Summary

1. Summary • “Elites” are not always unified. Argentina a good example of this: • Conflicts within elites  producing shifts in policies  exclusions of groups  instability • History of Argentina shows this constant tension within elites: • During most 1800s: conflict between Unitarians and Federalists • Unitarians in Capital: Pro-free trade, pro-nationalization of Port revenues • Federalists in Bs. Aires: Pro-free trade, anti nationalization of Port Rev. • Federalists in far provinces: Anti-free trade, pro-nationalization of Port rev. • Examples: • Rosas govt. (1830s) Pro Federalist-Nationalist-Landowners • Sarmiento govt. (1860s) Pro Unitarians-Liberal-Elites in Capital.

2. Summary • During 1900s, consolidation of three parties • Radical Party (moderate party) supported by • Middle class (mostly from Buenos Aires) • Old aristocracy from far provinces • New “rich” that did not have access to power. • Leftist parties. Workers parties. Weak and no well-organized. • By the 1940s emerged the Peronist Party, supported by: • Working class • New Industrialists • Factions of the Military • By mid 1960s, the main political actors were the Radical Party, the Peronist party, (supported by diff. Elites and social actors) and the military.

3. Exclusion: A mechanism of doing politics • Since 1940s, Argentina’s main characteristic is the exclusion of some sector from government. Exclusion = Repression • Peron (1946-1955) -- Exclusion of Landlords and foreign investors • Inclusion of workers and Industrialists • Manipulation of the military • Outcome: 1955 Military coup • 1956 – 83 Period of Instability • 1956-58 Military regime – Exclusion of Peronists • 1958-62 Frondizi –Exclusion of Industrialists/Peronists • 1962-63 Military coup – Exclusion of Peronists • 1966-73 Military regime –Exclusion of political parties/ Peronists • 1976-83 Military regime. Exclusion of Peronists (30,000 disappeared) • Inclusion of foreign investors • Inclusion of technocrats

4. The Re-Establishment of Democracy1983-2001 • Three periods: • Raul Alfonsin (1983-1989) Radical Party • Supported by middle class, Buenos Aires • Carlos Menem (1989-1994 and re-election 1994-1999) • Originally supported by Peronist party (workers, provinces in the interior and business elite) • Fernando De la Rua (1999-2005) Radical party-FREPASO • Originally supported by middle class and workers.

5. Contemporary ArgentinaAlfonsin Period (1983-1989) • The main challenges: • (a) Justice: human rights violations during the previous regime • Commission for truth and justice • Trials against military officers. Imprisonment of top-generals • Reaction: low-ranking officers’ rebellions • (b) Economic stability • Solving macroeconomic problems • High inflation (343% in 1983) • High fiscal deficit (-12.7%) • Between 1983-1989 the government applied an heterodox policy: • Reduction of fiscal deficit (from -12.7 to -0.5%)--Cut spending • Attempt to change labor rights to increase foreign investment and no increase in workers’ wages --Led to workers’ strikes (Peronists) • Government attempted to tax export sector--exporters rejected this measure.

6. Alfonsin government(1983-1989) • By 1989, Alfonsin was isolated: • The military rejected human rights trials • Exporters rejected tax reforms • Workers (led by the Peronist party) rejected frozen wages and changes in labor rights. • Foreign investors did not observe a “welcoming” environment for investment. • Thus, by 1989: • Serious inflation crisis (3,079% a year) • Serious real wages reduction (-14.4 in relation to 1983) • No economic growth. No production of goods, scarcity of goods, inflation spiral. • Carlos Menem won 1989 presidential elections promising work, and growth. Alfonsin left power six months ahead of schedule.

7. The Menem Era.1989-1994 and 1994-1999 • Menem is Peronist. Thus, he was supported by Peronist’s traditional constituency: • Workers (they wanted labor rights to be respected) • Industrialists (they wanted promotion of local business) • Political and social sectors from far provinces (they wanted more budget) • Menem promised such reforms. • But once in power, major shift in Menem’s policies. Menem promoted different policies from what he promised • (a) Pardons to military officers involved in human rights abuses • (b ) Privatization of major state companies (to obtain revenues) • (c) Reduction of the state apparatus (from 347,000 to 200,000) • (d) Lower labor costs--meaning reducing labor rights (to attract foreign investors) • (e) Increasing income taxes (to obtain revenues)

8. The Menem Era.1989-1994 and 1994-1999 • In other words, Menem built a new different coalition. Now, his main supporters were: • The Military. (Menem did not face more military protests) • Foreign creditors and investors (Menem negotiated good conditions for new lending and investment) • Some big industrialists. (they could buy state companies) • Exporters (Menem favored traditional raw-material exporters by opening the economy (beef, wheat, bean, etc.) • The losers of this shift were: • Workers. They lost rights • The middle class. They have to pay more taxes • Local small industrialists. They have to compete against foreign products • Question: Why did Menem remain in power after such a significant policy shift? (Actually Menem was re-elected!)

9. Explaining Menem’s “Success” • If important social actors reject Menem’s policy, Why did Menem successfully implemented these reforms? • (a) Support from abroad • (b) Co-optation of workers’ unions and major political actors • (c ) Social Control • (d) Macroeconomic stability. The fear of “hyper-inflation” • But, by 1998 several scandals affected Menem government: • (a) Corruption scandals in the police and government • (b) Workers were discontent with Menem’s policies • (c ) The opposition (Radical + FREPASO) a serious alternative • (What is FREPASO?)

10. The “Alianza” victory and challengesDe La Rua (1999-2005) • De la Rua (“I am a boring but serious”). Alianza’s programmatic goals underlined: anti-corruption and solving social problems. • Alianza supported by: • Middle Class (the most affected sector with Menem’s reforms) • Discontent workers • Discontent local industrialists • Discontent public opinion with Menem’s scandals • International investors and lenders who wanted “clean rule of the game” • The Alianza faced several challenges: • (a) High level of foreign debt • (b) International economic recession (less investment) • (c ) Need to reform a system of corruption (police, judiciary) • (d) High workers’ expectations • (e) High middle class’ expectations

11. Today: Argentina in Crisis • The government has not solved previous challenges and it is actually suffering a deep crisis. Why? • Corruption issue • Strong opposition in Congress (controlled by the Peronist party) to have reforms. The issue split the government (FREPASO wanted more substantive changes than Radical party) • Strong police’s opposition to make changes (the govt. need the police) • Economic Policies • Government need to attract investment and lenders. IMF imposed ‘conditions’ (Read Fischer) • Crucial condition: reduction of state deficit • Reduction of state deficit=reduction state budget (increase tuition, fire employees) • This produces (a) split in the government (FREPASO) and (b) strong workers (peronists) and students opposition

12. Summary • How can we understand instability? • Coalition Politics --> considering alliances and interests different groups have. • Elites are not always “unified” • Divisions within elites can produce instability • Argentina illustrates how difficult is for political authorities to achieve a balance between social demands and economics needs