$Unique_ID{COW00171} $Pretitle{273} $Title{Argentina Chapter 4E. The Politics of Democratic Restoration} $Subtitle{} $Author{Craig H. Robinson} $Affiliation{HQ, Department of the Army} $Subject{military government alfonsin economic political parties announced percent cgt elections} $Date{1987} $Log{} Country: Argentina Book: Argentina, A Country Study Author: Craig H. Robinson Affiliation: HQ, Department of the Army Date: 1987 Chapter 4E. The Politics of Democratic Restoration The End of Military Rule In March 1976, when the armed forces deposed Isabel de Peron, the move was supported by almost the entire upper class, large sectors of the middle and lower classes, and even some Peronist leaders. With inflation running at some 450 percent and guerrillas fighting each other in the streets, most felt that the country was in complete chaos. Only the military seemed capable of extricating the country from the crisis (see The Peronist Restoration, 1973 -76, ch. 1). The military established an institutional government in which the commanders of the three services collectively served as the head of government, choosing the president and filling the entire state apparatus with military officers. Videla was named president (see The Military in Power, ch. 1). The military established two goals for its government-the eradication of "terrorism" and the restoration of economic stability. To accomplish its first goal, Videla's government directed the military and police forces to win the civil war, placing no restrictions on how that was to be accomplished. Victory was achieved after three years of limited open fighting and a stream of kidnappings, "disappearances," bombings, and killings that brought a total breakdown of due process for those suspected of being connected with the guerrillas. By June 1978 the guerrillas were all but eliminated, and the military declared victory. By 1980 the last vestiges of the terrorist groups had died out, and the disappearances had stopped. The Videla government was initially supported in its efforts by an apparent majority of the population. Most of the political parties welcomed the end of the political violence and economic chaos that had threatened their lives and livelihoods in 1975 and 1976. Many business and financial leaders participated as advisers to the government, as did some prominent individuals from the more conservative political parties. A second line of "critical supporters" included sectors of the major agricultural and industrial groups, major newspapers such as La Prensa and La Nacion, and the hierarchy of the Roman Catholic Church. Participation by civilians was not limited to the right, however. In 1979 a government intelligence study revealed that 52 percent of the country's 1,679 sitting mayors were what it described as "political activists." Of these, it identified about 33 percent as members of the UCR and over 20 percent as members of the PJ. Despite the concern abroad, concern for human rights inside the country remained a minor sideshow, confined to small groups and to the several hundred relatives of the disappeared who marched each Thursday in the Plaza de Mayo in downtown Buenos Aires. The Videla government placed Minister of Economy Martinez de Hoz in charge of restoring economic stability. He sought to do this by opening the highly protected economy to foreign competition, reducing state intervention in the marketplace, and transferring most state production activities to the private sector. His policies seemed to work in the short run. Foreign reserves jumped from US$20 million in 1976 to US$10 billion by mid-1980. Farm output also grew, paced by a 52-percent rise in wheat production during the 1978-79 season over the previous harvest. Despite the apparent economic success and the victory over the guerrillas, the military was divided over its future course. As early as 1978 the air force commander proposed that a process leading to a return to civilian rule be initiated. The military became divided into hard-liners and moderates. The hard-liners wanted to continue the high level of repression they called "an ideological war of national purification." The moderates, including Videla and the army commander, Viola, wanted to reach an agreement with civilian political and social forces. A third group, led by Admiral Emilio Massera, sought to forge an alliance with the more conservative elements among the Peronists. While the military leaders debated their future course, the political parties were unable to agree on a common strategy to push for elections. In April 1979 an ideologically diverse group of political parties issued a statement calling for unrestricted political activity and elections. The Radicals, preferring to seek a separate pact with the military, refused to participate. In August several parties issued statements critical of the government's economic policy and calling for elections, but the MID, although agreeing to call for changes in economic policy, refused to join the call for elections, and the Radicals refused to participate at all. The economy worsened during the 1979 and a large number of domestic industrial firms declared bankruptcy. A chorus of