reagan administration should also reconsider cutbacks in funds to multilateral lending institutions, which can begin channeling more devel-

opment assistance to needy sectors of Argen- tine society. Friendly warnings to the new

Argentine government by U.S. officials about the necessity of budget cuts must also be

tempered by the realization that high interest rates in the United States, caused largely by America's financial habits, contribute to the

problems that the new government is strug- gling to resolve.

These trade, aid, and financial concessions will exact costs in the West, especially for banks and for workers whose products compete with Argentine goods. But if these measures will help strengthen democracy in Ar- gentina, the price is well worth paying.

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Dateline Argentina: Hello, Democracy

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