TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/061289/06128900.009

Text File | 1990-09-22 | 6KB | 101 lines

BUSINESS, Page 47

The Fall and Fall of Argentina

Amid hyperinflation and hunger, a nation drifts into chaos


    The crowd began to gather silently last Monday afternoon on
the streets adjoining the Boerio Supermarket in Rosario,
Argentina's third-largest city. The tin-roofed grocery store had
served its middle-class neighborhood for years, so manager Luis
Nicastro recognized many of the well-dressed people outside the
store as his regular customers. Some of the others were toothless,
hungry folk in tattered clothes, who came from nearby shantytowns.
By 2 p.m., a mob of more than 500 filled the parking lot. "I
thought of closing the doors," Nicastro says. "But what good would
it do? With all this glass, there was nothing we could do but let
them in."

    The crowd held back while a group of 40 hungry women and
children rushed into the Boerio and grabbed as much milk, flour and
sugar as they could carry. As they fled, the ransacking began in
earnest. Young, strapping men armed with crowbars knocked
spaghetti, oranges and hunks of meat onto the floor as they rushed
to scoop up groceries. Others carted off boxes of laundry
detergent, frozen foods and toilet paper into their Peugots, Volvos
and even waiting taxis. Within 20 minutes they had destroyed the
bakery at the rear of the store, smashed out the windows and broken
open the cash registers. As the looters left, one of them, laughing
hilariously, asked Nicastro, "What time do you open tomorrow?"

    After years of tottering on the brink of economic crisis,
Argentina started sliding into chaos last week. In food riots that
erupted in Rosario, Cordoba, Buenos Aires and other major cities,
more than 2,000 people were arrested and at least 15 killed. The
primary trigger: hyperinflationary price increases that have left
even middle-class citizens unable to afford food and other
necessities. Inflation for the month of May reached 75%, and is
accelerating at a pace that would amount to more than 80,000% for
the year. Said David Feldman, news director of Radio Rosario: "It's
not just hunger. People are crazed. There is extreme tension here."

    The upheaval began two weeks ago, with isolated outbreaks of
looting in several provincial capitals. Widespread food riots broke
out in Rosario (pop. 957,000) early last week, after lame-duck
President Raul Alfonsin announced his fourth emergency economic
plan of the year. Roving crowds, described by police as a mixture
of the hungry, the criminal and the opportunistic, overwhelmed
poorly prepared local police. Stores not gutted by looters closed
their doors, creating widespread food shortages. The unrest then
spread to the volatile working-class suburbs of Buenos Aires.

    Alfonsin responded by declaring a 30-day state of siege, which
entitles police to detain suspected looters without charging them.
The President, following the lead of provincial leaders, also
ordered the creation of hundreds of soup kitchens and the free
distribution of food. Some measure of order was restored after four
days, but many citizens were calling for Alfonsin, whose Radical
Civic Union party was convincingly defeated by Peronist Carlos Saul
Menem in May 14 elections, to step down before his term ends on
Dec. 10. When the two men met last week, however, they apparently
agreed that an early transition would suit neither one. Alfonsin
wants a normal, democratic transfer of power -- Argentina's first
since 1928 -- while Menem and his sharply divided party realize
they have no comprehensive plan for stitching together the
shattered economy.

    The country's eruption was the second such outburst to hit
debt-stricken Latin America this year. In February and March more
than 300 people died in Venezuela during protests against an
austerity program aimed at bringing down a foreign debt of $30
billion. Argentina, which has a $60 billion external debt, has made
no payments since April 1988.

    The economy, desultory even in the best of times, is now
virtually shut down. Automobile, tire and auto-parts production
have come to a stop. Ranchers have halted delivery of cattle
because they are being paid with uncashable checks. The government
cannot print money fast enough, so a severe cash shortage has
prompted bank closings. Because the austral has lost 90% of its
value since February, most people try to conduct their business in
U.S. dollars, although it is now illegal to do so. According to
private estimates, what is left of the economy runs on $500 million
worth of austral notes and $5 billion in U.S. currency.

    Food riots in a country considered to be one of the world's
breadbaskets amounted to a devastating indictment of the Alfonsin
government, which failed to act quickly enough to put Argentina's
fiscal house back in order in 1983, when Alfonsin became the first
civilian President in nearly eight years. The former human-rights
activist valued political stability at the expense of wrenching but
necessary economic changes to correct the country's low
productivity, over-regulation, bloated public payroll and
money-losing state-owned companies. By the time Alfonsin began
pushing for economic reforms in 1985, his popularity had eroded,
and the Peronist-controlled Congress was able to block his moves.

    Now Argentinians have turned their eyes to Menem. But since
the President-elect has yet to define a concrete economic plan, the
situation seems bound to deteriorate further. Even Argentina's
generals, who have never been shy about staging coups before,
appear reluctant to intervene for fear of saddling themselves with
the blame for economic ruin. "We are in a process of decline,''
says Federico Zorraquin, president of the Banco Commercial del
Norte. "No one knows where it will end."