During the election campaign de la Rúa made it clear he would continue Menem's economic policies: austerity measures, pegging the peso to the U.S. dollar, and undermining union rights in the name of "labor reform." De la Rúa's victory pleased Wall Street and local capitalists.

At the same time, de la Rúa's promises of jobs and fighting the corruption associated with the Menem regime have raised the hopes of many working people, hit hard by a recession. Many voted for him as a lesser- evil candidate. "I'm praying that de la Rúa will not be a liar like all the rest of the politicians here," said Alejandra Domínguez, an unemployed garment worker in Buenos Aires, as she came out of the polls. De la Rúa's Alliance for Work, Justice and Education is a coalition of his Radical Civic Union (UCR), the oldest traditional bourgeois party, and the Front for a Country in Solidarity (FREPASO) — social democrats and former Peronists who parted ways with Menem.

Menem's bourgeois nationalist Justicialist Party has played a dominant role in Argentina since it was founded by Juan Perón after World War II. Perón ruled at a time when workers organized powerful industrial unions and wrested substantial concessions from imperialism and native capitalists, including an expansion of the social wage, women's suffrage, and the nationalization of rail and other industries.

Since then the labor movement has been politically tied to the Peronists, despite the party's role as defender of the interests of the native bourgeoisie.  
 

Ten years of Menem

Menem's predecessor, Radical president Raúl Alfonsín, had presided over a period of hyperinflation that destroyed workers' living standards. Menem, elected in 1989, shed traditional Peronist policies, aligning his government closely with Washington and loyally following the prescriptions of imperialist financial institutions.

The Menem government ended hyperinflation by tying the peso to the U.S. dollar — a policy known as "convertibility" that has led to relatively stable but brutally high prices for consumer goods. Today the dollar is used as a unit of account for virtually all except the most immediate transactions. Some 60 percent of bank deposits and almost all savings accounts, mortgages, and leases are denominated in dollars. Some voices in business circles have even called for "dollarization," that is, declaring the dollar the official currency.

Conducting a massive fire sale, Menem sold off most state-owned companies to capitalists — including telecommunications, oil, utilities, provincial banks, and the post office. The result was a greater concentration of wealth among the rich, on one hand, and large-scale layoffs and speedup for workers on the other.

The government has driven to cut workers' social wage and pass "labor reform" laws designed to make it easier for bosses to fire workers, hire temporary employees, and gut union contracts.

Meanwhile, the country is in the grip of a deep and long recession for the second time in four years. The economy is likely to shrink by 3.5 percent this year. Unemployment is officially 14.5 percent — in a country with no unemployment insurance. Workers' paychecks are running out much earlier in the month than even last year. The number of homeless workers in Buenos Aires has tripled in the last two years.

Argentina is being devastated by the worldwide deflationary crisis. The bulk of its exports are agricultural commodities, whose prices have plummeted over the past two years on the world markets. The country has been shaken by the international financial crises in Russia and Brazil.

Brazil's 40 percent devaluation of its currency in January has undermined Argentina's exports, especially in auto manufacturing, where production has dropped to half of last year's levels. Brazil is its largest export market.

At the same time, Argentina's debt to foreign capitalists has doubled from 1990 to almost $150 billion — five and a half times Argentina's export earnings. Interest payments to the bankers are now 15 percent of the national budget, up from 5 percent when Menem took office.

These deteriorating conditions have prompted labor resistance. Public employees in the northern province of Tucumán took to the streets in August to demand back pay. Riot police attacked them with tear gas and rubber bullets, leaving two dozen wounded. In September, truckers went on an eight-day strike to demand the abolition of a 1.5 percent vehicle tax and relief from steep fuel prices and tolls.

The economic and social crisis has tarnished Menem's image, fueling corruption scandals in the government, especially the judiciary and police. At least 10 of Menem's top advisers have been fired or are under indictment for corruption charges, mostly stemming from privatization kickbacks.  
 

Why de la Rúa won

De la Rúa capitalized on the corruption issue to win votes. He pledged to crack down on tax evasion by the rich to fund social programs. At the same time he promised continuity in basic economic policies. The Peronists were divided by a power struggle between Menem, who wanted to run for a third term but was barred by the constitution, and presidential candidate Duhalde, governor of Buenos Aires province. Duhalde presented himself as to the left of both Menem and the Alliance. His promise of pension increases and talk of a moratorium on Argentina's huge foreign debt got an icy response from Wall Street.

Besides losing the presidency and their majority in the lower house of Congress, the Peronists lost control of many provinces long considered their strongholds. But they held onto the governorship of Buenos Aires province and the majority in the Senate. This means both parties will share governmental responsibility.

A third presidential candidate, Domingo Cavallo, former finance minister and architect of Menem's economic plan in the early 1990s, won 10 percent of the votes.

After his victory, de la Rúa, who takes office December 10, wasted no time in reassuring foreign investors. He called on Menem to impose a freeze on social spending during his remaining days in office. The likely appointee as economy minister, José Luis Machinea, has floated calls for steep austerity measures in the name of slashing the budget deficit. One of de la Rúa's slogans is, "Debts are paid and honored, not debated."

In foreign policy, de la Rúa has proposed a slight shift away from Menem's close public alignment with Washington. He has said the Argentine government will no longer contribute troops to U.S.-led "multinational" military operations, as it had under Menem in the Balkans, Haiti, and Cyprus.

But he has made it clear Buenos Aires will not stray far from its masters in Washington. After getting a phone call from the White House, de la Rúa said, "I told President Clinton we would work together for peace and against drug trafficking."  
 
 
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