il

Building Castles in the Sand?

The Politics of Institutional Weakness in Argentina

Steven Levitsky and Maria Victoria Murillo

than Argentina. Given

Few countries have puzzled social scientists more
and comparatively
its level of development, large, educated middle class,
consis tently “unde rperformed”
egalitarian class structure, the ceuntry has
stabili ty.: Indeed, it is
in terms of both economic growth and democratic
ry coup (Przeworski
the wealthiest country in history to experience a milita
and Limongi 1997, 170).
cause of Argentina’s
The central argument of this book is that 2 major
instit utional instability.
underperformance was persistent and widespread
n a self-reinforc-
Beginning in 1930, a series of military coups set in motio
sion or collapse of a
ing pattern in which periodic crises led to the subver
the absence of stable
wide range of political and economic institutions. In
actors operated in
-nd effective rules of the game, political and economic
short time horizo ns, and low
2 Hobbesian world of extreme uncertainty,
nell 1994). As a result,
levels of trust and cooperation (Nino 1992; O'Don
vulnerable to crisis,
the Argentine polity and economy remained highly
praetorian conflict, and breakdown.
cycle of military coups
The 1983 democratic transition put an end to the
rule. The new dem-
and ushered in an unprecedented period of democratic
ing the hyperinflation-
ocratic institutions proved strikingly robust, surviv
the 1990s, and the
ary crisis of 1989, the radical economic reforms of
Limongt
. 5ee O'Donnell 1973, Waisman 1987, Adelman 1994, and Praeworski and
A
 22 Argentine Demacracy 23
Building Castles in the Sand?
economic collapse
pse of 2001-2. Many of the core second presidency.
market institutions created ‘military coup that put a premature end to Yrigoyen’s
after in which
aL o 1989 also proved durable Yet a variety of other political The coup ushered in a period of authoritarian rule (1930—43)
nstitutiB ons remaini ed weak, and economic
read elec-
2001-2 suggests that Argent
9 and the political and nd economici
meltdo
d wn o f conservative elites maintained themselves in power via widesp
ina remains far more vulnerab in which electora l losers, facing the
=itutional crisissis than
inst le to severe soral fraud. Tt also established a patiern
th neig
i hboring
i countries such as Brazil, Chile, the barrack s as a means of
and prospect of long-term minority status, turned to
| Thi:q chapter is divided into thre obtaining (or excluding rivals from) power.
conomic
instability of Argentina’s
e Conservative tule was eventually undermined by socioe
growth of
tury through 1989, The
’ change. Industrialization and massive urbanization fueled the
the conserv ative post-19 30 govern-
the urban working classes, and under
classes went largely unmet
ments, the demands of these emerging social
power a group of
{Matsushita 1988). In 1943, another coup brought to
o Per6n.
nationalist military officers that included Colonel Juan Doming
created post of secreta ry of Jabor to build
Using his position in the newly
unprec edente d politica l access to
government, working-class support, Peron granted
in labor dispute s, and
union leaders, intervened on the side of unions
by the labor
sponsored social legislation that had been long demanded
This populist ap-
THE ORIGINS ‘movement (Murmis and Portantiero 1971; Torre 1990).
OF INSTITUTIONAL by fellow
INSTABILITY peal was extraordinary successful, and when Perén was jailed
working -class mobiliz ation forced his
Argsntina’s political histo; r)-J is r.nar officers in October 1945, a massive
.ksd by a recurrent pattern of 1946 (Torre 1990, 107-40) .
tional instability, The 18W?I Lonts institu. release and the calling of elections for early
iil.n}l]c(ni, written in the aftermat the Peronis t move-
hglf a century of civil h of nearly The Ociober 17, 1945, mobilizgtion marked the birth of
; esta
tabblished a federal and presiden camps—2
e emergingg;;siiczmlfied suffrage
i i syste;
tial ment, and it divided Argentines into Peronist and anti-Peronist
= . T CIgin
and electoral manipui’afiorrr: cleavags that would endure for more than half a century.
i ana economic elite t 0 establis ng a broad
ziona{i Au:;enzllliarchlc regime—do ih - Perén won the February 1946 presidential election, defeati
minated by the agrarian elsiteiliz elites, the middle- class UCr,
B—— ssse; h 1:‘“‘ <oalition that included conservative economic
;:)1; :;r:y (pm;;*that foreshado urban workers
s
wed later periods of m:- and the Socialist and Communist parties. Mobilizing
" 979; ks (Mora y
& thcp;‘:g:z; spe;r}ileaded by the
Floria and Garcircfa
: Belsunce 1 i y through unions and the rural poor through clientelist networ
most
ool
Radical Civic Union (ucr) 23;:(“1‘4]
1‘1(; 12 Araujo and Llorente 1980), Peronism quickly established itself as the
€ of ol the 1912 Saenz Pena I, .aw, whici ation of mate-
s I;ret )ur}lversdl male suffrage
h established ek powerful political force in Argentine history. Using a combin
incorporated
ki ;190 th n Lgl()(i democratic
(women did not gain thee ;O;Tt‘?i
ulsury tial and symbolic appeals, Perén and his wife Eva effectively
elections brought ucr leadegr H'o the lower classes into politics (Ostigiy 1998; Navarro 20032). With solid
by i) e presidency. y. T The uck easi i 'Vlote
c reforms.
ly retained
i the presidency ini 1922 <ontrol over Congress, Perén undertook extensive socioeconomi
y, national-
Although ugh the the Radi ‘The new government expanded the state’s role in the econom
tab
Radicals estab lisdhedA; Arge
lishe gentina’si first d emoc th new ized key economic sectors such as the railroa ds and telepho nes, taxed ag-
racy, the
riculiural exports to promote industr ializat ion, expand ed workers’
of one—pa:ty dominance (Rock 1
75)-
975) Conservative forces fragmented after
incomes, and introduced reforms that improved workin g conditi ons and
1912, and in the absence of f
W9 g!
aa large
large Dbeapea: sant , health
hich to remain competitive
antry,ry, tl h they lacked d a mass b: base
wi ith extended a variety of new social benefits (including social security
re
insurence, paid vacations, and mandatory Christmas bonuses) (McGui
in the national electoral aren
the economic realm but unab a. Powe; rful i n
le to win elections, the olig strengt hened unions by establi shing
gained a s 3kf€ in -the democrat
archic elite never 1997). Moreover, the 1945 Labor Law
ic dues
ic regime (Di Tella 1968;
1930, soon after 1lthe onset of f the Grea Gibson 1996). ) In mionopolies of representation for collective bargaining and automat
the n (cGT) quickly
Greatt D epression, 3 conservative s s backed a deductions. As a result, the General Labor Confederatio
 24 Argentine Democracy Building Castles in the Sand? 25
grew into one of the largest and best organized
in Latin America. Yet the Sem s exclusion exacerbated an ongoing conflict betvfeen w0 pov&;crful,’]m:;
corporatist Labor Law also enhanced state contr
ol over the unions, which politically unmediated, socioeconomic alliances: a “defensive a.lmtnze o
Perén used to purge the cort of communist, L
socialist, and even indeper mgamxt;d labor and domestic industrialists and an Q\tharyd-unenueI
dent Peronist union leaderships (Doyon 1988) 1978;
. ance of agricultural exporters and international capital (O’Donnell
Although he was freely elected in 1946, Per6n lso Wa sman 1987). Because outcomes ini thisi conflict i :
i had substantial
subsequently assaulied
democratic institutions. Government oppon
ents were harassed, jailed, and :!?;)ls:l;un\'c consequences, control of the state bccamé a hlg}?-s}:ates‘
exiled; public employees were forced to join
the Peronist party; press free- game (O Donnell 1978: Waisn’lan1937).Yetbccause.l’erom?m (;N' (;c rr;;
dom was curtailed; and post-1946 elections
were marred by ini timidation tesented labor) was banned and conservative parties (which had rep
and abuse of state resources. Moreover,
Perén used his ‘majoritarian con- sented agricultural exporters) were weak, the P?SNQSS part? syster? fil:i
trol to weaken institutions perceived as obsta t
cles to his political goals 10 mediate this conflict (Cavarozzi 1987; Cull.lér and Colh.e.r 1991).
