A New Leader, A new Course In Argentina. President vows changes

<a href=www.newsday.com>NewsDay.com By Reed Lindsay SPECIAL CORRESPONDENT

May 18, 2003 Buenos Aires, Argentina - In the 1990s, no Latin American leader more unreservedly embraced the market-oriented policies promoted by the International Monetary Fund and the U.S. government than former Argentine President Carlos Saul Menem. So when Menem bowed out Wednesday from his campaign to win a new presidential term, his departure symbolized the end of an era of unrestrained economic liberalization in Argentina. Following the election of left-leaning presidents in Brazil, Ecuador and Venezuela, it also was the latest sign in South America of the political shift against U.S. policies. Menem's opponent in the election planned for Sunday, Nestor Kirchner, will assume office on May 25. He has vowed to pull Argentina out of one of the worst crises in its history by replacing a "model of economic concentration and financial sectors" with a large-scale public works program, subsidies for small- and medium-sized companies and increased social welfare. "This new model means taking a stronger position towards the IMF, rejecting the idea that the market will solve everything, and consolidating Mercosur," the South American free- trade bloc, said Torcuato Di Tella, a white-haired left-leaning Buenos Aires intellectual who has spoken in favor of Kirchner's candidacy. Kirchner has said he will give priority to relations with Brazil and the rest of Latin America, at the expense of the intimate ties Menem had knit with the United States. Kirchner has voiced opposition to the U.S.-led invasion of Iraq, which was hugely unpopular here, while praising outgoing President Eduardo Duhalde's decision to abstain on a U.S.-backed resolution in the United Nations to condemn Cuba for human rights violations. "I haven't come this far to make pacts with the past, or for this to all end in an agreement among the elite," said Kirchner, 53, at a news conference on Wednesday. "I'm not going to fall prey to the corporations." Governor for 11 years of the vast, sparsely populated Patagonian province of Santa Cruz, Kirchner has won praise for running an efficient administration that has stayed debt-free and has boasted relatively low poverty rates despite more than four years of recession in Argentina. Critics say that's the least that might have been expected from an oil-rich province where the government is the main employer. Kirchner's opponents in Santa Cruz say he held power through authoritarian methods and a system of political patronage. What is certain is that the president-elect, who has not held federal office, will face challenges far more daunting than he did as governor. These include a monstrous $130-billion debt, an entrenched political elite riven by factions, unprecedented levels of unemployment and poverty and a crisis-weary nation that has come to view its leaders, and even its institutions, with scorn. Worse, Menem's withdrawal prevented Kirchner from solidifying his mandate with an electoral majority. Kirchner was set to trounce Menem in a runoff Sunday, but won only 22 percent of last month's first-round vote - a record low for an elected Argentine president. "Kirchner has a strong discourse, but in Argentina people are used to leaders who say one thing and do something entirely different," said Graciela Ocaña, a legislator with the center-left ARI party. "He's got an enormous opportunity to make up for his lack of legitimacy by pushing through some of the popular measures he's promised." This opportunity will be limited, however, by a lack of money. While the economy has showed signs of rebounding in recent months, the Duhalde administration will leave some potentially explosive financial problems. Most grievous is the ever-rising external debt. To avoid default, Argentina will need a new deal with the IMF after a temporary agreement ends in August. "The IMF is going to demand a high budget surplus and a tough monetary policy to keep inflation low, but this could contradict with the government's plans for spending and growth," said Alejandro Vanoli, an economist at the University of Buenos Aires. Like Brazil's new president, Luis Inacio Lula da Silva, Kirchner has tempered nationalist rhetoric with assurances of fiscal responsibility to international investors and creditors. He has vowed not to renationalize the formerly state-owned companies privatized during the 1990s and has announced that Economy Minister Roberto Lavagna, who negotiated the last agreement with the IMF, will stay on. "Kirchner's not a leftist," said Buenos Aires-based analyst Analia Del Franco. "He isn't bringing a revolution. This is going to be a government of transition, which will be more nationalist than anything." According to Del Franco, Kirchner must win a consensus from a wide range of antagonistic sectors, both within and outside his long-dominant and much-discredited Peronist Party. Menem's supporters hold a significant minority in congress and in the provincial governments, and new anti-Peronist political leaders from both the left and right are gaining force after surprisingly strong showings in the first-round vote. Kirchner must consolidate support from the main Peronist faction, led by Duhalde, his most influential ally in the election. Analysts warn that Kirchner's need for alliances with Duhalde and other party bosses who backed his candidacy may compromise his vow to reform politics and fight corruption. For now, this seems a minor concern for Argentines who, like Ernesto Argento, yearn for normalcy. "We just want this mess to end," said Argento, 69, who runs a shoe-shine shop. "We want a president who will last four years."