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Background Note:
Argentina PROFILE
OFFICIAL NAME: Geography People Government Flag: Economy (1999) U.S.-ARGENTINE RELATIONS U.S. Embassy Functions Attaches accredited to Argentina from the Department of Justice (including the Drug Enforcement Administration and the Federal Bureau of Investigation), U.S. Customs, the Federal Aviation Administration, and other federal agencies work closely with Argentine counterparts on international crime and other issues of concern. An active, sophisticated, and expanding media environment, together with growing positive interest in American culture and society, make Argentina an uncommonly receptive environment for the information and cultural exchange work of the U.S. Embassy as well. The number of Argentines studying in U.S. universities is rapidly growing, and the Fulbright fellowship program has more than tripled the annual number of U.S. and Argentine academic grantees since 1994.
The embassy's consular section monitors the welfare and whereabouts of more than 20,000 U.S. citizen residents of Argentina and more than 300,000 U.S. tourists each year. Consular personnel also provide American citizens passport, voting, notarial, Social Security, and other services. Although the U. S. since 1996 has permitted Argentine tourists to visit without visas, the consular section does issue nonimmigrant visas to persons who travel for other purposes, such as students and those who seek to work in the U.S., as well as immigrant visas to those who seek U.S. permanent residence.
Principal U.S. Embassy Officials Contact information ECONOMY The 1991 convertibility law established a quasicurrency board, which has been a pillar of price stability. The government privatized most state-controlled companies, opened the economy to foreign trade and investment, improved tax collection, and created private pension and workers compensation systems. As a result of these policies, Argentina experienced a boom in economic growth in the early 1990s, followed by a period of somewhat more erratic growth in the second half of the decade when the country was hit by a series of external economic shocks. While the economy recovered fairly quickly from the effects of the "Tequila" crisis of 1995, Argentina is finding it harder to return to strong growth after the recession that followed successive shocks from East Asia, Russia, and Brazil.
Structural reforms, coupled with monetary stability, fostered major new investment in services and industry in the 1990s, particularly in the telecommunications, food-processing, banking, energy, and mining sectors. As a result, Argentina's exports more than doubled, from about $12 billion in 1992 to around $25 billion in 1999. Imports also grew rapidly during the same period, from $15 billion to over $25 billion. However, Argentina's international trade still remains a relatively small part of its economy. This is in part a heritage of decades of import-substitution policies, but it also reflects the country's relatively diversified economy.
One of Argentina's challenges is to generate growth with more equitable distribution of income and reduced unemployment. The country has seen double-digit unemployment since the mid-1990s (peaking at 18.4% mid-year 1995); the May 2000 unemployment rate was 15.4%. Over the long term, significant declines in unemployment will come slowly; labor productivity will rise as major private investments are implemented, and future growth will be strongest in capital-intensive sectors. There is broad support for the key elements of Argentina's economic model. However, a growing awareness exists that important structural reforms are still needed, primarily in the labor market, tax administration, and delivery of public services. Inefficiencies in these areas need to be addressed to ensure stable growth. Public sector corruption, commonly acknowledged as being widespread, is another subject of public debate. The Argentine justice system can be politically influenced, is often inefficient, and provides slow due process.
Banking Despite the recession, bank deposits continued to grow during 1999, although at a much slower rate than in previous years. Total deposits in the banking system stood at nearly $80 billion in December 1999--twice that of June 1995, when deposits hit a low of $37 billion. Foreign-controlled banks now hold over 40% of total deposits, and six of the top 10 commercial banks are in the hands of U.S. and European financial institutions. Still, the level of bank utilization in Argentina remains relatively low, and bank intermediation represents only about 30% of GDP--a much lower ratio than that in Chile, Mexico, or Brazil, for example. Financing and lending costs, high by industrialized country standards, were further increased by the late-1990s turmoil in emerging markets. Annual interest rates which banks charge large preferred businesses were around 10% in 2000. For consumer overdrafts or higher-risk firms (typically small businesses), annual rates approach 25%. Given Argentina's extremely low rates of inflation, those interest rates, which reflect lenders' risk calculations, are very high in real terms.