protests against Martinez de Hoz from wide sectors of the population failed to cause the government to alter its policies. At the end of 1979 Videla announced that the government was ready to begin laying the foundation for the creation of a democratic government although, no schedule was set nor a mechanism announced for the process. In March 1980 he announced that consultations to discuss the basis of a new political system with party leaders would soon begin. However, the onset of a new financial crisis interrupted the process, for several major banks collapsed following a large number of bankruptcies. In June 1980 Ricardo Balbin, leader of the UCR, indicated that the UCR was not prepared to discuss a transition to civilian rule while the country was in economic crisis. In August, however, several small, center-left parties demanded an immediate return to civilian rule. Videla responded in September 1980 by prohibiting all party gatherings. In the meantime, economic conditions worsened, and by mid-1981 the country was in a deep economic recession. Videla retired in March 1981, and the army commander, General Viola was selected by the junta to replace him. The choice, however, was not unanimous; although the army and the airforce supported him, the navy voted against him. The navy, firm supporters of Martinez de Hoz economic policies, distrusted Viola. The SRA and the UIA urgently requested relief from the financial plight of their members and the chaotic state of the exchange and finance markets. A package of economic measures was announced on March 31. Its most important feature was a 23-percent currency devaluation, which effectively dismantled the central instrument-an overvalued peso-of Martinez de Hoz economic policy. In addition, Viola offered to include critics from the SRA and the UIA in his cabinet and to include party leaders in discussions on the political transition. His moderation and his apparent desire to talk to the political parties were welcomed by human rights organizations but earned him the distrust of many officers, particularly his successor as army commander, General Leopoldo Galtieri, who publicly warned Viola not to seek popularity by dissociating himself from direct responsibility for the repression of the guerrillas and who criticized Viola's attempts to reach an understanding with the civilian politicians. The navy command, in contrast, seemed to support Viola by issuing a statement indicating its view that a time limit should be set on the military's exercise of governing power. In the midst of the political uncertainty, the financial crisis continued. There were three major runs on the peso between Viola's inauguration and June 1981. As firms went bankrupt and as unemployment rose, 1.5 million workers staged general strikes in June and again in July. Meanwhile, Viola called for resumption of the political dialogue begun by Videla on an orderly transition to civilian government. However, the UCR and the PJ resisted entering into any agreement without a guarantee of policy concessions, ministerial positions-and, ultimately, elections. Neither would agree to a political system based on indefinite military control. In July the UCR called for the development of a common platform by the major parties and toward that end formed a group known as the Multipartidaria (Multiparty Commission), together with the PJ, the PI, the Christian Democrats, and the MID. The Multipartidaria, however, did not demand immediate elections. Rather, it demanded that the government establish a definite timetable for the transition to civilian rule. Clearly unprepared for elections at that point, the Multipartidaria indicated that an appropriate timetable would be three to four years. It called on the government to promulgate a new statute for political parties and an electoral law under which parties would compete. The agreement among the parties did not extend beyond a demand for a return to civilian rule, for they failed to agree on a set of economic policies that would restore high employment and economic growth while ensuring political stability. The establishment of the Multipartidaria was widely seen as an attempt by the civilian politicians to support Viola against the hard-line officers who were coalescing behind Galtieri. In return for this support, the Multipartidaria expected to play a role in the choice of Viola's successor when his term expired in 1984. In November 1981 the government issued an outline of a new political party law, requesting comments from all parties before February 1982 in order to allow preparation of a final draft in June. The law envisioned a gradual transition, beginning with local elections, but no date was set. That same month, however, the junta announced that Viola had temporarily resigned "for reasons of health." The following month it was announced that Galtieri would serve the remainder of Viola's presidential term. The Galtieri coup marked a sidetracking of the political liberalization and a return to the monetarist economic policies of Martinez de Hoz. Galtieri appointed a cabinet that included many conservatives who had supported the policies of Martinez de Hoz under Videla. To deal