Thus, the Peronists packed the Supreme Court th civilian and military —prove
, redrew electora 1 districs Jesult. non-Peronist governments—bo
to reduce opposition representation in Congr ) )
ess, and in 1949, unilaterally i unstable.
imposed a new constitution that permi
tted Perén’s reelectios m. Excluded "‘;i:i :larl\' 1970s. persistent instability, the proscription of. Peru(rinlsexll;lti
from all centers of political power and facin
g the prospect of long:term i the emergence of urban guerrilla movements (both Percn;t anTtzlr
minority status, Radicals and conservatives backe .elrm i by
d efforts to emove Peron ist) had given rise to a serious crisis of legifi@aq. In 1972,
through extraconstitutional means, In 1955, polarizat\ ol"n E.ind pohltlc'al V‘;l :cho rg
a military coup ousted Perén gevemm;m responded to increasing
and forced him into an eighteen-year exile. ng Perén’s 1; o
calling elections, legalizing Peronism, and permitti
The 1955 coup ushered in a period characteri y,’g his
zed by an “impossible eile. The following year, the aging Perén again won the preslpen’c
game” (O'Donnell 1973). Unable to defeat Peron
ism in free elections, mili Sne with an unprecedented 62 percent of the vote. H_ow.cver., ;:ronli.dcal
tary and economic elites opted to ban the move
ment, effectively disenfran urn o power failed to stem the risinih tide of .flraetor:nz}s‘:n ;:; dsoof <l
chising a large sector of the electorate, With on's death in 1974 left the presidency i ! :
Perén in exile and the pary
(renamed the Partido Justicialista, or »
7) banned, Peronism survived ::)Z:ceanze;ce gpresidem, }\;?aria Estela Martinez de Pero.nj Armd lla:‘gcz
within the powerful labor movement (James
1988). Peronism’s survival “eale labor mobilization and increasing guerrilla and pararr{xhytary.:fim e was,
prevented remaining parties from building
majority electoral support. The Argentina descended into chaos, and in Marc}é 1)976, Perén’s widow
UCR, which was the country’s largest legal ]
party, split in 1957. Given the i in yet another military coup (De Riz 1981).
size of the Peronist electorate, the two compe
ting Radical parties were m]": llng‘e(: coup usheredriyn a period of .nfxilitary rule d’:aract;r};c‘ihba};
tempted to make deals with Peron, promising
legalization in exchange for \nprecedented repression. All political activity was banned, and 1 o
Peron ist votes. But when e
Peronist candidates were permitted to
compe ie Lame 1o be known as the Dirty War, tens of thousands of Mgcnnns
in provincial and legislative elections, as occur
red in 1962 and 1965, they Wlegally detained. tortured, and “disappeared.” At the same myne, 1 e mll
won, triggering military intervention. Thus,
the presidencies of Arfura tary go’\cmmenl's economic opening weakened the country’s prevtm.use g
Frondizi (Intransigent Radical Civic Union
ical Civic Union) were ended by coups in
) and Arturo Iflia (People’s Rad- srotected indusirial sector. The reforms failed to produce sustain
1962 and 1966. srowth, however, and in the early 1980s, the cou.ntry fell mt.o 2 severc}
Argentine politics was thus deadlocked betwe
en 1955 and 1972 (O'Don- “eonomic crisis. In 1982, in an ill-advised bid to win b.ack 2 mn’)fxmhuréxr;-
nell 1973, 166~97). On the one hand, liftin
g the ban on Peronism would popular support, the military government launched an invasion of tl if e
almost certainly result in a Peronist victory, Malvinas/Falkland Islands. The Argentine rmlm?ry sul dcthe
which was unacceptable to key’ ish<ontrolled
elite sectors. On the other hand, Peronism’s
exclusion from the electoral 4 devastating defeat at the hands of British forces, which mgg;re
arena proved equally destabilizing, Lacking
representation in the political Collapse of the regime and a transition to dsmocrfxcy (Munck Igfig )’,S et
arena, the powerful labor movement opted
for tactics—such as general 1n October 1983, ucr candidate Ratl Alfonsm. won Argen na Do
strikes, factory occupations, and mass protests—t -
hat undermined govern: presidential election in more than a decade, handmg the .Psromsts
ability and destabilized regimes (Cavarozzi 1987;
McGuire 1997). Peron- Sestever defeat. The election inaugurated a democratic period of unprec
 26 Argentine Democracy Building Castles in the Sand? 27
dented scope and duration. The brutality MENEM
and dramatic failure of the mil ARCENTINA UNDER
fary regime discredited the armed force
s and en
§ ure ini Argen
cal | junct
Menem's¢ presii dency was a crilititical
politics.
tineR
Carlos
th_e Men: mg]acmg
Aandoning Peronism'’s traditional populist program,
11.1sh n';ltmn h ospw-ith 3
ment radically resiructured the country’s economic
t ;ézgl g
‘I: St ded indusirialization model establish.ed d\mng
: important ; pol e : 3
m and conviction of marks etoriented model. Menem al lso .oversaw
plicated in human rights violations—an initiative ry influ ence and the drafti ng
Scluding the further erosion of milita
that was unparalleled anywhere in Latin = '
America. The human rights triak nstitution in 1994.
