Economy Gives Peronists Win In Argentina

Big victory endorses Menem's austerity plan

PRESIDENT Carlos Saul Menem of Argentina appears set to accelerate his austere economic reforms after winning an overwhelming vote of confidence in key congressional and provincial elections Sept. 8.The electoral victory, which is viewed here as the direct result of a recently curbed inflation rate, sends investors a clear message: There is no turning back for Argentina's economy. "The government's economic policies have been ratified in a plebiscite," said Vice President Eduardo Duhalde, adding that the central government will continue reducing state spending and privatize state companies.

Menem's coattails Mr. Duhalde was one of 10 gubernatorial candidates, blessed by President Menem, who were victorious in 13 electoral districts. Menem's Peronist Party won in the federal capital and other important provinces. The other three winning candidates - two from the opposition Radical Party and one from a provincial party - have similar pro-business ideas. The vote contrasted with Menem's own expectations of only a few months ago, when his standing was damaged by corruption and money-laundering scandals involving his family and aides. Pollsters had, until recently, expected many Peronist candidates to lose. "The election results reveal there is a large social consensus for Menem's economic program," says analyst Rosendo Fraga, of the Center of Studies for the New Majority. "This reduces the uncertainty for investors - both foreign and domestic." Economy Minister Domingo Cavallo - the man who made the victory possible by bringing down relentless inflation to a record low of 1.3 percent for the month of August - is expected to speed up financial reform this week. "With this popular support, we expect Congress to discuss all initiatives from the executive with greater speed," Mr. Cavallo said after results were made public. According to his aides, Cavallo's plans include financial reform aimed at reducing interest rates, privatization of state-owned electric utilities and natural gas companies, as well as new laws to reduce regulations on the hiring of workers. The minister also aims to have Argentina become a beneficiary of United States Treasury Secretary Nicholas Brady's debt-reduction plan in order to reduce the country's $60 billion foreign debt. The elections, the second of a three-stage voting process, also left Menem with a much friendlier Congress. The results suggest that 80 percent of voters support government economic measures. Menem himself was elected on traditional Peronist Party pro-labor promises, but he implemented pro-business programs after taking office in July 1989. The results seem to have dispelled speculation that the harsh austerity policies would prove too unpopular to sustain. Although he still calls himself a Peronist, Menem has changed his party's dogma and constituency so much that many observers have begun to talk about "neo-Peronism." Alvaro Alsogaray, the leader of the conservative, free-market Union of the Democratic Centre party, admitted a stunning defeat. But he added: "We are satisfied by the intellectual victory of our ideas, since they are now in the government." The Peronists won two of three provinces at stake in the first round of elections last month. The remaining eight provinces go to the polls in late October.

Opposition victories The elections to choose provincial governors, representatives to the Lower House, and municipal authorities are the fifth to be held since Argentina returned to democracy in late 1983 after almost eight years of military rule. Vice President Duhalde retained the key province of Buenos Aires with more than 46 percent of the vote. Two other candidates Menem took under his wing, race car driver Lole Reutemann and pop singer Ramon "Palito" Ortega, won surprise victories. In the province of Cordoba and the Federal Capital, however, the Peronists were defeated by the opposition Radicals. Eduardo Angeloz, who lost in the presidential race against Menem in 1989, was reelected for a third term in his native Cordoba with 50 percent of the vote. Radical Fernando de la Rua led the winning Radical ticket for Lower House Representatives in Buenos Aires. Both men emerge as likely opposition candidates for next presidential elections due in 1995.