with the worsening economic crises, Minister of Economy Roberto T. Alemann froze public sector wages, affecting some 1.6 million workers, and issued a plan to sell off parts of the military industrial complex, the state banking system, and the oil and gas sector in an attempt to cut the budget deficit. The policy succeeded in reducing inflation but deepened the recession. Politically, Galtieri continued the liberalization at a slower pace and tried to create a political force that might carry him and the conservatives he represented to elected office in 1984. Toward that end a number of civilians were appointed to provincial governorships. The draft law on parties forbade the questioning of the armed force's role in the 1976-79 repression and prohibited public meetings. Finally, the decision was made to try to rally support for Galtieri's future presidential candidacy by reviving an old navy plan to retake the Falkland/Malvinas Islands from Britain. This move assumed that Britain would protest but do nothing, that the United States would remain neutral, and that the Soviet Union would veto any strong action in the United Nations (UN) Security Council. On January 1, 1982, the formal decision was made to invade sometime between August and September 1982. Plans for the invasion were worked out during the first months of 1982 (see The South Atlantic War and Its Aftermath, ch. 1). In February and March 1982, as the economic recession deepened and unemployment rose to about 15 percent, social tension mounted. Organized labor took to the streets in protest, and the parties spoke out against the military. The timetable for the invasion was moved up and began on April 2. The move had the desired effect. The leaders of the Multipartidaria went to the Casa Rosada (the presidential palace) to congratulate Galtieri personally on his reaffirmation of sovereignty over the islands. The PJ, the UCR, the PI, the PSP, and the PCA all praised the move, and many of their leaders attended the ceremony at which General Mario Benjamin Menendez was sworn in as governor of the islands. After the reoccupation of the islands by British troops in June 1982, Galtieri's project collapsed. The army refused to support his desire to continue the war, and he resigned on June 17, 1982. But the military could not agree on its next step with respect to the political process. The army wished to continue the gradual liberalization, the air force preferred a rapid reopening, and the navy favored continued military rule. With the junta deadlocked, the army unilaterally appointed retired General Reynaldo B. Bignone as president. Neither the air force nor the navy would support him and withdrew from the junta, leaving the government in the hands of the army with a clear mandate to return power to an elected civilian successor by March 1984. Bignone appointed a cabinet with only one military minister and lifted restrictions on the parties. As the second half of 1982 began, however, the country faced a huge payment on its foreign debt of US$40 billion by the end of the year and entered into negotiations with the IMF. The government announced a policy of multiple exchange rates, firm price controls, and financial reform. Inflation continued unabated, however. Banks saw one-third of their deposits disappear by the beginning of 1983, for their monthly rate of interest was 10 percent lower than the 15 percent monthly rate of inflation. Inflation in 1982 reached some 209 percent. In July the government suspended payment on both the interest and the principal on its foreign debt and called for a rescheduling. Drastic wage cuts gave rise to strikes and demonstrations, culminating in general strikes in December 1982 and March 1983. The Multipartidaria called for the prompt initiation of a phased plan for national elections and a Nationalist-expansionist-oriented economic policy that included tariff protection for industry, lower interest rates, liberalized credit, and substantial real wage increases. Internally, the military agreed on four lines of action: a political retreat to allow elections, the transfer of government to the parties winning a majority, a reforging of the cohesion of the armed forces shattered in the wake of the South Atlantic War, and a substantial increase in the military capability of all three services. The junta was reestablished in September 1982. The military established as conditions for the return to civilian rule that the parties would have to agree not to pursue investigations of corruption, economic mismanagement, human rights abuses, or the conduct of the war. All parties would also have to agree to new laws regulating elections and union organization and would have to guarantee the jurisdiction of the armed forces over all investigations of military conduct. In an attempt to prevent investigations by civilian courts, the military declared in April 1983 that all military actions during the "dirty war" were carried out in the line of duty on orders from the high command. In March 1983 it was announced that elections would be held on October 30, with the transfer of power scheduled for January 10, 1984. As the campaign got under way, the Peronists