Argentina in Transition
ALEXANDER, ROBERT J.
Frondizi's First Six Months Argentina in Transition By Robert J. Alexander The actions of Argentine President Arturo Frondizi in the six months since he became chief executive appear, on the...
...Thus, for the first time since 1930 the military departments are represented in the Cabinet by a civilian...
...Although that charge is widely regarded as being true, the measure ending the CADE concession was taken for political reasons and caused considerable bad comment among foreign investors...
...An appreciable increase in Argentine agricultural, mineral and industrial output and an improvement in the country's balance of trade would make it possible to halt inflation, which has been under way since 1949 and has been increasingly severe since the overthrow of Peron in September 1955...
...However, Frondizi has not been content with this type of insurance...
...Its railroads have not been reequipped or adequately repaired in a generation...
...The fact that the Peronists have come out in support of Frondizi's arrangements for the oil industry is evidence that such is the case...
...Only legally-recognized groups can enter into collective bargaining agreements or deal with the Government officially on labor affairs...
...For the time being, Frondizi remains in full charge of the Government...
...However, they may cause Frondizi considerable trouble in the future...
...It was substituted by a government-appointed "interventor...
...Both these loans constitute only a beginning...
...Peronist leaders received a general amnesty, as Frondizi had promised during his campaign, and most of the important Peronists have returned to Argentina...
...Frondizi, the first civilian Argentine President in 15 years and the first democratically elected one in 28 years, rules a country which, as the result of the Peron experience, is sharply divided into two hostile camps, has been decapitalized, and is suffering from severe inflation...
...The Administration also hopes to increase the production in Argentina of urgently needed agricultural equipment, and to find funds to finance the importation of whatever machinery cannot now be produced by industries within the country...
...The armed forces are virtually duty-bound to give Frondizi a year or so of grace...
...Although traditionally anti-clerical, Frondizi has sponsored a move to allow Catholic universities to grant recognized degrees, thus ending the state monopoly in this field...
...But the Argentine Government had the right to buy all or part of CADE's share in the new company after giving a year's advance notice of its intention to do so...
...Others are opposed to his attitude toward the Church...
...Taken together, they are probably insufficient to get the Argentine economy really back on its feet...
...In August 1957, the Government of General Pedro Aramburu declared that the concession under which CADE was operating, given in 1907 for 50 years, had expired, although Congress, in 1936, had voted to extend it by another 20 years...
...Frondizi had his first showdown with the armed forces when he took office...
...The third move with regard to oil has been a reported agreement with the Soviet Union for the acquisition of approximately $100 million worth of drilling equipment for YPF's own use...
...In return for its shares the Argentine Government would put up CADE's original installations, as well as certain debts CADE owed the Government...
...The Peronists are strongest in the labor movement...
...All these programs will take several years before their effects will be felt...
...The Aramburu regime had received a loan of approximately $80 million for this purpose from the Export-Import Bank in 1957...
...Frondizi will undoubtedly have trouble within his own party sooner or later...
...It provides for only one legally recognized central labor organization, and only one government-authorized trade union in each field...
...First, a general wage increase of 60 per cent over levels existing in February 1956 was decreed within two weeks after Frondizi took office...
...At the time, they were psychologically and politically in their weakest position...
...Secondly, the settlement with CADE will undoubtedly help the Frondizi regime to draw new foreign capital to Argentina...
...Viewed against this background, the policies which Frondizi has followed since becoming President on May 1 seem to fall into two categories...
...It has had a growing deficit in petroleum, the chief source of power and light...
...Second, there is a good chance that if Frondizi allows the Peronists to get control of the labor movement, they will exercise a benevolent neutrality toward his Administration, at least for a time...
...Three things have been done here...
...One group which had been associated with Peron, the so-called Nationalists, were given Cabinet posts and other Government jobs...
...He has tried to get firm control over the military, and he has attempted to appease the group most violently opposed to Peron, and presumably to himself, the Navy...
...However, as long as Peron is alive, his more extreme partisans will be a danger to the Frondizi Government or any other regime which is not headed by the ex-dictator...
