Postmodern Argentina

Duhalde: Interim president hints at return to the discredited Peronist economic past.

January 03, 2002

ON APPEARANCES, Argentina has repudiated its free market reforms of the past decade in nostalgia for pure Peronism.

This may endear the regime to the workers initially, but not for long after it alienates world lenders and investors.

Eduardo Duhalde, failed candidate for president in 1999, is the fifth president in two weeks, thanks to his fellow Peronists in Congress and his own pledge not to seek election in 2003.

Mr. Duhalde is an unreconstructed adherent of the economics of Juan and Eva Peron from the 1940s on. As governor of Buenos Aires in the 1990s, he distributed housing and food and nearly doubled public employment while going $2.2 billion in the red.

His first act as president, yesterday, was to dismiss the reforms brought in by former President Carlos Menem for bankrupting and destroying Argentina. Mr. Duhalde was Mr. Menem's vice president from 1989 to 1991.

He hinted at an end to the peso's peg to the U.S. dollar, and a devaluation of reportedly up to 40 percent, and at defaulting on some $132 billion in debt. Although some see a return to protectionism, he spoke favorably of the Mercosur common market and the goal of American free trade.

How Mr. Duhalde can attract investment or reassure the International Monetary Fund remains to be seen. The biggest losers from debt repudiation and business failure would be Spain's large banks. If Argentina's malaise spreads to Spain, it appears to spare its biggest customer, Brazil, which devalued when Argentina did not, protecting its own employment.

Argentina's biggest peril is social unrest, which helped install Mr. Duhalde. Although that might presage a military return to power, Argentina's army appears to have learned its lesson from its discredited past dictatorship, and to want no such thing.

The outside world must wish Mr. Duhalde well, however inauspicious his start. He promised an economic model that will make Argentina strong and Argentines secure. All he has to do is deliver.

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