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Argentina: Troubled Nation

Argentina's fifth president in two weeks took office amid protests. Two experts discuss the challenges he and his country face in the months ahead.

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  • RAY SUAREZ:

    At noon in Buenos Aires today, Eduardo Duhalde slipped on the presidential sash with the blue and white colors of Argentina, pledging to resuscitate his country's worst economy in a generation.

    At the inaugural, Duhalde hailed legendary nationalists Juan and Eva Peron, promising an end to what he called "immoral" free- market policies; policies often endorsed by Washington.

  • PRESIDENT EDUARDO DUHALDE (Translated):

    I promise from today to put an end to the failed system that has brought desperation to a huge majority of our people. Argentina is broke. Argentina is struggling. This model destroyed everything. The essence of the model culminated with convertibility; meaning the peso pegged to dollar. This created two million unemployed, destroyed the middle classes, bankrupted our industries, and pulverized our workforce.

  • RAY SUAREZ:

    A member of the Peronist party, a populist, Duhalde is a trade protectionist and a proponent of new government protections for Argentine industries. He's a former vice president and governor, and is now his country's fifth president in 14 days.

    Duhalde inherits a country reeling from more than two weeks of violent protests. Argentines furious at government belt-tightening policies, including a cap on bank withdrawals, clashed with police in several cities. Crowds also looted grocery stores. Today, 18 percent of the workers are jobless; four in ten are considered poor. On December 20, the public cheered when Fernando de la Rua resigned, and his helicopter left the presidential palace.

    To succeed de la Rua, a member of the Centrist Party, lawmakers chose Adolfo Rodriguez Saa of the opposition Peronists. But his economic ideas were unpopular, too, and he quit after ten days. Under the constitution, the job went automatically to Senate leader Ramon Puerta, who resigned after a few minutes on Sunday.

    The next man in succession, senior lawmaker Eduardo Camano, was in and out in three days. The revolving door then brought in Eduardo Duhalde. He's to serve out the remaining years in the de la Rua presidency. That means, barring another political crisis, Duhalde will be president until the end of 2003.

  • RAY SUAREZ:

    For more, we turn to Peter Hakim, president of the Inter-American Dialogue, a non profit Latin America research group; and Miguel Diaz, director of the South America Project at the Center for Strategic and International Studies.

    Well, we just got a sense of the who as far as the five presidents, most recently at the Casa Rosata. But Peter Hakim, why has the presidency moved like a hot potato between these men's hands?

  • PETER HAKIM:

    Well, I think that we can exaggerate this a little bit. We talk about five presidents, five pictures were flashed up on the screen. But two of those people were basically, had the role of supervising the transfer of power so really we had one president resign, a president take over who lasted one week, was not up to the task and now we have a president that hopefully will last for a couple of years. To talk about five presidents is an exaggeration not –.

  • RAY SUAREZ:

    Even three makes headlines in most countries.

  • PETER HAKIM:

    It certainly does, and it's certainly a chaotic situation in Argentina, I don't want to underestimate it either. And this is the worst crisis that Argentina has had since the military left office back in 1983, and it's not only that Argentina has been sort of rudderless in terms of leadership.

    It is now penniless and bankrupt as the new president, President Duhalde made very clear in his opening address. I must admit that I think he is probably the best person that Argentina has to lead the country out of this chaos at this point. He was the Peronist candidate for president. He lost to the former President de la Rua; he recently won election to the senate in a very convincing victory.

    His capacity to mobilize support for his own candidacy for presidency now was very, very impressive. I mean it showed he knows how to work the Argentine political system to galvanize the support he needed. His speech when he was given the presidential sash was a model of honesty, openness. He made it very clear Argentina was bankrupt, it had no money to pay its bills and that this was going to be sacrificed into the future.

    I think that this was all good news for Argentina that we're sort of hearing it straight from an Argentine government.

  • RAY SUAREZ:

    Miguel Diaz, does Duhalde need to stick around for a while in order for the crisis to cool down a bit?

  • MIGUEL DIAZ:

    He does and I hope the Argentine public gives him the time to prove himself. I think the alternatives are pretty grim. You do have the possibility that if this government fails, considering the facts that it's a coalition government that could you have military intervention again in Argentina.

    The middle classes who are leading the charge for this change of government cannot stand for the kind of chaos and protest and killing that we've seen in Argentina over the last couple of weeks so the stakes are pretty high that this government thrive and survive the current crisis. I happen to agree with Peter that Duhalde is the best candidate for that particular task.

    He has a lot of political respect across the political divide that is Argentina today. He is extremely well connected to Washington, which his immediate predecessor wasn't. And so I do think and I share Peter's view that this is good news for Argentina that Duhalde is in charge.

    PETER HAKIM; Let me say one thing though. I think to sort of look to the military as a possible outcome I think is wrong at this point. There is no more discredited institution in Argentina worse than the politicians has been the discrediting of the army over time. I don't think they are a real contender for power. I think that is a real advance for Argentina.