...Frondizi has also sought to push forward the modernization of the railways, which are the backbone of Argentina's transportation system...
...Also undoubtedly designed to allay the suspicions of foreign as well as local private investors was the release of some 35 firms which the Government had administered since they were seized from German and Italian interests during World War II...
...These included such enterprises as the Bayer and Mercedes Benz affiliates in Argentina...
...From conversations 1 had with Peronist labor leaders last April, a few weeks before Frondizi took office, I am convinced that there is good reason to believe that such a relatively friendly attitude is likely...
...Although there are obvious dangers in giving control of labor to the Peronists, there are at least two arguments which have recommended it to the Frondizi Administration...
...Perhaps a real crisis will develop several years hence when the question arises as to whether Peron will be allowed to return to become once again a candidate for President in the election of 1964...
...It is trying to persuade farmers to shift from wheat to growing corn, which has a readier market abroad, and to cultivate grains which can be used for cattle feed, thus stimulating the cattle industry whose products are in much greater demand than is wheat...
...This has aroused a great deal of opposition even within the ranks of his own party, the Union Civica Radical Intransigents, but it has certainly won him the benevolent neutrality of the Church...
...The Frondizi Government has concentrated on five areas: petroleum, electric power, industry, railroads and agriculture...
...This will be acquired in exchange for certain Argentine agricultural products...
...Frondizi's interpretation is that the agreements are "service contracts," not "concessions...
...In addition to seeking to appease both anti-Peron and Peronist elements, Frondizi has sought to gain the backing of the Catholic Church...
...It will probably take several hundred million dollars more before the Argentine railroads reach the level of efficiency they had before the Great Depression...
...Frondizi's actions on petroleum have undoubtedly angered the extreme nationalist wing of the party...
...Frondizi has tried to neutralize these dangers...
...But the ex-dictator himself remains in the Dominican Republic, and would probably not be welcomed back by the Frondizi Government...
...The significance of this agreement is twofold...
...But it seems that Frondizi plans to undertake other, similar moves in the months to come...
...On the other, the Government has tried to gain time and temporary political support to head off subversion until the economic measures can begin to bear fruit...
...The Frondizi regime hopes that their return to private ownership will encourage more extensive private investment in manufacturing...
...The electric power industry of Argentina is overworked and inadequate...
...He is a man of extraordinary ability and the success or failure of his Government will undoubtedly depend to a very great degree upon Frondizi himself...
...All possibility of healing the deep civic wounds opened during the Peron era depends on the recuperation of the country's distraught economy...
...On the other hand, Frondizi bowed to the Navy by arranging a deal whereby Argentina exchanged several very over-aged destroyers for a somewhat less over-aged British aircraft carrier...
...First, the Peronists have a majority in most of the important unions, and a democratic government can be said to be acting democratically in letting them get control of the labor movement, though legal prohibition of anti-Peronist unions is not necessarily democratic...
...The Compania Argentina de Electricidad (CADE), a Belgian firm which supplied most of the electricity for Buenos Aires, has come in for severe criticism...
...The Intransigent Radicals have several factions, and conflicts between them are latent...
...This new Law of Professional Associations, which was violently opposed by anti-Peronist elements in the unions, goes back to principles established during the Peron era and abrogated under Aramburu...
...More moderate elements in the ranks have strong doubts about the wisdom of the Administration's labor policies...
...A meeting of Peronist labor leaders in the middle of October, although going on record in support of the deposed dictator, also turned down the proposal of some of Peron's more fanatical adherents that they support a general strike movement against the Frondizi regime...
...It is likely that this split among the Peronists will continue to grow— which is exactly what the President wants...
...The President thus needs time for his economic program, and he has taken several steps in an effort to buy this time...
...All these firms were auctioned off to the highest bidders in July and August...
...This would help Frondizi to realize one of his proclaimed objectives—to gain the true support of the million workers whose votes he "borrowed" from Peron, who endorsed him in the February 1958 election...
...The avowed objective of the anti-Peronist elements in the military was to re-establish a democratic, civilian and constitutional government...