triggered a backlash among sectors of the sf;ccessfu]d durxc IE il
armed forces, made manifest by Iw‘l‘ E smc respects, Argentina was strikingly
three military rebellions in 1987 and 1988
(Norden 1996; Lopez and Pion . .sf)l"uc The m\:\mr\' v combined economic libera | lizati: on and errfu:h : zost
Berlin 1996). The rebellions were met nonen(;enaken =
with massive civic mobilizations i :’::\'smai was unparalleled in Latin America. ertlua]ly
defense of democracy, but they nevertheless were ureforms o
led the government to limit nd:c‘al economic reforms in post-1973 Latn? America
the scope of the trials to higher-level and }I)vle xmo,e e
officers. Still, the governmen . context of full-Aedged democracy. In Chile
achievements in the area of civil-military : In Peru
imes. Tt, they wert c i
relations were impressive. Uniike carried ut under d authoritar itariaian regime
post-transition Brazil and Chile, key areas dl;sc lvcm e
of military decision-making, in- by ongflipc in which the congress and the judiciary weri
cluding the budget, procurement, and was forceded intointo exile. Even i n 8o -
national defense strategy, were B d o nent of neolii beralism i
placed under a civilian-led Defense Ministry. '.h' la::g dzgpi nabil izafio n was imple mente d via distin ctly a.utho gla:oa n i
The 1988 Defense Law o
hibited the armed forces from intervening reprelssmr;l.d é’razfl
in matters of internal securf; ::ad\:mqr ‘xr;duding states of siege and harsh labor
and denied them any role in the policymaking ay, Vlenef lu.e a,czmpamfive,
process. Notwithstanding trast, in c‘ierr’\’ocracies such as Costa Rica, Urugu
the military rebellions, then, the combination e
of a military defeat with ker conal form was slower and less ex tensive.; Placed. in
institutional and societal changes left ¢ cile radical refog m andr : e
the armed forces far weaker than ,:rspcc'm‘( ive,er cther ther, /Argentina's capacity to recon
their counterparts in neighboring countries exira ordin ary: among ful%y en;r; e
such as Brazil, Chile, and Une “"du'mg the 1990s was
guay. e
mmes r;'\xArgenr‘*m\a carried out the most rapid: and far-reachlng ecwas
Alfonsin was less successful on the economic refor m, Argen tina
front. The Radical gow I!fom\s fmong cases of deep crisis and radical
ernment inherited an economy battered e
by recession and inflation, which most democratic
it attempted to combat through a heter m peralgedr;diczl
odox adjustment program. Afier et there was 2 dark side to the successes of the Mene
some initial success, this program coll radica
lapsed amid severe distributions! ¢ the policy arrangements and political side payments that 1;123“
confl
ict among unions, industrialists, and prove d eco_n.o rrll ¢ t)i'md (ms
Efforts to negotiate a social pact with
agro-exporters (Smith 1990} reft - ssible under democracy ultimately
politic al m; Htuio ns :
the Peronist unions failed, and fhe uix;.:’;epo\:(;reover. Menem did little to strengthen
6T led an astounding thirteen g enera In carryin e
l strikes between 1984 and 1988 niany important respecis, he weakened them.
(Gaudio and Thompson 1990). As the spect onc: ntrase p.(zuwtt‘?o)ns e
er of a Peronist victory in 193y :ldm nmomic reforms s (but also in an effort to conce
elections grew, capital flight and finan d m:bys fions o
cial speculation soared, culminating M :‘:‘ overnment often circumvented or manipulate
in a hyperinflationary burst that brought country
the economy to the brink of col- h;‘s]ams nd judicial oversight, which undermined the
lapse. In May, Peronist candidate Carlos
Menem, a populist provincial gov system of democratic checks and balances.
ernor, was elected president. Soon afterward,
a wave of mass looting forced
Alfonsin to resign the presidency six mont
hs before the end of his man. The Politics of Radical Economic Reform
date. Thus, although Menem’s inaugurati
on marked the first time in Ar . .
gentine history that the presidency had ent Menem r¢
changed hands between elecied Although he was elected on a populist platform, Presid
leaders of different parties, it took place isis w i
thh_a dran.fl? shift.
icy Ehif
t.ncic pol pol;:,;\
in a context of extreme instifu- spon ded 1o the 1989 hyperinflationary crisis
tional fluidity. politi cians,
Filing his cabinet with business leaders, conservative
 28 Argentine Democracy Building Castles in the Sand? 29
ket-
Mo orie nted tech: nocrats to highl role in dampening popular
nd clientelisi networks played a critical
ol ight
ghligh t hishis commitme
i nt to fi
i neighborhoods through-
cwz:l;c;i on what was widely viewed
as the fastest alrfg rrnm‘rk’ pposition to neoliberalism. In Jow-income
i networks” distributed: food,
)996.1c reform program in Latin
America (Gwartne; I:: e country, Peronist “problem-solving
e who lacked alterna-
; IDB 1997). The government eliminat
ed pn’c;”com*'I + disability pensions, and odd jobs to peopl
Levitsky 2003, 187-91),
Sources of social assistance (Auyero 2000;
ght the Alfonsin presi-
1o prevent the kind of urban riots that brou
mony among the popu-
¥ to an e 4+l end. Peronism’s continued hege
reform appeals. Because most
s sectors also limiied the space for anti
inued to vote Peronist through-
kg and lower-class Argentines cont
nationalist parties to capture
S the 19908, attempts by lefi-wing and
tedly.
e yotes through anti-neoliberals failed repea
ded the Menem government with
The #1's electoral sirength also provi
in the Chamber of Deputies,
4 paiority in the Senaie and a near-majority
conservative and provincial par-
ik ensured—with the help of small
important reform measures
striking success. This succoes wme roug b neoliberal program wil - the relatively smooth passage of its most
required arduous negotiation
3 W oted in several fact i , the
actors. i First, g
the goe Mliznos 2001). Although this passage often
eernment’s ability to end hy yperinflat nt was nevertheless critical
i ion
i enh:
nhanced publ i o4 substantial concessions, unified governme
overal flrlzf;orm lz:mcess. Successful stabi deadlock that had undermined
s lization wasp in Ersuppfm ek # avoiding the kind of executive-legislative suc-
d, Menem’s
y Law. The brainchild of 2 Ministgcr£ I;?IE: efforts in other Latin American countries. Indee
s Domi:;)ic;?{;rfl;]nhé '
: gcr::- e
e ' , the Convertibility ity L. Law constraii ned m, reforms through the legis latur e stands in stark
g ‘s 10 pushing neoliberal
rencygw i i (gjat‘éon of a currency board proposals, which were blocked
. The law Establiqhz(ri)zmnry l?"hq Lonisast o Alfonsin's more modest reform
S r:(—) 0-one parity with the dollar, prohibited
the goverenw C:” by the Peronist-conirolled Congress.
. from the »y’s close ties to orga-
ney not ba»cked by foreign reserves,
and permitte dm“ The Menem government also benefited
vl Ohency.h By tying t.hE government’s Jeaders remained Peronist in the
hands in monet: m:! 204 labor. The vast majority of union
e C)Z d.cgj].t e convertibility system enhanced many of them maini tained close ties
to the party (Levitsky
the dome: t? i 3990s, and
Proinaice .Stc ibility of the governme rs a stake in the government’s
nt's new economic i " ('md S0y 110-39). These ties gave nion leade
e rgbl arr 1997). This credibility was furth
er enhanced?}snmfi?m Shecese and an incentive to limit
public opposition to Menem. Union
T rs. By en-
i 1lity was passed into law by Congress, 3 which m;
dy'thmm Lsos aleo maintained long-standing personal ties to pj leade
et for iua‘;crzr;r::rfis to change. Conve government and union offi-
rtibility brought jnflaatieo;t ;:3: Jancing st and communication between
e horizons and facilitated the
2300 p ercent in 1990990 t to near2 zero ini
iggeri s these ties lengthened the unionists’ time
tWge & 1; QV;II'\ pr‘livanzatlon‘a massive inflo cal to keeping many unions
w of foreigfr? ?r‘:‘v tr;gfe““%_ Segotiation of side payments that were criti
and Alfonsin confronted thirteen
1997, price stabili
e o 15 the pro-government camp. Thus, whereas
Sene ared Eyrroor:l lg Menem government gained a
generated publi cic ;uppo
s rt for the gove
i rnment’s rgeforcr(:! 52;: gm:,tij general strikes during his presidency, the
o —and even cooperation—with far
1992;
992; Pal mo and Novaro 1996; Etchegar
Paler
ay ando Elor:;
i semarkable degree of labor acquiescence
pro- and anti-Menem camps,
e radical reforms. Initially divided into
oA secothhfj nd (;:;—
fa e during Menem’s first three
oz'e}fnd
i the success of the Menem reforms was
the e oot did not lead a single general strik
s 3th o general strike during his entire
ist party. The py maintntain
ai ed a i 404 half years in office and led only one
arg;z;zgat:)i, dlehelply embedded in worki nizations such as the Congress of
ng- and lci:rx trj:ss ¢ soctsyo Set term. Although dissident labor orga
trong ubculture and identity, , whi which helped
the e
gorciel
o
maintain :azial
a stal)lef support base ini a context iof crisis rank-and-file support
and :dgoa‘.ilemmem
i el 1 st noting that in some unions, there existed substantial
mirastructure of neighborhood branches,
, sor soupE kirlihfflm fie priwatization (Ranis 1992).