  • MIGUEL DIAZ:

    It is an advance for Argentina, the military loss a lot of credibility after they held government last time around in the 80s because of the human right violations because they entered the country into the war because of their poor management of the economy.

    But one thing that the middle class would be abhor more than the economic chaos that is griping Argentina at the moment is political and violence — street violence. And I think there will be no other choice but for the military to intervene if you have the kind of killings that we've witnessed in Argentina over the last couple of weeks.

  • RAY SUAREZ:

    To look at Miguel's point a bit further, Peter Hakim. If desperation grows, if people find that they can't withdraw their own money in their bank accounts, if small business people can't get loans to buy the things from other countries that they sell in their businesses, could the military even if it is as you suggested discredited institution, look like an alternative?

  • PETER HAKIM:

    I can't imagine the military being an alternative at this point. Like I said, this would set back Argentina it, would set back Latin America. It violates a whole set of agreements among the countries of Latin America jointly with the United States to protect democratic institutions.

    I think Duhalde will make it as president. If he doesn't make it, they're going to have to find another civilian leader to take over. They need a process.

    No Latin American country has turned to the military in a quarter of a century – realize that — that for 25 years the last coup in Latin America in which the military took power was in 1976 and it was in Argentina incidentally. I just don't think it's an alternative today.

  • MIGUEL DIAZ:

    You had a coup in Ecuador just a couple of years ago when you had similar — .

  • PETER HAKIM:

    But very quickly a civilian vice president was put into office.

  • RAY SUAREZ:

    Okay. Well let's keep the military in the barracks for the moment and talk about the choices that face the new leadership in Argentina. If Duhalde makes some of the tough choices that economists are saying he has to make, can he keep his job in a democracy?

  • MIGUEL DIAZ:

    Well, it's a tough call. And again, I reiterate I think Chavez needs and requires the patient of the Argentine public to make the kind of economic transition that the country needs to undertake. The old economic model to the — and by that I mean convertibility – is unworkable.

  • RAY SUAREZ:

    And by convertibility you mean?

  • MIGUEL DIAZ:

    The tying of the peso to the dollar in a one to one basis. All odds are that, odds favor that this government will move away from that toward devaluation. And if they are able to manage that transition, I think they will be able to see some light at the end of the tunnel..

  • RAY SUAREZ:

    Why is there reluctance to do that? Who gets hurt by that?

  • MIGUEL DIAZ:

    Well, the reluctance to do that is because of a history of hyperinflation in Argentina. Argentina – for good reasons – are very fearful of a return to the years of the 70s and 80's where you have 5,000 percent inflation a year and more. So there is political as well as just personal fears that Argentina might return to those days.

  • PETER HAKIM:

    Let me say that Argentina is in for some very hard times. They are incredibly difficult decisions Duhalde has to make. He has to cut public expenditures, which probably means firing people from the payrolls in a country that already has close to 20 percent unemployed.

    It means cutting wages in a country that has seen a recession for four years. It means finding agreement with the International Monetary Fund whether Argentineans like it or not. It means finding an agreement with the United States. Duhalde's position depends on support from the politicians across the political spectrum. If he can maintain that support, if they are really willing to take responsibility from what has to be done, Argentina will come out of this.

    The problem is there are a lot of very ambitious people, a. lot of people looking to the next election but it seems to me that this is just a very difficult time, Argentines know it's a difficult time. It with be helpful will the United States stepped a little more up to the bat and was engaged a little more and showed some greater support for Argentina at the stage.

  • RAY SUAREZ:

    Miguel, is that very likely given the tone of the new president's speech sort of repudiating the free market, the global transparency and that you will that Argentina has experienced?

  • MIGUEL DIAZ:

    I wouldn't worry too much about the recent rhetoric coming out of Argentina. It, you have to, really mind and pay attention to what Duhalde proposes as opposed to what he says. He will come out with a plan on Friday, an economic plan that hopefully will stand for itself. I do agree with Peter that the U.S. could take a more active role in supporting Argentina.

  • RAY SUAREZ:

    When you say role, what does that mean?

  • MIGUEL DIAZ:

    For example the intent is to devalue I think the US could play a very supportive roll to assure that the devaluation is a controlled devaluation. Again, the fear of the Argentines is that once you devalue you will lose control of the process. If the US could apportion some kind of support — even verbal support — to make sure that that doesn't happen I think it will be a humongous amount of good for Argentina.

  • PETER HAKIM:

    Can I tell you what my plan would be?

  • RAY SUAREZ:

    Very briefly…

  • PETER HAKIM:

    President Bush ought to state very publicly that he praises Argentina for its commitment to democracy; it's strong advocate for integration, economic integration in the hemisphere; it's been a good ally.

    The United States is willing to back Argentina if it takes the necessary economic measures itself. Bush should begin speaking or Bush and his team ought to given speaking with the IMF, the World Bank, the European countries, the Inter-American Development Bank, beginning to put together a package that will help Argentina recovery.

  • RAY SUAREZ:

    Peter Hakim, Miguel Diaz, thank you both.