...To insure their tolerance, Frondizi has taken three steps...
...However, these "contracts" have come in for very serious criticism from groups who feel that their terms unduly mortgage Argentina's oil resources to foreign firms...
...First, the Government oil firm, Yacimientos Petroliferos Fiscales (YPF), has entered into agreements with half a dozen U. S. and European firms which will do exploration, drilling and exploitation work and sell the oil to YPF for processing...
...The Peronist party has been legalized once again, a development which has served to bring out into the open the quarrels of the ex-dictator's followers...
...Recent events have borne out the idea that Frondizi has gained the backing of a large number of the followers of Peron, at least temporarily...
...The principal dangers to the Frondizi regime are likely to come from two opposing groups: the anti-Peron and almost equally anti-Fron-dizi elements in the armed forces...
...The law provides for new elections in all unions within 90 days after the statute has been passed...
...This they did, and although many officers do not like Frondizi and his regime, they would, for the time being, hardly overthrow a president elected by a two-thirds majority...
...On the one hand, he has taken measures to get the economy back on its feet, chiefly by aid from abroad...
...Frondizi's First Six Months Argentina in Transition By Robert J. Alexander The actions of Argentine President Arturo Frondizi in the six months since he became chief executive appear, on the surface, to be exceedingly contradictory...
...First, the new company agreed to extend electric light and power service in the Buenos Aires area according to the Government's wishes, which seems to imply a considerable amount of new investment...
...Perhaps the most fundamental is petroleum...
...However, taken together and studied against the background of the situation when he took office, they fall into a recognizable pattern...
...An aircraft carrier had been strongly demanded by the Argentine Navy since Brazil acquired one a year ago...
...and the Peronists, especially those in the labor movement...
...In turn, the slowing down of inflation should allay the widespread popular discontent which has intensified the loyalty of many workers to the deposed dictator...
...On September 9, it was announced that a new agreement had been made between the Frondizi regime and CADE, establishing a company in which both parties would hold stock...
...Subsequently, the Government removed an Administrative Committee which had been put in charge of the General Confederation of Labor by the Aramburu regime, and which was strongly anti-Peronist...
...It needs a greater diversification of crops, improvement of seed strains, and a great deal of capital equipment...
...In recent years Argentina has been spending abroad some $200-300 million more than it has been earning there...
...This extension, it was argued, had been the result of bribery...
...He insisted on abolishing the three posts the armed forces had held in the Cabinet, and substituted a single Ministry of Defense with a civilian minister in charge...
...This may help to strengthen Frondizi's position with the armed forces, where the Church has considerably more influence than it does in the populace at large...
...Frondizi has supplemented this with a further loan of $70 million from the Nether-landische Handel Maachappy Bank...
...Argentine agriculture declined disastrously under Peron and has recuperated only partially since...
...Obtaining the crucial support of his predecessor, General Aramburu, who still is an important power in the armed forces and sincerely dedicated to seeing a civilian government succeed, Frondizi managed to smooth over the crisis...
...Frondizi won a second showdown with the armed forces in September, when his nomination for Minister of Air (one of the three service posts under the Ministry of Defense) was rejected by the majority of the Air Force officers...
...So far, these disputes are largely beneath the surface...
...CADE would put up the improvements it bad added since 1907, and, in the beginning, would have a majority of the stock...
...These elections will undoubtedly give control of the General Confederation of Labor and of most of its important affiliates to the Peronists, since they have the support of the majority of the workers...
...Second, Frondizi has sent to Congress a law nationalizing the country's petroleum resources, thus making it clear that the foreign companies are not getting title either to the land or the oil they discover...
...He has shown a remarkable capacity for bringing together a coalition of disparate political groups...
...In July, Frondizi sent to Congress a new general law to govern the labor movement...
...Finally, the Frondizi Government is launching an agricultural program to increase the export of farm products, which constitute the nation's principal source of foreign exchange...
...Frondizi has also sought to appease the Peronists...
Vol. 41 • November 1958 • No. 42