 30 Argentine Democrecy Building Castles in the Sand? 3
Argentine Workers (cta) and Argentine Worke
rs Movement (vTa) mos Argentines accumulated debts in dollars, the Converfil?lllty Lawt:n-
lized repeatedly against the Menem reforms durin Lroad public support throughout the 1990s. Yet by taking mogifl ;yy
g the 1990s, most
unions refused to join them; as a result, these exchange rate policy out of the hands of pohcymake‘rs, com{(er el
Pprotests failed to mobils
large numbers of workers (Martuccelli and Svamp 4 them without the tools to respond to either economic shoc»s or jhe
a 1997; Murillo 990
2001; Levitsky and Way 1998). . of Argenting's export competitiveness. A second legacy was ':-\ g
A third factor behind the success of the Mene i growth in public debt. Many of the political concessions gr;mt e "
m reforms was the g
ernment'’s use of policy concessions and side Payme
nts to construct & s wffont 1o accelerate macroeconomic reform—part\cular]y_ the pos1 ponts
ble pro-reform coalition. This coalition inclu 51 of adiustment in the provinces—generated substantial fisc? ;ossd.
ded powerful political
economic actors—such as unions, domestic indust 4o did the privatization of the pension system.> These cos‘gs in u;
rialists, and old gus
Peronist governors—that might otherwise have % federal and provincial governments to turn to largc.-scale orrowi gd
opposed neoliberal
forms (Palermo and Novaro 1996; Corrales
1998; Murillo 2001; Fiches . the Menem reforms generated large-scale social exr_}uslcn. ;\;118
endy, this volume). Union support was achieved ¢ inequality that shrunk the Hadifionallyllarge Argentine n'nh e
through agreements i
to reform the corporatist labor legislation (whic unemployment rate, which had been virtually zero fm'—muf1 of
h allowed the unions &
maintain critical organizational resources) or dereg twentieth century, soared to a record 18.6 percent in 1995 ?nM rnu
ulate labor markets
union-administrated health insurance funds,
and by granting unios ed in double digits for the rest of the decade. These legacies l\; ; fece
shares in newly privatized enterprises and partic
ipation in the new pri BI'S SUCCESSOTS in a difficult bind: future governments wo . dab(
pension funds market (Murillo 1997; Etchemendy
, this volume). Rey é \ demands 1o address long unmet social needs, but a massive Z]
mestic industrialists were granted highly favora
ble conditions for compet % and 2 nigid monetary and exchange rate system would seriously
ing in the privatization process, which allowed them their capacity 1o meet those demands.
to expand their shas
of critical markets or enter new sectors with protec
tion from foreign com
petition (Schvartzer 1998; Basualdo 2000; Azpia i Institutions Under Menem
zu 2002; Etchemends
this volume). Finally, the support of Peronist gover
nors was assured v
the repeated postponement of provincial adjus
tment and state refor the 1990s, Argentine democracy was chal.'az.;terizcd by bot:atrxlx;-
processes (Gibson and Calvo 2000). This last concession 4 stability and persistent institutional fluidity. On the onfe‘ 3
was critical i
Menem'’s legislative success, as governors exert semained fully democratic throughout the decade. The fairness
substantial influence ove
their provinces’ legislative Tepresentatives (Jones
and Hwang, this vl “ational elections was unquestioned, there were no states of em({)rger;iy
ume). Taken together, these concessions were
inefficient and fiscall Wermuptions of the democratic order, and civil liberties were »roa ! z
costly, but they may have been critical to the
government's capacity i Srotcied Moreover, press freedom was cxtensivs: the cen§orsh1p: Lf)-toiu
implement its overall reform program. 4 bullying of the media found elsewhere in the region was vir \ilafly
Finally, the Menem government’s economic reforms were accomps ent+ The persistence of full-fledged democ]{acy was Ap.amcx,(\:1 thz'
nied by a series of executive encroachments
on legislative and judicsl & wiven the depih of the 1989—90 hyperinfla.nonary crisis an
power. These institutional shenanigans included fical nature of the Menem government's economic reft?n.fns. ) |
the widespread use of
executive decrees, the 1990 packing of the Supreme
Court, and the polit- Democratic imstituions were buttressed by an active c1.vl.1 s?mety.' anfii
cized appointment of federal judges (Verbitsky
1993; Larkins 1998). B independeni media. State encroachments on civil llbeftle]s =
creating a loyalist majority on the Court, the gover
nment ensured that 1% #iggered sustained civic protests that imposed heavy political co
reforms would not be blocked on constitutional
grounds. Perhaps most Becsuse the st nunued to pay out on its
i igati s to rel tirees
obligation the same time e
at i
notably, in the 1990 Peralta case, the Court uphel ion pro
d the constitutionalityof ,_finor‘? r::\‘:dcfm‘; the nevg privately funded system, pension privatizat
Menem’s executive decrees (Helmke, this volum
e). massive fiscal drain . N .
Notwithstanding their successful implementa i vt press freedom (such as a 1992 “Truth in Press” bill and flbf;::zr:flz
tion, the Menem reforms
left several problematic legacies. One was conver - S 4w of the stick” that would permit citizens to take matters into L
tibility. Because it wat s afiended by i media) generated massive public opposition, which le
widely viewed as having ended hyperinflation, and
because many middle: gat 1o abandon them.
 1
32 Argentine Democracy
Building Castles in the Sand? 33
on gove governme
rnmernt offici: als(ls and,
nd, In many y cases
serlous investigations (Smulovi
ca , indu
ing ced d them to o undertake dircumvented the legislative process through the use of Necessity and Ur-
tz and Peruzzotti 22003;
me).e). For exampple,
le, i in 1990,0
0 3; Peruzz
Peruzz
otti,
otti, this
th: vol- gency Decrees. Prior to 1994, decree authority was not explicitly granted
For exam when the provi o ncial gov
ernment in Cata by the constitution, and legal experts disagreed over its constitutionality
(Ferreira Rubio and Goretti 1998, 285-90). Whereas President Alfonsin
issued 10 Necessity and Urgency Decrees between 1983 and 1989, Menem
issued 335 of them between 1989 and 1994 (Ferreira Rubio and Goretti
2000, 1, 4).
