ECONOMY-ARGENTINA: No More ‘Stability at Any Cost’

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Mar 9 1998 (IPS) - Argentinians, who less than a decade ago were struggling under the burden of four-digit hyperinflation, are no longer willing to accept price stability at any cost. According to a survey released Monday, a majority want social problems to be given top priority.

The study, carried out by a local polling firm, Sofres Ibope, in Argentina’s biggest cities, indicated that 52.2 percent of those interviewed believed it was necessary to “provide a solution to the social problems as soon as possible, even if that means renouncing economic stability.”

For the first time since inflation was tamed in 1991, the leading demand of Argentinians is that priority be given to social matters, especially unemployment.

“That does not mean people do not value stability, just that they no longer accept the extortion of putting up with anything in exchange for it,” said the president of Sofres Ibope, Enrique Zuleta.

After the 1980s, characterised by annual inflation rates of around 2,800 percent, price stability became one of the most cherished aims of Argentinians at all socioeconomic levels, including the poorest, who were hit hard by the constantly rising prices of basic goods.

Stability, achieved under Economy Minister Domingo Cavallo – an outspoken opponent of the government today – was the main political capital of the administration of Carlos Menem, and a decisive factor in his reelection in 1995.

The dizzyingly fast fall of inflation led to a boom in consumer credit. With the reappearance of mortgages, housing became more accessible, and rents dropped. People once again were able to budget and plan.

But the ranks of the unemployed swelled. The unemployment rate soared to a record 18.4 percent in 1995. Although it has dropped since then, experts in labour affairs say the fall has not been due to economic growth, but rather a result of government programmes providing temporary jobs.

After an initial rise in the equitability of income distribution due to price stability, unemployment once again concentrated wealth in an increasingly small proportion of families, and led to a loss of income among the poor and the middle class.

The first sign of change was seen in the October 1997 legislative elections, the first national elections that the governing Justice Party had lost in 10 years. Voters, who realised that Cavallo’s resignation in 1996 did not alter stability, dared to vote for other options.

A new opposition Alliance, whose platform was based on concern for social problems and the fight against corruption, won the elections, and has become a serious contender for the 1999 presidential elections, according to the latest opinion polls.

The leaders of the opposition Alliance say stability “is now everyone’s birthright,” and that the economy is functioning “on automatic pilot.”

Price stability “at any cost” was only accepted by 24.2 percent of those interviewed by Sofres Ibope, while 52.5 percent said no to the deal. Twenty-three percent marked no response.

A 63.8 percent majority marked unemployment as the most pressing social problem, followed by corruption (9.8 percent) and lack of safety (6.2 percent).

With respect to the overall situation in Argentina, 66.2 percent said they thought it was bad or very bad, while only 8.4 percent said it was good or very good. The government also got a bad grade: 44 percent described it as bad or very bad, and 31.4 percent as average. Menem’s economic policy was considered bad or very bad by 49.8 percent, and 30.1 percent described it as average.

The privatisation of public companies, another dogma in the early 1990s when state companies were a symbol of inefficiency, has also begun to be questioned. Forty-four percent of those polled said they wanted the Alliance to win in 1999 and review the privatisations, which according to a majority of consumers were carried out with the aim of creating monopolies with scarce state control.

The survey underlined that this was the first time since 1989 – when Menem first took office – that demands for the privatisation process to be reviewed exceeded support for the private administration of the companies.

Lastly, 82.5 percent of those surveyed said they were not in favour of a constitutional amendment that would allow Menem to run for a third term. A group of governing party leaders are trying to put the proposal for a second consecutive reelection of Menem on this year’s political agenda, with a view to the 1999 presidential elections.