were divided, but the Radicals quickly settled on Alfonsin as their nominee (see Political Parties, this ch.). Alfonsin based his campaign on an attack of the military and the unions, accusing the Peronists of forming an electoral pact with the former at the behest of the latter. There was little difference, however, between Alfonsin's proposed economic policy and that of Italo Luder of the Peronist PJ. Both proposed reducing inflation and unemployment by expanding the economy and renegotiating the foreign debt. Both also emphasized their commitment to a mixed economy with an expanded role for the state in economic planning. When the military decreed a law giving itself amnesty in September, both Luder and Alfonsin vowed to repeal it. The Radical Government of Raul Alfonsin Raul Alfonsin of the UCR won the 1983 elections with 52 percent of the popular vote; Italo Luder of the PJ received about 42 percent. It appeared that Alfonsin benefited from a strong anti-Peronist sentiment, especially among voters in the more populous provinces around Buenos Aires. In particular, many voters were thought to have been frightened by Herminio Iglesias, the PJ candidate for vice president, who threatened violence against members of the UCR at a PJ rally on national television during the closing days of the campaign. The election, however, was not a clean sweep for the UCR. Although it emerged from the elections with a majority of the 254 deputies (129 for the UCR, 111 for the PJ, three for the PI, one for the PDC, and 10 divided among other parties), it did not receive a majority of the 46 senators (18 for the UCR, 21 for the PJ, one for the MID, and six divided among three provincial parties). Nevertheless, Alfonsin and the UCR gave every indication that they interpreted the results as a clear mandate to transform the political system by destroying the political power of both the military and the unions. In keeping with tradition, Alfonsin made no overtures to the other parties in the days leading up to his inauguration on December 10, 1983. Once in office, he named a cabinet composed of individuals who had been associated with him for years as personal advisers. Most of his appointees were veterans of his Renovation and Change faction within the UCR. His one concession to party unity was the naming of Antonio Troccoli, a leader of the National Line faction, as minister of interior. Alfonsin's initial policy program called for a number of changes in the political system as well as a program for dealing with the economic crisis. He announced that his government would make the military subordinate to civilian authority and would reduce its role in the economy. He further announced that he would reduce the role of organized labor in the political system, in particular by weakening labor leaders whom he accused of having collaborated with the military governments. Finally, he promised to reactivate the economy by channeling investment capital into industry and by renegotiating the foreign debt. Days after taking office, Alfonsin moved to restrict the power of the military (see The Organization of the Armed Forces, ch. 5). He reached down into the officer corps to appoint relatively junior officers to the highest- ranking positions in all three services, forcing the retirement of 25 army generals, 12 admirals, and 12 air force brigadier generals. In addition, he proposed military reforms that altered the command structure and gave the minister of defense control over military promotions, the details of military policy, troop deployment, and the military industrial complex. He quickly disciplined any officers who commented on these moves publicly. Junior officers seemed to feel that the traditional political involvement of the armed forces had seriously harmed its fighting ability during the South Atlantic War. In early 1984 he announced further changes, cutting the defense budget from 5 percent of gross national product (GNP- See Glossary) to 2.7 percent. Some members of the UCR proposed cutting the size of the army by half. In February 1984 Alfonsin appointed civilian directors over the General Directorate of Military Manufacturers, the main holding company for the many industrial firms controlled by the military. Before taking office he had sought agreement from the military to transfer the nonmilitary factories that the armed forces had acquired over the years to civilian ownership but had encountered fierce resistance. This interim step, however, was accepted. The question of military responsibility for the "disappeared" (desaparecidos-those killed in the dirty war), however, proved troublesome. On December 13, 1983, Alfonsin issued a decree ordering the prosecution of nine former members of the military juntas for offenses allegedly committed in the 1976-79 dirty war against terrorism. Seven leaders of various guerrilla factions of the period were also indicted (see The War Against Subversion, ch. 5). During the 1983 electoral campaign, Alfonsin drew a distinction between the armed forces as an institution, which he defended, and those individual members of the armed forces who were responsible for violating human rights. He also made a distinction