Menem also showed little respect for judicial independence. In 1990,
he pushed through legislation—over the objections of the ucr and with a
contested quorum—expanding the size of the Supreme Court from five to
nine. He then stacked the Court with loyalists, creating what came to be
known as an “automatic majority.” The new Supreme Court rarely ruled
against Menem on important issues (Helmke, this volume). The appoint-
ment of federal judges was also highly politicizeds Though hardly new in
Argentina, executive intervention in the judiciary was particularly severe
during the 1990s, and it seriously eroded the legitimacy of the court
olitiical
polit c proclamationi s, and no miliilitary shows of system.®
force in the streets s of of Menem’s concentration of executive power had several important con-
sequences. For one, the absence of rigorous checks and balances facilitated
;’fic:srss ;(:)révlctcdhof ]’{um.an righ radical economic reform. Had President Menem been held fully account-
ts violations. After that point,
poes to0 ag:“t he dsuielmesvas the armed able to Congress and the judiciary, the reform process would almost cer-
the government slashed its budg
s ,D fth:d e ;he dr.aAh, and privatiz et and tainly have been slower and less far-reaching. In addition, the deficit of
ed military-owned enterprises. executive accountability permitted a substantial degree of corruption. The
e thee ;a e, military spending was unde
B e
r the tight control
of economic reform process—including several key privatizations—lacked
oconomy, and res.ponsi bility for det
e Foep DYéncnt lay exclusively with
ermining military transparency and was marred by questionable deals, and a series of high-
the Foreign Ministry. In profile corruption scandals involving top government officials created a
£ &,m — Yrcbesh. o.mmam?ler Martin Balz
ki zyes Ie .dvlor.d.u.rmg the Dirty
a issued a stunning apology public perception of widespread and unchecked abuse of power. Indeed,
g s
War. Although little progress although several ministers and high-level appointees were either directly
veloping civilian oversight capacity
ense Ministry, the armed forc
in eitherCongress o implicated in scandals or forced to resign amid corruption allegations,
es’ subordination to civilian none of these officials were brought to justice during the Menem adminis-
glrlthon'T
tration.
In Ar,
tect e(flgz:;hna,
ina a dram 2 atici ally weakened military,
One of the most striking instances of institutional manipulation during
i €, Loy appears
rather than a carefully pro. the 1990s was Menem’s repeated effort to modify the constitution to en-
to have
: been critical to d eémocratici stabi
= Sch:ttit wassn(otsncwssary to spar lity. In thi ; able him to run for reelection. In 1993, Menem took advantage of his
e the military “queen” (g’f)onn broad popular support to bully ex-President Alfonsin into accepting a con-
foit1tter 1986
9 , 69) in the name of dem, ellj
- Not
tici consolidati stitutional reform by threatening to hold a plebiscite on the issue. The
N withst staand
ndiing these; su ccesses,; however, Aimany y ofof Arge
e ntinina’
a’s de
hi: ;cr;rtxsthmno.ns ;;mamed frag -
ile during the 1990s. Pajicula 5. One of Meneny's cabinet ministers is reported to have listed on a napkin all of the
e erm in office, 3 Presiden rly d:;i r;o
ler t Menem took advantag: e ge
ofof hishi popula 2
federal appeals court justices the government “controlled” (Verbitsky 1997).
ofpicl)i & arlu:‘l a vs.leak.ened Oppositi 6. For cxample, a 1993 survey found that more than Go percent of Argentines perceived
on to concentrate power and bend
Political institutions to his advantag pa rzn - the judiciary to be in worse shape than it had been at the time of the 1983 democratic
e. For example, A Menem freque transition (Clarén, December 7, 2003)
nfiCly
 A
W—

34 Argentine Democracy 35
Building Castles in the Sand?
result was the 19 93 Olivi os Pact, ned the legiti-
R
tional reform that included .
which en
3 buses committed while carrying out those reforms weake
. Indeed, wide-
.Pm‘_’ed by an elected constitu
a reelecti e B T macy of the institutions that emerged from the process
abuse eroded the
spread perceptions of unchecked corruption and
ent asse;
Institutional reforms, the gap be-
ing. These included a shortening redibility of Argentina’s representative institutions, widening
of the Torre and Peruzz otti chapters,
sween citizens and the political elite (see
(prev.wusly chosen by provinci this volume).
al
the city of Buenos Aires, and the
“The Party System and Political Representation in the 19905

and change dur-

The Argentine party system experienced both continuity
where the failure of
ing the 1990s. In contrast to Peru and Venezuela,
collapse and the
established populist parties contributed to party system
resilient in
:
£meaA
ns to i
gain reelection, e Py rise of antisystem outsiders, Argentina’s party system proved
deprpriv
i ed the constitut part, this stability
ional Pproce: +he face of economic crisis and radical reform. In large
was rooted in the »)’s capacity to adapt to the neolib eral challenge while
TArgentina’s E demq ocraticici inst
. itutions surviv) ed the Menem t base (Levitsky 2003,
— opposgfione{ms gove: f simultaneously maintaining its traditional suppor
publ.lc support began t national elec-
=
to wane durinz hi:n;n ol this yolume). As Table 1.1 shows, the 7j won four straigh
orces gained strength, The legi Peronism’s decisive
s ve, , and previo
slature became i " tions after the Menem government’s neoliberal turn.
i usly deferentia] justices beg were widely interpreted
an to
r u l ga ii on) - wictories in the 1991 and 1993 midterm elections
ent (Helmke, this volume). The Menem with clear
limits on e as votes of support for convertibility, and they provided
The »j also won the 1994
‘mandates to proceed with,economic reforms.
was overw helmingly
eL
5 ike 1993-94, the “ constituent assembly elections, and in 1995, Menem
i ; ul blic o) ppositio
'PPosition parties, and more cruc
it n, was joct it reelected with 50 percent of the vote.
of the Alfonsin
ially, by a large ;a:i];rfte? tl}}ly
of the 1pj ‘The Radicals, who were discredited by both the failure
t of the presidential
government and the Olivos Pact, fell from 52 percen
vote in 1983 to an unprecedented low of 17 percen t in 1995. UCR candidate
race, behind
Horacio Massaccessi finished third in the 1995 presidential
former Peronist José Octavio Bordén, who ran as the candidate of the
as scheduled, in December 1999. ). The center-left
s Menem’s institut newly created Front for a Country in Solidarity (¢ rEPASO
t ional manipulation of clean gover nment and institu-
ent pomfgl t:nzlrc:lr.nvent.,
had ad imp
i ortant costs. FrEPASO, which campaigned on issues
-class elector ate.