Foreign Trade Argentina's trade deficit dropped from $5 billion in 1998 to $2.2 billion in 1999, primarily because the recession lowered demand for imports. The overall value of 1999 Argentine exports fell 12%, due mainly to low international commodity prices, while imports dropped 19% from 1998. Argentine exports began to increase significantly in the last months of 1999 and continued their upward trend in early 2000. Exports should continue to rise throughout 2000 as rebounding economies in Brazil and Asia increase demand and prices for Argentine commodities move upward; rising oil prices have been particularly significant. The U.S. trade surplus with Argentina was $2.4 billion in 1999, down from 1998 as U.S exports to the country declined from $5.9 to $5.0 billion. Fresh Argentine beef was exported to the U.S. market in 1997 for the first time in over 60 years, and in 1999 its export quota of 20,000 tons was filled. However, beef exports to the U.S. were suspended in August 2000 when some Argentine cattle (near Paraguay) were discovered to have anti-bodies for hoof and mouth disease.
Mercosur, the customs union that includes Argentina, Brazil, Paraguay, and Uruguay, entered into force January 1, 1995. Chile and Bolivia joined the pact subsequently as associate members. Close cooperation between Brazil and Argentina--historic competitors--is the key to Mercosur's integration process, which includes political and military elements in addition to a customs union. Brazil accounts for more than 70% of Mercosur GDP and Argentina about 27%. Mercosur has been one of the largest and most successful integrated markets in the developing world, with substantial foreign investment going to its members. Intra-Mercosur trade also rose dramatically from $4 billion in 1991 to over $23 billion in 1998. More than 90% of intra-Mercosur trade is duty-free, while the group's common external tariff (CET) applies to more than 85% of imported goods. Remaining goods will be phased into the CET by 2006.
Argentina adheres to most treaties and international agreements on intellectual property. It is a member of the World Intellectual Property Organization and signed the Uruguay Round agreements in December 1993, including measures related to intellectual property. However, extension of adequate patent protection to pharmaceuticals has been a highly contentious bilateral issue. In May 1997, the U.S. suspended 50% of Argentina's GSP benefits because of its unsatisfactory pharmaceutical patent law. In May 1999, The U.S. Government initiated consultations under WTO procedures to address these inadequacies and expanded the consultations in May 2000.
Investment GOVERNMENT AND POLITICAL CONDITIONS The constitution of 1853, as revised in 1994, mandates a separation of powers into executive, legislative, and judicial branches at the national and provincial level. Each province also has its own constitution, roughly mirroring the structure of the national constitution. The president and vice president were traditionally elected indirectly by an electoral college to a single 6-year term and not allowed to seek immediate reelection. Constitutional reforms adopted in August 1994 reduced the presidential term to 4 years, abolished the electoral college in favor of direct voting, and limited the president and vice president to two consecutive terms; they are allowed to stand for a third term or more after an interval of at least one term. The president appoints cabinet ministers and the constitution grants him considerable power, including a line-item veto.
Provinces traditionally sent two senators, elected by provincial legislatures, to the upper house of Congress. Voters in the federal capital of Buenos Aires elected an electoral college which chose the city's senators. The constitution now mandates a transition (beginning in 2001) to direct election for all senators, and the addition of a third senator representing the largest minority party from each province and the capital. The revised constitution reduces senatorial terms from 9 to 6 years. One-third of the Senate will stand for reelection every 2 years.
Members of the Chamber of Deputies are directly elected to 4-year terms. Voters elect half the members of the lower house every 2 years through a system of proportional representation. Other important 1994 constitutional changes included the creation of a senior coordinating minister to serve under the president and autonomy for the city of Buenos Aires, which now elects its own mayor. The constitution establishes the judiciary as an independent government entity. The president appoints members of the Supreme Court with the consent of the Senate. Other federal judges are appointed by the president on the recommendation of a magistrates' council. The Supreme Court has the power, first asserted in 1854, to declare legislative acts unconstitutional.
Political Parties A grouping of mostly left-leaning parties and former Peronists--the Front for a Country in Solidarity (FREPASO)--emerged in the 1990s as a serious political contender, especially in the federal capital. In August 1997, the UCR and FREPASO formed a coalition called the Alliance for Work, Justice and Education (the Alliance). Smaller parties occupy various positions on the political spectrum and some are active only in certain provinces. Historically, organized labor (largely tied to the Peronist Party) and the armed forces also have played significant roles in national life. However, labor's political power has been significantly weakened by free market reforms, and the armed forces are firmly under civilian control. Repudiated by the public after a period of military rule (1976-83) marked by human rights violations, economic decline, and military defeat in the 1982 Falkland/Malvinas Islands conflict, the Argentine military today is a downsized, volunteer force focused largely on international peacekeeping.
