President Menem

FEW national leaders have had to take up the reins of power under less auspicious circumstances than those confronting Carlos Sa'ul Menem, who will be inaugurated as President of Argentina July 8. Indeed, Mr. Menem's midsummer accession to the job is itself a barometer of the problems he faces. The outgoing President, Ra'ul Alfons'in, was to step down in December, but the nation lost confidence in his ability to manage Argentina's economic crisis. Hence the accelerated transfer of authority. Argentina is bedeviled by runaway inflation. Whether the annual rate of price increases, as variously measured, is 4,000 or 400,000 percent, the austral is virtually worthless. If the food riots of May haven't been repeated, perhaps it's only because despondency has replaced anger among the middle and lower classes. The nation owes international lenders $60 billion, which it stopped paying a year ago. Capital is fleeing out of the country. And elements of the Army are restive.

As heir to the populist tradition of Juan Per'on - whose popularity was built on an inflationary bouillabaisse of manufacturing and export subsidies, industrial nationalization, and pay raises for labor - Mr. Menem seems an unlikely champion of economic reform. The longtime governor of La Rioja province secured his standing there by putting much of the work force on the public payroll.

Menem kept his plans vague during the presidential campaign. Whether he had no plans (as opponents say) or was preserving options (his supporters' defense), he will take office with his hands free. There is some reason to hope that Menem has soberly assessed the task before him and is willing to expend political capital.

His preliminary actions have heartened a wary business community. Menem's Cabinet appointees are generally pragmatists, including a leading corporate executive as his economics minister and, as labor minister, a moderate unionist. The new President also has designated two trustees with orders to make private the state oil and telephone companies.

Menem - like Mr. Alfons'in in 1985 - is expected to impose ``shock'' measures to brake the hyperinflation. The bigger question is whether he will be able to introduce the structural reforms necessary to preserve the short-term gains, as Alfons'in failed to do. This will require more than just pulling economic levers; it means altering fundamental attitudes among powerful interest groups that for decades have bent their efforts less to developing their enormously rich land than to divvying up a shrinking pie.

Argentina's enormous debt will hang as a ball-and-chain around the economy unless Menem can reduce it. He should restore confidence among the international community by resuming payments quickly. And the foreign creditors - who are not blameless in the debt crisis - should agree to partial debt relief as soon as Menem proves that his reforms are for real.

Will Menem rise above his political legacy? Or will he be another co-conspirator in Argentina's decline? History waits to see.