On July 21 Argentina’s President Carlos Menem electrified his country with the news that he would not run for a third term at the end of next year. In so doing, he not only revived the political careers of several possible rivals but also saved his country from a potential political and constitutional crisis. As most people read the Argentine Constitution of 1994, Menem was ineligible for immediate reelection. Nonetheless, for months the president as well as his advisers and supporters had been broadly hinting that one way or the other the matter would be "arranged" either by a nonbinding plebiscite that would force the politicians to bend to the popular will or by a finding of the Supreme Court--most of whose justices have been named by Menem himself.

As the latter course of action became increasingly probable, members of Congress--not just from the opposition parties but some even from Menem’s own Peronists--were broadly hinting that in such an eventuality they would impeach members of the court. The justices themselves were becoming distinctly nervous. Many observers felt that the country’s democratic institutions were facing their first real challenge since the abortive military uprising of 1990.

Such is Carlos Menem’s hold on the Argentine political imagination that virtually until the day before his withdrawal no serious analyst was certain that he would not run again. This was so despite polls consistently showing that the public was overwhelmingly against a third term; indeed, one might even argue that much of the mystique and verve of the two major opposition parties derived from their militant opposition to the very idea of his reelection. Certainly since his stand-down both opposition parties have experienced a slump in the polls. Since elections are a long way off--October 11 of next year--it is far too early to predict the ultimate consequences of Menem’s withdrawal.

Menem’s Legacy

Whoever succeeds the current Argentine president, Menem’s place in history is already secure. He has effectively reversed fifty years of paternalism and government involvement (not to say control) of the economy. He has opened Argentina to the world, both in terms of lowering tariffs and in terms of joining major international endeavors such as the Persian Gulf War task force or the United Nations peacekeeping operation in Bosnia. Menem has stabilized the Argentine currency (now on par with the dollar) and has imposed a fiscal discipline that no previous government, civilian or military, was ever willing or able to attempt. He has also privatized huge parastatals that were almost literally bleeding money--the railroads, the airlines, the state oil company--or providing less than mediocre service, such as the state telephone monopoly. Menem has effectively removed the Argentine military from politics and drastically reduced its share of the national budget. Such, indeed, is the force of these reforms that even the opposition now embraces them.

To be sure, Menem has not always done these things in the daintiest or most transparent fashion. While it is arguable that corruption has actually decreased during his tenure (if for no other reason than the state controls a far less important share of the economy), the irregularities that persist have provoked anguished outcry. Likewise, although Menem has restored economic growth and investor confidence, during his tenure the gap between rich and poor has widened. (As of May 1997, the richest 10 percent possessed 37 percent of the country’s wealth; the poorest 10 percent, a mere 1.6 percent.) And the Argentine middle class, historically Latin America’s largest, is suffering from serious unemployment, largely as the result of a downsizing of the public sector.

Given the social costs of economic reform, it is all the more remarkable that Menem not only was able to survive a sometimes stormy six-year first term but managed to get the Argentine constitution rewritten to allow him to run for reelection in 1995. (In that contest he actually improved his electoral score over 1989.) At all the critical points of his presidency, where others might have been restrained by hesitation or doubt, Menem forged ahead, mindless of the consequences. History so far has vindicated his choices.

But ten years is a long time to preside over a country, particularly one as historically contentious as Argentina. Few Argentine presidents have managed to complete their term since 1928; none, including General Peron himself, left office with anything like universal appreciation. It cannot be surprising that, after ruling the country longer than any other elected president, Menem has become the scapegoat for popular discontent if for no other reason than that the country’s fiercely independent press feeds its readers a daily diet of stories impugning the president’s dealings with cronies, relatives, "business partners," and coprovincials.

Visitors to the country can sense a vague but pervasive malaise. In some ways it is seasonal. Argentina’s culture is manic-depressive; at the present moment, it is on its downward curve. The ruling administration must inevitably take the fall.

A New Political Geography

Theoretically, this situation should be ready-made for an opposition victory. The rules of Argentine politics, however, have changed so drastically in the past few years that all predictions are hazardous. In the first place, Argentina is moving from a two-party to three-party system. Since 1946, all elected Argentine governments have been either Peronist or Radical, but in the 1995 presidential elections the candidate of a third force, now known as FREPASO, ran a strong second, besting the Radicals by twelve percentage points.

As a result, the Radicals were forced to abandon a traditional repugnance for coalitions and joined forces with FREPASO to create the Alliance. In the off-year elections of 1997, running a joint list, the Alliance won a resounding victory in the vote-rich Province of Buenos Aires, a traditional Peronist bailiwick. The lesson was clear: in a three-way race, the Peronists, the largest single party in the country, are bound to win; in a two-headed contest, the opposition stands a real chance of victory.

Second, the two opposition parties were driven even more firmly toward coalition by changes in the electoral system. Under the old rules, a president needed a majority of electoral votes, just as in the United States; failing that, provision was made for a runoff. Under a system of ballotage established in 1994, a president requires either 45 percent of the popular vote or 40 percent with an advantage of more than ten points over the nearest competitor. In either case, if no candidate wins the desired percentages, a runoff is held. This system obviously favors the Peronists if they face a divided opposition, since by most reckonings they can count on 35 percent of the vote in almost any national election. But if the opposition remains united, it can hope to win the 45 percent for itself or, in the worst of cases (too many minor parties eating away at its plurality), force a runoff, in which it would certainly be victorious.