between the top officials who had given the commands and set the apparatus for human rights violations, those who had exceeded their authority in carrying out their orders, and those who merely obeyed orders. He had pledged to bring indictments against only the first two categories. At its first meeting the new Congress annulled the amnesty law decreed by the Bignone military government, and Alfonsin announced that the members of the three juntas that governed between 1976 and 1982 would be indicated by the Supreme Council of the Armed Forces. Only the Bignone-led junta was exempted. Alfonsin asked the armed forces to form a council of retired officers who had served on active duty prior to 1976 and charged them to investigate and court martial personnel who had exceeded their authority during the dirty war. In addition, a law passed by Congress at Alfonsin's request in January 1984 enabled the results of the trial conducted by the Supreme Council to be reviewed by the Supreme Court. Human rights groups and the public at large objected vociferously to this procedure, charging that the military could not be trusted to try its own officers. To allay the criticism, Alfonsin appointed a 12-member commission that was to determine what had happened to the desaparecidos. Chaired by novelist Ernesto Sabato, the commission took testimony from 5,792 witnesses over nine months before submitting its 50,000-page report to the president in September 1984. The report documented the "disappearance" of 8,961 people, many of them tortured in 340 secret prisons. It named 1,300 police and military personnel who had participated directly in the repression, most of whom were still on active duty. This procedure was rejected by most of the human rights groups that had protested the repression. The Permanent Assembly for Human Rights, the Mothers of the Plaza de Mayo and the Center for Legal and Social Studies, in particular, opposed the trials by military courts. They also demanded a congressional investigation in place of the Sabato Commission. After losing the congressional vote on the law that laid down the procedures for trying the members of the military juntas in January 1984, they filed some 50 civil cases against military personnel in relation to the disappearances. The most celebrated case was against General Bignone, who had been spared prosecution by Alfonsin, who argued that Bignone had directed the return to civilian rule. Nevertheless, Bignone was indicted and arrested in a privately initiated case for covering up the disappearances of two communist draftees under his command while he headed a military college in 1976. In August 1984 human rights organizations submitted a list of 896 officers, many of junior rank, who they claimed were involved in crimes during the dirty war. Alfonsin had sought to limit the investigations as much as possible, but this proved impossible under the pressure of the human rights organizations and the uncharacteristic independence of the judiciary. In September, when the Supreme Council of the Armed Forces announced that its investigation found nothing objectionable in the orders and decrees of the military and that the military had only defended the nation against its enemies, Alfonsin's policy was in a shambles. The council's recalcitrance left him no choice but to begin prosecution in the federal courts, albeit slowly, of the service commanders who were members of the juntas. Lawyers for the accused officers appealed to the Supreme Court, arguing that the civilian courts had no jurisdiction in the cases, but the appeal was rejected in December 1984. As the trials got under way, the chief judge in the cases announced that the officers would be tried under new legal procedures that were designed especially for these cases. The trials were open to the public, evidence would be taken verbally instead of in writing, and the normal rules of evidence were suspended to allow the judges greater leeway (see The War Against Subversion, ch. 5). The trials were expected to proceed throughout 1985. Upon taking office, Alfonsin also moved against the Peronist leadership of the unions. In February 1984 he proposed legislation requiring that all unions hold elections for new officers under the auspices of the courts. Any union regulations that established seniority requirements for holding union office would be void, and the winners of the elections would serve three-year terms. Immediate reelection would be permitted once, after which individuals would have to sit out for a full term before again becoming eligible for reelection. The proposed law also provided for a system of proportional representation on all union councils and commissions, which would award 33 percent of the seats to any minority in the elections that received at least 25 percent of the vote. Alfonsin's proposal had two objectives: first, to end the tenure of individuals who had been appointed by the military government to head the unions and, second, to undermine the incumbent leadership in the Peronist unions, most of whom had been elected to their positions before 1976. This would have severely weakened the union leadership in control of the PJ and thereby might have potentially strengthened the more moderate elements within the party. Alfonsin rushed the bill through the Chamber of Deputies, but it ran into opposition in the Senate. The PJ opposed the bill, as did several senators from small, local parties. Despite Alfonsin's arguments that the bill was nothing more than a democratic reform, many senators feared it was a middle-class attempt to destroy the unions. A few unions preempted the bill by staging their own elections without government supervision. The Peronist leadership was defeated in each election. Overall, however, the bill had the opposite effect from the one intended. In response to the threat to their positions, the leadership of the CGT factions joined forces to lobby against the bill in the Senate, where it was defeated by a narrow margin in March 1984. Stung by this defeat, Alfonsin fired his minister of labor and social security and called for national unity talks with the opposition parties. After March 1984 he emphasized unity in a series of speeches throughout the country, urging businessmen and labor leaders to join in a system of informal consultation with the government in which all groups would be consulted on policies that might affect them. In return, he asked that the opposition temper its criticisms. The CGT denounced Alfonsin's initiative, claiming that he wanted to divide the union leadership and seduce the rank and file. In May, Alfonsin met with Isabel de Peron, titular head of the PJ, in an attempt to enlist her support for the talks. After a brief stay in the country, however, she again departed for Spain. Labor leaders did participate in talks concerning wage and price issues throughout 1984, and there were relatively few days of national labor protest. Simultaneously, however, the labor leadership began a campaign of harassment with a series of short, local strikes in mid-1984. The CGT demanded that the government return control of the union social services funds, which had been confiscated by the military, but Alfonsin refused, insisting that the unions join business groups and the government in talks on a new "social pact" on wages and prices. The CGT refused to join the talks and demanded that Alfonsin form a coalition government with the PJ. Alfonsin refused, and the impasse lasted until August, when talks between the government and the CGT began under the auspices of the Catholic church. Because the government continued to refuse official recognition and the return of the social services funds, the CGT called a general strike in September 1984. Millions of CGT members ignored the strike call, however, severely weakening the position of the labor leadership. In January 1985 it finally agreed to continue talks over economic policy. Alfonsin's problems with labor were exacerbated by the steadily deteriorating state of the economy (see Growth and Structure of the Economy, ch. 3). During the 1983 election campaign, he had defined three objectives for his economic program: to reduce inflation, then running at an annual rate of some 950 percent; to reactivate the economy; and to improve real income. This was to be accomplished by cutting public spending and the budget deficit while increasing wages and reactivating the economy. Alfonsin declared a state of economic emergency upon taking office. Controls were placed on prices and interest rates, and wage adjustments were indexed at 2 percent above the rate of inflation. In return for easier credit policies, the UIA, the SRA, and the major business groups agreed not to pass along these wage increases to consumers. Inflation increased through 1984, however, and wage indexing was discontinued in March. Already in technical default on its US$45 billion foreign debt, the government again entered into negotiations with the IMF, seeking approval of its economic policy, as required by its creditors before they would refinance the country's debt. Negotiations broke down in June 1984 when the IMF team asked the government to institute a 20-percent decrease in real wages and limit the budget deficit to 9 percent of GDP. The government refused, proposing a 6- to 8-percent wage increase and a budget deficit of 12.5 percent. Alfonsin appealed directly to the IMF directors in June 1984 but failed to gain their support. He was then forced to negotiate an agreement based on the original IMF proposals. In December 1984 an agreement was reached under which the country received US$1.7 billion from the IMF, US$4.2 billion in new loans from commercial banks, and the rescheduling of US$14 billion. In return, the country agreed to pay its creditors US$850 million in overdue interest payments, US$500 million of which was supplied as a bridge loan from the United States government and US$100 million supplied by other Latin American countries. The deal reached with the IMF caused a sudden hardening of opposition to the government. The PJ turned to obstructionist tactics in Congress, refusing to attend the sessions at which Minister of Economy Bernardo Grinspun explained the scope of the agreement. The CGT announced that "the workers are not willing to pay the external debt." Disagreement also emerged within