Menem abandoned his party’s traditional support of state enterprises; he cut government spending and generally liberalized the Argentine economy. He also pardoned and released top military leaders. In May 1995, following a first term marked by economic success and political stability, Menem was reelected to a second four-year term. He weathered Argentina’s 1995–96 economic recession with the aid of Domingo Cavallo, one-time economy minister and architect of Argentina’s anti-inflation plan. Despite the economic successes, many Argentineans grew tired of Menem and alleged corruption in his administration. Menem also couldn’t keep his private “playboy” life apart from politics, and began showing the traits of a caudillo by pressing for changes to the constitution so he could run for a third term in 1999. His bitter rival and critic, Eduardo Duhalde, prevailed and represented the Justicialists in the 1999 presidential election. For Duhalde and his fellow Peronists, a downturn in the economy came at a bad time. In 1999, Argentina entered a recession and saw its GDP decline by 3%. The economy was affected by downturns in the Russian and Asian economy and devaluation in neighboring Brazil, one of Argentina’s biggest trading partners. Unemployment reached 14%. Menem didn’t help his party’s cause. He seemed more intent in undermining Duhalde while he actively appeared to be campaigning for a third term in 2003.
In the meantime, Fernando de la Rúa Bruno, the popular mayor of Buenos Aires, had balanced the city’s budget and even managed to increase and improve services. A leader of the Unión Cívica Radical, de la Rúa aligned his party with a new political movement called Frente del País Solidario (Frepaso) or Front for a Country in Solidarity, an amalgamation of several center-left parties. Together, they created the Alianza (alliance), and backed de la Rúa for president. De la Rúa’s conservatism and successes in Buenos Aires got the attention of voters. He provided a sharp contrast to the excesses of the bon vivant Menem. De la Rúa even emphasized his own boring demeanor in political campaigns. A serious president would take the country’s problems seriously, his aides stressed. The campaign worked. In October 1999, voters gave de la Rúa 48.5% of the vote. Duhalde received 38.1%.
After taking office in December, de la Rúa declared a national economic emergency. By March 2000, he had pushed through Congress a new budget that sliced in half the fiscal deficit. He promulgated new laws to weaken the bargaining power of unions as he continued to push for his plan to make the country more competitive. But he faced many battles. While the Alianza held on to a slim majority in the lower Chamber of Deputies, the Senate remained in control of the Justicialists. Partially because of his inability to restrict spending by provincial governors and because he had little maneuvering space to adopt policies that could stimulate growth, de la Rúa could not overcome the economic crisis and the government was eventually forced to devalue the currency against the dollar. Social and political chaos ensued with the economy going into its worst recession in decades. After his party lost the midterm elections in 2001, President de la Rúa popularity continued to fall and the economic situation became unbearable. After protests turned violent in Buenos Aires in December 2001, looting and chaos erupted, followed by police repression. De la Rúa was forced to resign from the presidency. After a few weeks of political instability, the Senate chose Eduardo Duhalde, who had been elected to the Senate in the 2001 midterm election, as a temporary president. Duhalde governed until May 2003, when Néstor Kirchner, elected in April, was inaugurated president. Although former president Carlos Menem obtained the first plurality of votes in the first round among a handful of other presidential candidates, the former president withdrew less than a week before the runoff when it became clear that Kirchner, who came in second with 22% of the vote, would win by a landslide. Kirchner was a little-known governor from the southern province of Santa Cruz, but he successfully captured the growing anti-Menem sentiment. In addition, Kirchner was widely seen as Duhalde’s favorite and many expected him to carry on Duhalde’s policies.
In the end, the 2003 presidential election turned out to be a contest between the two Perónist rivals, Menem and Duhalde. Although Duhalde’s candidate became president, Menem’s withdrawal prevented Kirchner from winning a majority of votes in the runoff election. With his legitimacy weakened and his independence of Duhalde under doubt, Kirchner became president of a country in the midst of an economic, social and political crisis. The economy shrank by 14% in 2002 and official unemployment remained at 25%. With a mounting foreign debt and financial obligations to foreign lenders that will be difficult to meet, President Kirchner faced the challenge of assuring Argentines and the world that he had the leadership skills, political muscle and will needed to lead his country out of the turmoil. During his first weeks in office in 2003, Kirchner combined the continuation of Duhalde’s economic policies with the anti-corruption initiatives. Yet, his success depended on his ability to reunite the Justicialista party.
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