Government Policy NATIONAL SECURITY Lack of budgetary resources is the most serious problem facing the Argentine military today. Current economic conditions and the government's commitment to reduce public sector spending have slowed modernization and restructuring efforts. Under Presidents Menem and De la Rua, Argentina's traditionally difficult relations with its neighbors have improved dramatically, and Argentine officials publicly deny seeing a potential threat from any neighboring country. Mercosur has exercised a useful role in supporting democracy in the region, intervening, for example, to discourage the Paraguayan military during an attempted coup in early 2000.
PEOPLE HISTORY Buenos Aires formally declared independence from Spain on July 9, 1816. Argentines revere Gen. Jose de San Martin, who campaigned in Argentina, Chile, and Peru as the hero of their national independence. Following the defeat of the Spanish, centralist and federalist groups waged a lengthy conflict between themselves to Conservative forces dominated Argentine politics until 1916, when their traditional rivals, the Radicals, won control of the government. The Radicals, with their emphasis on fair elections and democratic institutions, opened their doors to Argentina's expanding middle class as well as to elites previously excluded from power. The Argentine military forced aged Radical President Hipolito Yrigoyen from power in 1930 and ushered in another decade of Conservative rule. Using fraud and force when necessary, the governments of the 1930s attempted to contain the currents of economic and political change that eventually led to the ascendance of Juan Domingo Peron (b. 1897). New social and political forces were seeking political power, including a modern military and labor movements that emerged from the growing urban working class.
The military ousted Argentina's constitutional government in 1943. Peron, then an army colonel, was one of the coup's leaders, and he soon became the government's dominant figure as Minister of Labor. Elections carried him to the presidency in 1946. He aggressively pursued policies aimed at giving an economic and political voice to the working class and greatly expanded the number of unionized workers. In 1947, Peron announced the first 5-year plan based on the growth of nationalized industries. He helped establish the powerful General Confederation of Labor (CGT). Peron's dynamic wife, Eva Duarte de Peron, known as Evita (1919-52), helped her husband develop strength with labor and women's groups; women obtained the right to vote in 1947. Peron won reelection in 1952, but the military deposed him in 1955. He went into exile, eventually settling in Spain. In the 1950-60s, military and civilian administrations traded power, trying, with limited success, to deal with diminished economic growth and continued social and labor demands. When military governments failed to revive the economy and suppress escalating terrorism in the late 1960s and early 1970s, the way was open for Peron's return.
On March 11, 1973, Argentina held general elections for the first time in 10 years. Peron was prevented from running, but voters elected his stand-in, Dr. Hector Campora, as President. Peron's followers also commanded strong majorities in both houses of Congress. Campora resigned in July 1973, paving the way for new elections. Peron won a decisive victory and returned as President in October 1973 with his third wife, Maria Estela Isabel Martinez de Peron, as Vice President. During this period, extremists on the left and right carried out terrorist acts with a frequency that threatened public order. The government resorted to a number of emergency decrees, including the implementation of special executive authority to deal with violence. This allowed the government to imprison persons indefinitely without charge.
Peron died on July 1, 1974. His wife succeeded him in office, but her administration was undermined by economic problems, Peronist intraparty struggles, and growing terrorism. A military coup removed her from office on March 24, 1976, and the armed forces formally exercised power through a junta composed of the three service commanders until December 10, 1983. The armed forces applied harsh measures against terrorists and many suspected of being their sympathizers. They restored basic order, but the costs of what became known as the "Dirty War" were high in terms of lives lost and basic human rights violated. Conservative counts list over 10,000 persons as "disappeared" during the 1976-83 period.
Serious economic problems, mounting charges of corruption, public revulsion in the face of human rights abuses and, finally, the country's 1982 defeat by the U.K. in an unsuccessful attempt to seize the Falklands/Malvinas Islands all combined to discredit the Argentine military regime. Under strong public pressure, the junta lifted bans on political parties and gradually restored basic political liberties. On October 30, 1983, Argentines went to the polls to choose a president; vice president; and national, provincial, and local officials in elections found by international observers to be fair and honest. The country returned to constitutional rule after Raul Alfonsin, candidate of the Radial Civic Union, received 52% of the popular vote for president. He began a 6-year term of office on December 10, 1983.
In 1985 and 1987, large turnouts for mid-term elections demonstrated continued public support for a strong and vigorous democratic system. The UCR-led government took steps to resolve some of the nation's most pressing problems, including accounting for those who disappeared during military rule, establishing civilian control of the armed forces, and consolidating democratic institutions. However, constant friction with the military, failure to resolve endemic economic problems, and an inability to maintain public confidence undermined the effectiveness of the Alfonsin government, which left office 6 months early after Peronist candidate Carlos Saul Menem won the 1989 presidential elections.