the government as the president of the Central Bank of the Argentine Republic, Adolfo Canitrot, advocated "flexibility" and "giving in little by little" to soften the social impact of the commitments made. In January 1985 the government announced a new economic strategy that was designed primarily to lower inflation-then running at some 776 percent annually-and to pay the foreign debt. The plan envisioned no real wage increases for 1985. The IMF, however, refused to release the first disbursement of its funds until the government implemented further austerity measures. In March Alfonsin replaced his minister of economy, appointing Juan Sourrouille in his place. The new minister announced that future wage increases would be held to 90 percent of inflation. The IMF objected, however, to even this level of wage increases and still refused to release its funds. In the midst of these difficulties, rumors surfaced that Alfonsin was thinking of resigning and that a move was afoot to overthrow Alfonsin and replace him with Vice President Victor Martinez. In the meantime, Sourrouille resisted the implementation of a strongly recessionary economic program, insisting that the gradualist approach be continued. Talks among business, labor, and the government on a "socio-economic pact," however, broke down in April. MID leader Frondizi then issued a statement warning that anarchy was already reigning in the country, specifically mentioning the rapidly deteriorating economic situation and the continuing trial of the leaders of the military juntas. Former president Ongania echoed these criticisms, sparking a flurry of rumors about a military coup. On April 23 the CGT announced a series of labor demonstrations to protest declining wages, beginning on May 30, in several interior provinces that were to culminate with a general strike on May 23. In response to the uncertain situation, Alfonsin addressed the nation on television, warning of "traitors" whom he accused of planning a coup and summoning the opposition parties to a "rally in defense of democracy" in the Plaza de Mayo. The representatives of 14 political parties signed a Document in Defense of Democracy on April 25 to pledge their support for the constitutional government. Most of the major political organizations participated in the rally the following day. Notable by their absence, however, was the leadership of the CGT and the Odeon faction of the PJ. In his address Alfonsin announced that he was putting the economy on a "war footing" by increasing taxes, transferring many state firms to private ownership, and substantially reducing public spending. These moves were designed to decrease the budget deficit and thereby reduce inflation. The CGT proceeded with its planned protests, but the indications were that many of the union rank-and-file did not support the actions. In addition, counterrallies held by the MAS succeeded in drawing larger crowds than the CGT rallies in some cities. The CGT campaign was also opposed by the Rio Hondo faction of the PJ, which while calling for a change in economic policy joined the UCR to discuss the possibility of creating a new multiparty group "in defense of democracy" and urged the resumption of talks between the government and the CGT leadership. As the CGT campaign continued, however, prominent members of the PJ's Odeon faction, particularly Saul Ubaldini, called on the government either to change its economic policy or to resign. The 12-hour general strike, marked by the largest antigovernment demonstrations since Alfonsin's inauguration, took place on May 23. The CGT failed, however, to completely shut down the country; trains and buses still functioned. Alfonsin quickly regained the initiative, announcing that the government had uncovered the existence of a heavily armed group of right-wing terrorists on June 1 (see The Ministry of Interior and Internal Security, ch. 5). He recognized the CGT as the "most representative" labor group and finally returned the unions' social welfare funds to the organization on June 6. The talks between labor, business, and the government reconvened soon afterward. On June 14 the government announced sweeping economic austerity measures, which Alfonsin said were necessary for the survival of democracy. The program included an indefinite freeze on wages, prices, and public sector tariffs, the introduction of a new currency unit (the austral), and a commitment that the government would no longer print money to cover its budget deficit. The CGT initially opposed the plan, as did the leaders of most opposition parties. Indications that the public as a whole supported the plan, however, led most leaders, including the CGT leadership, to express qualified support for it in subsequent weeks. Politically, Alfonsin staked his government on the plan's success. The congressional elections scheduled for October 1985 were expected to express the public's verdict, whether in favor of the program or opposed to it. In the meantime, however, indications were that Alfonsin had again managed to steal the initiative from his opponents, who would be blamed for opposing the plan if it did not work, while he would get the credit if it did.