Voters in Sunday’s presidential elections in Argentina and Paraguay decided to stick with the devils they know

The usual suspects Apr 28th 2003 From <a href=www.economist.com>The Economist Global Agenda

CONSIDERING the mess that Argentina’s Peronists and Paraguay’s Colorados have made of their countries, and given the grinding poverty, high unemployment, endemic corruption and decrepit public services that each country has suffered under the misrule of its main political party, one might expect that voters would relish an opportunity to dump them and give a chance to someone new. Indeed, until recently, Argentina’s streets were resounding to the chants of protesters shouting “¡Que se vayan todos!” (“Kick out the lot of them!”) But in Sunday’s elections, Argentines and Paraguayans decided to stick with the devils they know. Argentina’s flamboyant ex-president Carlos Menem came top in his country’s first-round presidential vote, and will go into the second round with Néstor Kirchner, a rather colourless candidate from a rival faction of the Peronist party. In Paraguay, where there is only one round of voting, the Colorados’ candidate, Nicanor Duarte Frutos, was elected president, maintaining the party’s 56-year grip on power.

Many Argentine voters seem to have bought Mr Menem’s proposition that they should forget all the various scandals of his ten years in power, in 1989-99, and overlook his spending-and-borrowing binge, which contributed to Argentina’s subsequent debt default and economic meltdown, and instead remember the economic boom that the country enjoyed while he was running it. With his playboy image and his glamorous new wife—a former Miss Universe—Mr Menem personifies those good times, which Argentines yearn to have back. Until their country’s economic collapse, they lorded it over their South American neighbours, revelling in their higher incomes and “European” lifestyles. But now, so far has the country fallen that almost 60% of Argentines live in poverty (defined as a monthly income of less than 750 pesos, or $242, for a family of four) and around a fifth of the workforce is unemployed.

While Mr Menem did not achieve his dream of sailing to a first-round victory (which would have required at least 45% of the vote, whereas he only got 24%), his showing in the polls is rather better than might have been expected in mid-2001, when he was briefly put under house arrest, accused of involvement in an alleged scheme to sell illegal arms to Croatia and Ecuador in the early years of his government (Argentina’s Supreme Court later freed him). In late 2001, Mr Menem’s incompetent successor, Fernando de la Rúa, resigned amid violent public unrest, after which Argentina defaulted on about $60 billion of foreign debt and the peso collapsed. Following various short-lived caretaker presidents, Mr Menem’s arch-rival within the Peronist movement, Eduardo Duhalde, was chosen as president by the Congress. Mr Duhalde put up Mr Kirchner, hitherto a little-known provincial governor, as his chosen successor, but could not unite the Peronist party around him. Other factions of the party, founded in the 1940s by Juan Domingo Perón and his wife Evita, backed either Mr Menem or a third Peronist candidate, Adolfo Rodríguez Saá, who had a brief stint as stand-in president in 2001.

In total, 19 candidates stood for president, including Ricardo López Murphy, a free-market economist who was briefly Mr de la Rua’s economy minister until his cabinet colleagues decided they lacked the stomach for his tough remedies (a pity, because they might have averted Argentina’s collapse and the suffering that resulted) and Elisa Carrió, a congresswoman standing on an anti-corruption ticket. Now Mr Menem and Mr Kirchner must scrabble for the unsuccessful contenders’ votes in the run-off on May 18th. Though Mr Menem got the most votes, he also suffers from a higher rejection rate than any of the other main candidates.

Argentina’s business leaders—who had given generous backing to Mr Menem’s campaign—will be relieved that Mr Rodríguez has been knocked out of the contest. He had called for the abandonment of the free-market reforms brought in by Mr Menem and a return to the traditional Peronist policy of heavy state intervention, including the renationalisation of Argentina’s utilities and railways. Mr Kirchner spouted some leftish-sounding rhetoric during the campaign but is believed at heart to be a centrist. His flagging campaign was lifted towards the end by gaining the backing of Roberto Lavagna, Mr Duhalde’s economy minister, who has begun restoring some signs of life to Argentina’s moribund economy.

Mr Menem insists his free-spending days are over, and pledges tough controls on the government’s finances. However he is also promising big cuts in tax rates—value-added tax would fall from 21% to 13%—which he says will be paid for through a crackdown on tax exemptions and evasion. He also pledges to honour all of Argentina’s debts, though he will ask lenders for more time to pay, and lower interest rates. Amid rising optimism about the prospects for an economic recovery and a market-friendly election winner, Argentine shares and bonds have risen sharply.

In Paraguay’s election, Mr Duarte, despite coming from a party that has misruled the country for half a century, has projected himself as a bringer of change, a firm leader who will clamp down on corruption and revive the long-stagnant economy. That he won, with about 37% (with more than nine-tenths of the votes counted), is more down to a divided and feeble opposition and the strength of the Colorado party machine. He will take over from President Luis González Macchi, who barely survived impeachment earlier this year over fraud accusations. Mr Duarte’s main opponent, Julio César Franco of the Liberals, had been ineffectual as Mr González’s vice-president, and got only 24% of the vote on Sunday, with Pedro Fadul, a pro-reform businessman, coming third with 22%.

In all, those hoping to see new faces and sweeping changes will have been disappointed by the outcomes of the Argentine and Paraguayan elections. But things could have been worse. Both elections were free and fair, despite each country having only a short democratic history and a past marred by military dictatorships. Following Brazil’s successful election last October, which led to a smooth transition from centre-right to centre-left administrations, it may safely be concluded that democracy has firm roots in South America, even though it faces challenges in some parts of the region, such as Venezuela. This should come as some comfort to America as it struggles to introduce the concept to the Middle East. Furthermore, despite much rhetoric critical of “neoliberal” reforms, there seems little sign of going back to the failed statist policies of the past.