L
br.eak, or change rules that
st:o;?ne lioevifm‘ tional integrity, captured much of the ucr’s middle
e Ti u1cy objectives reinforced exis ronist forces, as
s ting patterns of insh’tiy The emergence of FREPASO temporarily divided non-Pe
undena.k ds, even though many of the middle -class vote.
political and ecor ic both FrEPASO and the ucr competed primarily for the
en during the 1990s were wide the working and
ly viewed as ben:{?:allc As a result, the pj, which remained hegemonic among
90s. However, in
lower dlasses, dominated electoral politics in the mid-19
7- It should be noted that th e Olivo the Alianz a por el Trabajo, la
e
that
s Pact a rep;
was notably lacking in earlier constit
August 1997, the UCR and FREPASO formed
and Educat ion), trans-
tional zeform processes (particularly that of1g4o), Educacién, y la Justicia (Alliance for Jobs, Justice,
electoral
i been Menem and Alfon- forming the previously weak and divided opposition into a viable
t and non- Pe-
alternative. The party system remained divided into Peronis
coalition of the estab-
ronist camps, but the latter was now represented by a
fished Radicals and the emerging ¥rEPAso. The Alianz a defeated the py in
 Building Castles in the Sand? 37
o
S11]1433¢g the 1997 legislative elections, breaking a string of six consecutive Peronist
- vidtories. In 1999, the Alianza’s presidential ticket of Fernando De la Ra
o L wNo {ucr) and Carlos “Chacho” Alvarez (FrEPASO) campaigned on a platform
sShlltge g of clean government, institutional integrity, and greater attention to social
needs. Taking advantage of increased public dissatisfaction over corrup-
»
2 3 .; o e tdon and increased social exclusion, the Alianza won easily, defeating
maTTgns g candidate Eduardo Duhalde by 48 percent to 38 percent.
The rise of the Alianza appeared to stabilize the party system and return
st & itto the competitive parity of the 198os. However, serious problems lurked
AR A g beneath the surface. The absence of policymaking transparency and the
high-profile corruption scandals of the 1990s had eroded the credibility
2 flaliuts; ~ of Argentina’s representative institutions, particularly among middle- and
iR ~g upper middle-class voters. In 1997 and 1999, the Alianza appeared to be
2 viable alternative for these voters, and the middle-class electorate voted
§ htin gl e overwhelmingly for De la Rita. However, middle-class support for the Ali-
_ - =g ) anza would prove shallow and short-lived.
F-J
gé‘
K
R
E
HEEREEI
- Sl THE POST-MENEMIST ERA
o I

g" ;: i L e é The post-Menemist period was marked by an economic collapse and a

~NE ¢ & severe crisis of political representation. Although the crisis again made
g
g 8 £ manifest the resilience of Argentine democracy, it also highlighted Dboth
E =z § -5 the limitations of the 199os experiment with democracy and radical mar-
:& H H E ket reform and the continued weakness of Argentina’s political and eco-
& % H E nomic institutions.

£ 5. £ 4 The Unfulfilled Promise of Renovation: The Rise and Fall of the Alionza
H i K
5 Fernando De la Rta’s defeat of Peronist Eduardo Duhalde in the 1999
2 g 2§ 5
£ i"?:g *§ {i P S presidential election brought the Menemist era to close. Although it ac-
g ?é 2 =2 . S X 2 3 cepted the fundamentals of the new economic model, the Alianza prom-
g _sds 3 s k| £ &2 5 & ised to combat corruption and address the social costs of neoliberalism,
De
EZE fé"é & & B TEL8 2 which generated high expectations of the new government. However,
H
E B35 253238 i é g £5 i: la Ria failed to deliver on both of these frons.
5 % g E g3 Af g & 5 5 gg 9 :g On the political front, the Alianza failed to clean up politics. In August
ED
FE0ngyEE | Frrayiy 2000, allegations surfaced that government officials had bribed a handful
3 cOSE §9% g = 250 of senators in an effort to pass labor reform legislation. Vice President
e (and FrEPASO leader) Carlos Alvarez, whose party had made anticorrup-
§8¢ SEss
2S5 8lE EESS3E5EF | 855 A . =y P
BIQIESS 3535
583 <)
8 252888 tion its central plank, called publicly for a serious investigation, and when
e =k De la Rtia balked, Alvarez resigned. Although ¥rEpaso remained in the
38 Argentine Democracy
government, Alvarez’s resignation triggered the de facto collapse of both
the Alianza and FrEPASO. More important, the scandal shattered the Ali-
anza’s claim to represent a “new way” of doing politics and convinced
many of its erstwhile supporters that none of the major parties effectively
represented them (Torre, this volume).
The Alianza fared even worse on the economic front. The De la Ria
government inherited a prolonged recession that was rooted in a series
of external shocks, including large-scale capital outflows triggered by the
1997-98 Asian financial crisis, a strengthening U.S. dollar, and Brazil’s
1999 devaluation. Yet the Convertibility Law prevented the government
from using exchange rate or monetary policy to reactivate the economy.
Wedded to convertibility and confronted with a heavy debt burden, fiscal
pressure created by declining tax revenues and fixed transfers to the prov-
inces, jittery bond markets, and inflexible 1M ¥ demands for fiscal adjust-
ment, the new government opted for a series of pro-cyclical austerity
measures that prolonged and deepened the economic downturn, In March
2001, as Argentina entered its fourth consecutive year of recession, a des-
perate De la Rtia reappointed Domingo Cavallo, the father of convertibility
under Menem, as minister of the economy. Yet Cavallo was unable to re-
verse the situation.
In the midst of a prolonged recession and in the wake of the Senate
corruption scandal, Argentine voters vented their frustration in the Octo-
ber 2001 legislative elections. The Alianza was badly defeated by the »j,
and its share of the valid legislative vote was cut nearly in half relative to
1999. More ominous, the percentage of voters who cast blank and spoiled
ballots—a protest against the entire political elite—soared to an unprece-
dented 22 percent of the overall vote. Indeed, the blank and spoiled vote
exceeded that of the governing Alianza, and in two of the country’s largest
districts (the Federal Capital and Santa Fe), it exceeded those of all parties.
Mounting fears of a debt default or currency devaluation, reinforced by
the Alianza’s devastating electoral defeat, triggered a severe financial crisis.
In late November 2001, Cavallo responded to a wave of capital flight by
imposing strict limits on bank withdrawals and currency movements. The
political consequences of the so-called corralito (playpen)—which deprived
the middle classes of their savings and starved the cash-dependent infor-
mal economy that sustained much of the poor—were devastating. On De-
cember 18 and 19, Argentina exploded in a wave of rioting and protest.
Confronted with widespread looting, highway blockades, and tens of thou-
sands of middle-class protesters banging pots and pans in downtown Bue-
nos Aires, and after a brutal police repression that resulted in at least two
dozen deaths, De la Rua resigned on December 20. With the vice presi-
Building Castles in the Sand? 39
dency vacant, Congress clected Peronist governor Adolfo Rodriguez Sai to
serve as interim president. Rodriguez Sad immediately declared a default
on Argentina’s U.S.$132 million debt—the largest default in history. Yet
on December 30, after another round of mass rioting and amid severe
conflict within his own party, Rodriguez Sai, too, resigned the presidency.