The issue of opposition unity is therefore crucial in determining the outcome of the next presidential elections. But if changes in the electoral system are bringing the anti-Peronist forces together, other factors threaten to pull them apart. In the first place, the Alliance brings together an old and well-established political force (the Radicals) with a movement (FREPASO), which is not really a party at all but a complicated mélange--dissident Radicals and Peronists who have left their parent parties; "good government" types, who are basically conservative on economic issues but militant on the subject of honesty in government; and, finally, almost all of what remains of Argentina’s Left (various flavors of socialism, as well as the old Argentine Communist Party).

Other than opposition to Menem and the Peronists, it is not all that easy for voters to discern any difference in what the Alliance is offering, except to continue existing policies, but (presumably) more efficiently and more honestly. Even where an attempt has been made to mark out a difference--opposition, for example, to the proposed reform of Argentina’s rigid labor code--many Alliance economists are in open and frank disagreement with its published program.

Moreover, the Alliance is divided in the choice of presidential candidates. The Radicals are putting forward Fernando de la Rua, the mayor of Buenos Aires, a politician of vast experience in both houses of the Argentine Congress, and a former candidate for the vice presidency, while FREPASO advances Graciela Fernandez Mejide, a sixty-something housewife and political novice who has catapulted to prominence over the past three years, thanks partly to her image as a nonpolitician.

At issue here is not so much which of the two candidates would be more likely to win next year, since both rank about equal in the surveys, but which party would control the top of the ticket and therefore the new administration. (This would be a complicated affair in any case; already there is much discussion about how jobs would be divided in the event of victory.) Presumably the composition of the ticket (De la Rua-Fernandez Mejide or vice versa) will be resolved on November 29 in a nationwide open primary.

The primary will not close the gap, however, between two political styles that are very different. The Radicals are a traditional party with a well-articulated national organization; all they lack are enough votes to elect a president. FREPASO has plenty of votes, plus the energy of idealism, anger, hope, and resentment, but no real national apparatus. De la Rua is very much a man of the establishment, unlikely to upset the applecart; this is both a strength and a weakness. Fernandez Mejide is the mother of a young man "disappeared" during the years of military rule (1976–1983) and (perhaps understandably) concerned about the rule of law and accountability. Unlike De la Rua, she is pledged to investigate cases of malfeasance during Menem’s administration.

The situation within Peronism is by no means simple, either. Now that Menem has said that he will step down, the battle for the presidential nomination is on between Eduardo Duhalde, the governor of the Province of Buenos Aires, and Ramon Ortega, a former popular singer and film star who served a term as the governor of the Province of Tucuman and now is the the minister of social welfare. Most observers believe that Ortega is Menem’s choice as a successor (indeed, he was given the patronage-rich social welfare portfolio earlier this year precisely to provide him with an instant nationwide constituency). It is likewise bruited about that Menem regards Ortega as a mere stand-in to keep the presidential chair warm for him until he, Menem, can run again in 2003.

Duhalde as Candidate

Duhalde sees himself as the independent Peronist who owes nothing to the president and does not even represent the same line of political or economic thinking. This is not entirely true. While the relationship between the two men has been tense in recent months, Duhalde was the vice president during Menem’s first term; as the governor of the Province of Buenos Aires, he was the recipient of huge federal subsidies. Among other things, they have allowed Duhalde to pursue a more populist social policy on his turf than would otherwise have been possible, given the budget-cutting instincts of Menem’s economy minister, Domingo Cavallo. Indeed, the irony of Duhalde’s candidacy is that, thanks to Menem’s past support (and vice versa), Duhalde has been able to represent himself credibly as a Peronist of a different color--one more humane, more concerned with social inequalities, more concerned with delivering essential ser vices to the poor.

Perhaps to underscore his distance from Menem, Duhalde has repeatedly said that the economic model of the past ten years is "exhausted." (Recently he has even taken to saying that it is "dead" and "cannot be revived.") "The difference between the Alliance and me," he recently told the press, "is that they want to continue with the model and I don’t."[1] Statements of this sort make the business community and the Argentine establishment distinctly uncomfortable, but they serve to position Duhalde to win votes in October 1999 from precisely those people who left Peronism to go over to FREPASO in the first place because of their disagreement with Menem’s economic policies. Meanwhile, Duhalde must retain good Peronist credentials as well so that he can overcome another obstacle--his party’s convention next April--where Menem is sure to have a large say in the choice of a candidate.

Recognizing the potential for serious conflict within the governing party, the president and his people have begun to explore the possibilities of a compromise ticket, with Ortega as Duhalde’s running mate. So far, at least, the governor has refused such overtures. But Duhalde and Menem must make their peace somehow by the end of next year if the Peronist Party itself is to remain united. Quite possibly Menem will have to stop advertising so widely his plans to return in the year 2003, and Duhalde will have to dispel fears within Peronism that he is committed to "rule or ruin."

After the Vote

What makes next year’s presidential elections in Argentina so interesting is that, almost for the first time in memory, voters will not be selecting between drastically different prescriptions for the nation’s future. The problem for the candidates is to differentiate themselves from existing policies just enough to attract votes but not so much as to scare off moderates, the local business community, and international investors. One cannot help noting the irony, however, of a race in which Menem’s own party would run a candidate more critical of the president’s economic policies than his opponent!

In the end, these elections are bound to serve two purposes: (1) to determine just how far a candidate for the presidency needs (or dares) to veer from a commitment to economic reform to get elected and (2) to demonstrate after afterwards just how firmly Menem’s legacy is grounded in Argentina’s political system. Both are significant indicators--for Argentina and for the region as a whole.

Mark Falcoff is a resident scholar at AEI.