Last Sunday's elections were strong evidence that democracy is
taking root in Argentina. Most striking about the elections was how
unremarkable they were. This in a country that had not in recent
memory witnessed the transfer of power from one elected
administration to another, until Raul Alfonsin turned the presidency
over to Carlos Menem in 1989.
The elections were fully free and fair. Opposition candidate
Fernando de la Rua, the mayor of Buenos Aires, won handily and will
take office without protest or fanfare.
The majority of Argentines now agree on the political rules and
share a common outlook on economic issues. This is good news for
Argentina's future, though politically and economically there is
much progress yet to be made.
The past decade produced Argentina's best economic performance
since World War II. It has grown by about 5 percent a year since
1991, nearly double the average for the rest of Latin America. Out
of 20 Latin American countries, only Chile did better. Inflation in
Argentina has been the lowest in the region; this year it will be
less than 1 percent.
These achievements did not come easily. They required the
remaking of the Argentine economy, the revamping of policy, and the
rehabilitation of the nation's financial institutions. During Mr.
Menem's two terms (1989 to 1999), nearly every state-owned industry
was privatized; barriers to imports and foreign investment were
dismantled; and, for the first time in generations, discipline was
imposed on government spending.
The cornerstone of this reform program was the so-called
"convertibility" plan, which pegged the Argentine peso to the US
dollar one-for-one, and allowed for the free exchange of the two
currencies. Nothing was more crucial to the country's fight against
inflation - or to building confidence among foreign investors, who
provided the capital that fueled Argentina's economic expansion.
Despite these changes and the impressive gains they produced, not
all is well with the Argentine economy. First, it is too vulnerable
and volatile. In 1995, the Mexican peso collapse sent Argentina into
a tailspin; this year it was the Brazilian currency crisis. Both
provoked an economic contraction of some 3 percent.
Second, the nation's economy is not generating enough jobs.
Unemployment has not fallen below 12 percent of the work force for
the past half dozen years, and has been as high as 18 percent. …