On January 1, 2002, when Congress selected pj senator Eduardo Du-
halde as Argentina’s third president in less than two weeks, Argentina
stood on the brink of anarchy. Rallying behind the slogan que se vayan
todos (“throw everyone out”), protesters descended on the three branches
of government, demanding the resignation of the Congress and the Su-
preme Court. At the same time, groups of poor and unemployed people—
known as pigueteros—blocked major roads and highways throughout the
country demanding food and jobs. While new forms of protest seemed to
replace partisan channels of representation, citizen anger against politi-
cians reached such heights that Argentines began to physically attack them
on the street, in restaurants, and in other public places.
Immediately after his inauguration, Duhalde ended the convertibility
system, plunging the economy further into chaos. Within weeks, the value
of the peso had fallen by more than 70 percent, triggering fears of hyperin-
flation.® With the banking system paralyzed and no immediate prospect of
international assistance, economic activity ground to a halt. Argentina’s
GDP contracted by 16 percent in the first quarter of 2002, and the unem-
ployment rate climbed to nearly 25 percent. More than five million people
fell into poverty between October 2001 and June 2002. By mid-2002,
more than half the population was living in poverty, compared to just 22
percent in 1994.
The economic collapse pushed the political system to the breaking
point. Widespread public hostility toward the political elite raised the spec-
ter of a full-scale party system collapse, and the intensity of social protest
and widespread perceptions of chaos triggered talk—for the first time in
thore than a decade—of military intervention. After police killed two pro-
testers in June 2002, a weakened Duhalde was forced to cut short his own
mandate. He announced that he would leave office in May, rather than
December, of 2003, and presidential elections were eventually rescheduled
for April 2003.
The 20012 crisis thus triggered yet another round of institutional col-
lapse. Institutions ranging from the currency board, property rights, and
8. Devaluation generated political pressure from influential dollar-denominated debtors
such as provincial governments, business, and much of the middle class. In response, Du-
halde subsidized their debts by creating a special exchange rate at great fiscal cost to the
state.
40 Argentine Democracy
central bank autonomy to judicial independence, presidential mandates,
and the electoral cycle were dismantled, violated, or seriously threatened.
Presidential elections were rescheduled four times. Indeed, throughout
2002, there was little certainty when elections would be held, which offices
would be up for election, or how candidates would be selected. Repeated
conflict over and manipulation of the electoral rules of the game reinforced
the already low levels of public trust in politicians and political institutions.
Political parties also fell into crisis. The parties of the Alianza suffered
a meltdown: FREPAsO disintegrated, and the ucr fell to less than two per-
cent in opinion polls. As the ucr sank into apparent oblivion, aspiring
Radical politicians abandoned the party. Elisa Carrié, a legislator who had
emerged as a prominent anticorruption crusader, formed the left-of-center
Argentines for a Republic of Equals (ar1), and Ricardo Lépez Murphy,
who had briefly served as De la Riia’s minister of the economy, launched
the conservative Federal Movement for Renewal (M¥R).
Although the »j remained strong in electoral terms and was widely
expected to win the presidency, it was nearly torn apart by internal conflict
between Menem, who sought to regain the presidency, and Duhalde, Des-
perate for a candidate to defeat Menem, Duhalde turned to Nestor Kirch-
ner, the little-known governor of Argentina’s least populated province
(Santa Cruz). Ex-interim President Adolfo Rodriguez Sa4 also sought the
presidency. The Peronists repeatedly failed to agree on the rules of the
game for selecting a candidate, and the nomination process quickly de-
scended into a naked power struggle. Although Py statutes called for a
presidential primary, Duhalde, fearing a Menem victory, used his power
in the party to derail such a vote. To avoid a rupture, py leaders ultimately
opted not to officially nominate a candidate, but rather to allow Menem,
Kirchner, and Rodriguez Sai to run outside the party.
The 2003 Election: Democratic Resilience and Partial Party System Collapse
The depth of the 2002 economic crisis and the extent of public hostility
toward politicians raised the specter of a party system collapse and a re-
gime-level crisis similar to those of Peru and Venezuela. Nevertheless, Ar-
gentina’s democratic institutions again remained intact. The role of the
armed forces during the crisis was striking. Notwithstanding widespread
social protest and an atmosphere of virtual chaos, the military refused to
Tepress protesters, made no attempt to change the government, and ab-
stained from seeking to exert behind-the-scenes influence over political
events (as occurred in Bolivia, Ecuador, Peru, and Venezuela). Given the
depth of the crisis and Argentina’s history of military intervention, this
was an extraordinary outcome.
Building Castles in the Sand? 41
As the 2003 election approached, the political and economic crises
began to ease. Buoyed by an incipient economic recovery, the Duhalde
government used a combination of old-school clientelism and effective so-
cial policies—including the distribution of low-cost medicine and. monthly
subsidies to nearly two million unemployed heads of houscholds—to re-
store a minimum of social peace. Levels of protest declined, and political
activity was increasingly channeled into the electoral arena.
The May 2003 presidential election was the most fragmented in mod-
em Argentine history. Peronism (unofficially) ran three candidates:
Rodriguez Sa4, who campaigned as a populist outsider; Menem, who ran
as a law-and-order conservative; and Kirchner, who adopted a progressive
center-left platform. The leading non-Peronist candidates were ex-Radicals
who had formed their own parties: Carrié, who adopted a left-of-center,
anticorruption platform, and Lépez Murphy, who combined a clean gov-
ernment appeal with a conservative and market-oriented platform.
The election marked a departure from the protest politics of 2001-2.
Notwithstanding widespread public anger and the political elite, no anti-
establishment outsider received even two percent of the vote, and the blank
and spoiled vote, which had surpassed 20 percent in 2001, fell to just 2.5
percent. Menem, who enjoyed the strong support of a minority of voters
but was intensely disliked by a majority, finished first with 24.5 percent of
the vote. Kirchntr, who was backed by Duhalde’s powerful Peronist ma-
chine in the province of Buenos Aires, finished second with 22.4 percent.9
Because no candidate secured 45 percent of the vote, Menem and Kirch-
ner, two Peronists, qualified for a runoff election. In the second round, the
anti-Menemist vote coalesced behind Kirchner.» Facing the prospect of
overwhelming defeat, Menem abandoned the race, handing the presidency
to Kirchner.
The 20012 crisis thus had an uneven impact on the party system. On
the one hand, the established non-Peronist parties were virtually wiped
out. FrREPAso and Domingo Cavallo’s Action for the Republic disinte-
grated, and vcr, which had been the country’s leading middle-class party
for more than a century, suffered an unprecedented decline. Radical candi-
date Leopoldo Moreau’s 2.3 percent of the vote was easily the worst
performance in party history. On the other hand, Peronism proved re-
markably resilient. Peronist presidential candidates won a combined 61
percent of the vote, and the »J eventually secured a majority of seats in the
9- Lépez Murphy finished third with 16.4 percent of the vote, followed by Rodriguez
Sad and Carrié, each with 14.1 percent.
10. Almost immediately after the first-round vote was counted, surveys showed Kirchner
winning the second-round election with more than 70 percent of the vote.

42 Argentine Democracy
Chamber of Deputies, retained control of the Senate, and won the vast
bulk of the country's governorships.
The »y’s electoral resilience was critical to preventing a full-scale party
system meltdown and the rise of an anti—political establishment outsider.