As President, Menem launched a major overhaul of Argentine domestic policy. Large-scale structural reforms dramatically reversed the role of the state in Argentine economic life. A decisive leader pressing a controversial agenda, Menem was not reluctant to use the presidency's extensive powers to issue decrees when the Congress was unable to reach consensus on his proposed reforms. Those powers were curtailed somewhat when the constitution was reformed in 1994 as a result of the so-called Olivos Pact with the opposition Radical Party. That arrangement opened the way for Menem to seek and win reelection with 50% of the vote in the three-way 1995 presidential race.
The 1995 election saw the emergence of the moderate-left FREPASO political alliance. This alternative to the two traditional political parties in Argentina is particularly strong in Buenos Aires but as yet lacks the national infrastructure of the Peronists and Radicals. In an important development in Argentina's political life, all three major parties in the 1999 race espoused free market economic policies. In October 1999, the UCR-FREPASO Alliance's presidential candidate, Fernando de la Rua, defeated Peronist candidate Eduardo Duhalde. Taking office in December 1999, De la Rua has not only continued the previous administration's free market economic policies but has followed an IMF-sponsored program of government spending cuts, revenue increases, and provincial revenue-sharing reforms to get the federal deficit under control. De la Rua also has pursued labor law reform and business-promotion measures aimed at stimulating the economy and increasing employment. Despite these measures, Argentine economic growth remained nearly flat in 2000.
FOREIGN RELATIONS Eager for closer ties to industrialized nations, Argentina left the Non-Aligned Movement in the early 1990s and has pursued a relationship with the OECD. It has become a leading advocate of nonproliferation efforts worldwide. A strong proponent of enhanced regional stability in South America, Argentina has revitalized its relationship with Brazil; settled lingering border disputes with Chile; discouraged military takeovers in Ecuador and Paraguay; served with the U.S., Brazil, and Chile as one of the four guarantors of the Ecuador-Peru peace process; and restored diplomatic relations with the United Kingdom. In 1998, President Menem made a state visit to the U.K., and Prince Charles reciprocated with a visit to Argentina. In 1999, the two countries agreed to normalize travel to the Falklands/Malvinas from the mainland and resumed direct flights.
Principal Government Officials Argentina maintains an embassy in the United States at 1600 New Hampshire Ave. NW, Washington DC 20009; tel (202) 238-6400; fax (202) 332-3171. It has consular offices in the following locations:
245 Peachtree Center Ave., Suite 2101 205 North Michigan Ave., Suite 4209 3050 Post Oak Blvd., Suite 1625 5055 Wilshire Blvd., Suite 210 800 Brickell Ave., PH1 12 West 56th St. 1811 Q St. NW Other Contact Information U.S. Department of Commerce
TRAVEL AND BUSINESS INFORMATION Emergency information concerning Americans traveling abroad may be obtained from the Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies, Sundays and holidays, call 202-647-4000. Passport information can be obtained by calling the National Passport Information Center's automated system ($.35 per minute) or live operators 8 a.m. to 8 p.m. (EST) Monday-Friday ($1.05 per minute). The number is 1-900-225-5674 (TDD: 1-900-225-7778). Major credit card users (for a flat rate of $4.95) may call 1-888-362-8668 (TDD: 1-888-498-3648). It also is available on the internet. Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled Health Information for International Travel (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800. Information on travel conditions, visa requirements, currency and customs regulations, legal holidays, and other items of interest to travelers also may be obtained before your departure from a country's embassy and/or consulates in the U.S. (for this country, see "Principal Government Officials" listing in this publication). U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged to register at the U.S. embassy upon arrival in a country (see "Principal U.S. Embassy Officials" listing in this publication). This may help family members contact you in case of an emergency. Further Electronic Information National Trade Data Bank (NTDB). Operated by the U.S. Department of Commerce, the NTDB contains a wealth of trade-related information. It is available on the Internet (www.stat-usa.gov) and on CD-ROM. Call the NTDB Help-Line at (202) 482-1986 for more information. |
determine the future of the nation. National unity was established, and the constitution promulgated in 1853. Two forces combined to create the modern Argentine nation in the late 19th century: the introduction of modern agricultural techniques and integration of Argentina into the world economy. Foreign investment and immigration from Europe aided this economic revolution. Investment, primarily British, came in such fields as railroads and ports. The migrants who worked to develop Argentina's resources--especially the western pampas--came from throughout Europe, just as in the United States.