opposition provided good evidence of their reviv-
ing strength when, in elections for provincial gov-
ernors, they won most of them while Alfonsín’s
Radical Party only just retained a majority in the
Chamber of Deputies. The economy continued to
deteriorate, and the army was growing restless,
though attempted coups by rebellious elements of
the military were easily defeated by loyal comman-
ders. Inflation was close to 200 per cent in 1988
and reached 600 per cent in 1989; the hardships
this caused were a gift to the Peronists. Their
choice for presidential candidate in May 1989 was
an unusual one, the charismatic 59-year-old
Carlos Saul Menem. Alfonsín had lost the will to
govern and transferred the presidency to Menem
(who had won the election) prematurely in July.
Menem began with a drastic austerity pro-
gramme, but by the end of the year Argentina was
suffering even worse inflation. The president
attempted, in a Peronist spirit, to build agreements
between state employers and trade unionists, with
the blessing of the Church. Amnesties granted to
those members of the military convicted of
human-rights offences, including three of the
imprisoned junta, were also intended to reconcile
the army. The breakdown of Menem’s marital rela-
tions, his wife claiming she had been locked out of
the presidential palace, added an element of colour
to Argentina’s chaotic domestic situation.
In October 1990 Menem issued decrees curb-
ing the right of the Peronist-dominated trade
unions to strike, a move that created a split among
his supporters. Two months later, the restiveness
of the military led to an attempted coup, and to
pacify the armed forces Menem pardoned the
high-ranking officers responsible for torture and
murder during the ‘dirty war’. His reputation ulti-
mately, though, would depend not only on
whether he could dismantle the Peronist corporate
state, with its featherbedding, its swollen bureau-
cracy and its uncompetitive state enterprises, but
also on whether inflation could be kept under con-
trol in the long term. He made a determined start
in 1991 to privatise state industries and turn
Argentina into a deregulated market economy.
Hyperinflation was curbed, the international
bankers were delighted and overlooked the risks.
The price of modernisation and reform was high
unemployment, but by 1997 the Argentine econ-
omy seemed to be in robust growth as trade liber-
alisation, privatisation and foreign investment
fuelled production. It all went horribly wrong.
The Argentine peso had been pegged to the
dollar on a one-to-one basis during the decade of
the 1990s and Argentinians had enthusiastically
changed their pesos into US dollar greenbacks.
Rising foreign and international debts, the world
economic slow down and unbalanced budgets,
brought about a spectacular crash when the
International Monetary Fund would not rescue
the currency. In December 2001 devaluation fol-
lowed and Argentina defaulted on its debts. The
dollar peg was unsustainable. The banks closed
their doors. The economy descended into barter,
angry Argentinians demanded that they be
allowed to draw on their savings now frozen by
decree. Rioting in Buenos Aires forced President
Fernando de la Rua to resign in January 2002.
Congress appointed a caretaker president who was
then followed by Eduardo Duhaldo. It was the
worst financial crisis in Argentina’s history with
consequences reminiscent of the Great Depression
of 1929. This time not only the poor but the mid-
dle classes were venting their anger. Argentina’s
default on its debts closed help from the Inter-
national Monetary Fund. Remarkably, democratic
institutions did not collapse and bring the army to
power. After a year of chaos Eduardo Duhaldo’s
interim government succeeded in creating a sem-
blance of stability once more. The future, how-
ever, in this once wealthiest of Latin American
countries remains clouded by the continuing
financial crisis and weak political leadership. More
than half the people live in dire poverty and one in
five are unemployed. A new surge of protest and
unrest has only been avoided by governemnt
financial handouts. The International Monetary
Fund is in negotiation with the government to
find a way forward.UruguayA contrast to a large and powerful country is the
small state of Uruguay. Uruguay had for a long
time enjoyed a tradition of comparatively free and