In Peru and Venezuela, the success of outsider candidates was rooted in
the collapse of established populist parties, which. left a large number of
low-income voters available for “neopopulist” appeals (Roberts 1995; Wey-
land 1999). In Argentina, by contrast, working- and lower-class voters re-
mained solidly in the Peronist camp, confining the “throw everyone out”
vote to the non-Peronist electorate (Escolar et al. 2002; Torre, this volume).
Non-Peronist forces remain unstable. The two “post-Alianza” parties
with the strongest claim to middle-class votes, Carri6’s center-left Az1 and
Lopez Murphy’s center-right mMrx, are little more than personal vehicles
for their respective founders. They lack national organizations, and their
support bases were concentrated largely in the major metropolitan centers.
Since the emergence of Peronism in the 1940s, national-level party build-
ing has proven exceedingly difficult in Argentina. Indeed, of the many
parties that competed in national elections between 1983 and 2003, only
the pj and the ucr succeeded in penetrating the entire national territory.
Alternative political forces, such as the Intransigent Party and FrEPASO
(on the center-left) and the Center Democratic Union and Action for the
Republic (on the center-right), were weakly organized, Buenos Aires—
Dbased parties, and all of them virtually disappeared within a decade. If the
ar1 and the MrR do not extend their influence into the peripheral prov-
inces, they will almost certainly suffer a similar fate.
Argentina’s post-1999 party system thus appears to have suffered a par-
tial collapse. On the one hand, Peronism’s electoral resilience prevented a
full-scale party system collapse along the lines of Venezuela and Peru. On
the other hand. unlike party systems in Chile, Mexico, Uruguay, and even
Brazil, no stable partisan alternative emerged to represent disaffected or
previously excluded voters. In contrast to the National Action Party (paN)
and Party of the Democratic Revolution (prDp) in Mexico, the Broad Front
in Uruguay, the Workers Party (T) in Brazil, and the Independent Demo-
cratic Union (upi) in Chile, Argentina’s emerging partisan alternatives
(FREPASO, Action for the Republic) never developed national structures
during the 1990s and quickly collapsed, leaving non-Peronist forces frag-
mented and disorganized.
The Kirchner Presidency: A New Round of Institutional Change
Following an election in which he won only 22 percent of the vote, Presi-
dent Kirchner quickly established his authority by launching a set of bold
e |
Building Castles in the Sand? s
reform initiatives. The new government restructured the military and po-
lice hierarchies, shook up several state agencies long linked to corruption,
pushed successfully for the removal—via impeachment and resigna-
tion—of leading Menemist-era Supreme Court justices, and established
mechanisms to ensure a more transparent and consensual judicial nomi-
nation process.” The new government also solidified its support among
middle-class progressives by launching a campaign to reopen judicial pro-
ceedings against military officials implicated in human rights violations.
Finally, Kirchner distanced his government from the economic policies of
the 1990s. The new government adopted a harder line in negotiations
with international creditors and began to revise several post-privatization
concessions and regulatory arrangements that were deemed harmful to
consumers. In many respects, these moves went beyond the progressive-
reformist platform that had been charted but abandoned by the Alianza.
Public opinion surveys showed broad support for the new government and
a striking degree of optimism about Argentina’s future, at least until the
third quarter of 2005.>
The longer-term impact of Kirchner’s reforms remains uncertain. In at
least some respects, the early Kirchner presidency resembled that of
Menem. The new president concentrated power in the executive, demon-
strated an unusual degree of political initiative and energy, and undertook
a series of boldInitiatives from above that shook up or undid institutional
and policy arrangements associated with discredited past governments.
Similar to the carly Menem years, these rapid-fire initiatives won broad
public support and helped to restore public confidence in the political
process. However, Kirchner's initiatives were more transparent and more
oriented toward institutional integrity than those of early 199os—perhaps
because the primary crisis he faced was one of public confidence, not hy-
perinflation. Thus, whereas Menem routinely sacrificed institutional integ-
tity in the pursuit of short-term political and economic goals, the Kirchner
government faced an important dilemma between process and outcomes.
On the one hand, facing a skeptical and highly mobilized public, Kirchner
needed to achieve certain institutional outcomes—such as a reshuffling of
the Supreme Court and other discredited state agencies—quickly to avoid
the fate of his immediate predecessors. On the other hand, simply stacking
the Court, as Menem did, would reinforce existing patterns of institutional
instability. In some areas, including the Supreme Court, Kirchner was able
12 As of late 2003, the Senate had approved four of Kirchner's proposed appointees to
the Supreme Court following the new open debate process.
12. Kirchner's public approval rating reached 8o percent soon after his inauguration in
May 2003 and remained above 70 percent through early 2005
44 Argentine Democracy
to achieve his goals while taking issues of process seriously, which could
enhance the long-term credibility of those institutions. In other areas, such
as regulatory agencies that were stacked by the executive in order to protect
consumers from rate hikes, outcomes won out over process. Hence,
whether the Kirchner round of reforms will break or reinforce preexisting
patterns of institutional instability remains to be seen.
If institutional instability remains a central feature of contemporary Ar-
gentine politics, however, the scope of that instability may be narrowing.
Although the political-economic crises of 1989—go and 2001-2 resembled
earlier ones in that they were accompanied by widespread contestation,
subversion, and alteration of the rules, they differed in that certain core
political and economic institutions survived. The democratic institutions The Institutional Foundations of Public Policy: A Transaction Cost
established in 1983 endured the collapse of the Alfonsin government {and Approach and Its Application to Argentina
later, that of the Alianza government), and notwithstanding the profound
socioeconomic crisis of 20012 and the election of a critic of neoliberalism Pablo T. Spiller and Mariano Tommasi
in 2003, the primary free market institutions created during the 199os
remained largely intact. This core institutional stability constitutes a sig-
nificant break with earlier patterns, and it permits a measure of optimism
about Argentina’s political future, even as the country struggles to recover In the 1990s, Argentina underwent a broad and profound process of mar-
from the devastating crises of the not-too-distant past. ket-oriented reform. With its ambitious program of macroeconomic stabi-
lization, libesalization, privatization, and deregulation, Argentina became
the poster child of the Washington establishment. After decades of inward-
looking policies, stagnation, and fiscal crises that produced hyperinflation
in 1989, Argentina seemed to have found its way at last. For a good part
of the 1990s, Argentina’s macroeconomic performance was extremely
strong. From negative growth in the 1980s, its Gp» grew over 50 percent
in the 199197 period, and inflation fell from 23,104 percent in 1990 to
around zero in 1997.
Unfortunately, in 1998 the Argentine economy entered into a long,
drawn-out recession that exploded into one of the deepest crises in modern
economic history in December 2001. In the end, the 1990s turned out to
be just one more cycle in Argentina’s history of hope and despair. Evaluat-
ing Argentina’s dismal performance, most economists have blamed poor
economic policies for these sad outcomes. We tend to agree with this per-
spective, but instead of emphasizing the “content” of economic policies
(for example, how market-friendly they are), we focus on general policy
“characteristics.” Argentine policies are unstable in ways that weaken their

This chapter draws extensively from our article in the Journal of Law, Economics, and
Organization (fall 2003), and from our forthcoming book. We thank Jeff Frieden, Steve Levit-
sky, Bob Barros, and especially Vicky Murillo for their insightful comments and criticism.