ARGENTINA'S PERONISTS AND THE RISE OF MENEM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP04T00990R000100680001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 23, 2016
• Document Release Date: July 23, 2013
• Sequence Number: 1
• Publication Date: July 15, 1988
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Rele-a-s-e"2013/07/23 : CIA-RDP04T00990R000100680001-6
DIRECTORATE OF INTELLIGENCE
15 July 1988
Argentina's Peronists and the Rise of Menem
Summary
The surprise victory of populist Carlos Menem as
the Peronist party's presidential candidate could lead
the Peronists away from their recent moderate, more
democratic trend and back to an authoritarian,
demagogic style. While Menem, an energetic, effective
campaigner, is already working to broaden his base of
support beyond labor and the lower class, his campaign
may prove dangerously divisive to the Peronist Party,
and his fiery style could alienate many of the voters
he needs. Menem's emergence gives Argentine voters a
clear-cut choice between working class-oriented
populism and the center-right philosophy of Eduardo
Angeloz, standard bearer of the ruling Radical Party.
Washington can expect to come in for criticism from
Menem during the campaign on issues such as the
Falklands, Central America, and Argentina's debt, where
Menem has declared his support for a moratorium.
This typescript was prepared by
South America-Caribbean Division, Office of African and Latin
American Analysis. Comments and queries are welcome and may be
directed to the Chief, South America-Caribbean Division, ALA,
ALA M 8-20055
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
Introduction
The ascendency of Carlos Menem, Governor of La Rioja
Province, to the Peronist presidential ticket appears to signal
another important change in the party's direction. When
Argentina returned to democratic rule in 1983, the Peronist
Party--the country's most powerful political force between 1945
and 1973--was in disarray after suffering nearly a decade of
pervasive factionalism, ideological conflicts, and lack of
leadership. As a result, the party lost by a wide margin to the
Radicals in both the 1983 and 1985 national elections and broke
into two camps. One, an old guard Orthodox faction, insisted
that the party remain a militant, ultranationalist, populist
movement dependent upon a handful of political and labor bosses
to enforce party discipline. The other, the newly created group
of Reformists, advocated adopting a more democratic image by
softening nationalist rhetoric and initiating internal reforms
such as direct voting in ?art rimaries and guaranteed minority
faction representation.
The Reformists' more polished appearance and emphasis on
democratic principles paid off in the September 1987
congressional and gubernatorial elections, when the Peronists
finally bested the Radicals. Aided by the poor performance of
President Alfonsin's economic policy, the Peronists won 41
percent of the vote to the Radicals' 37 percent, and deprived the
Radicals of their absolute majority in Congress. Nearly every
Peronist who won a major post--including all but two of the
party's 17 successful gubernatorial candidates--was a Reformist.
The electoral victory in 1987 helped to usher the Reformists
into control of the party, but newly elected party president and
Reformist leader Antonio Cafiero failed to consolidate his power.
The Orthodox faction retained some influence, particularly within
the powerful unions. Menem, an erstwhile Reformist who briefly
aligned with the Orthodox faction in 1986 before declaring
himself an independent, capitalized on the unions' lingering
strength and resentment toward the Reformists to challenge
Cafiero's bid for the nomination as the party's candidate in the
1989 election. The two became embroiled in an acrimonious
struggle for the nomination that threatened to split the party,
although Cafiero, in conceding, has since pledged to lend his
Lull support to the Menem campaign.
Menem's Agenda--Reviving Old Ways
While Menem has not yet fine-tuned his platform, his
agenda--dominated by nationalist, populist themes--is aimed at
Argentina's working-class and the poor. It stands in sharp
2
OVI-IDVM
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
contrast to Reformist attempts to appeal to the growing numbers
of middle-class and white collar voters, whose support was key to
the Radical victories in 1983 and 1985.
Menem's economic ideas, though not fully consistent, reflect
the statist, interventionist cast that has accounted for much of
Peronism's appeal over the decades.
He favors an increase in salaries and production and a
decrease in unemployment, to be financed by a five-year
moratorium on the foreign debt.
He believes the state should continue to play a major
role in the economy, and that the deficits of the state-
owned enterprises could be reduced through more efficient
management and purchasing practices, rather than
privatization.
Menem's brother Eduardo, a Peronist Senator, has publicly
hinted that Menem would nullify major agreements made
between parastatals and foreign companies during the
Alfonsin administration.
Menem also favors the reimposition of complete government
control over bank deposits so that the state can channel
credit toward production, and has even proposed the
nationalization of trade to hinder the ability of
businessmen to evade foreign exchange controls.
On the other hand, Menem views himself as a friend of
business, and is offering tax incentives and protectionist
policies, as well as promising that price freezes would be
employed only as a last result. He acknowledges the need for
foreign investment, so long as it is controlled, and does not
appear to favor widespread nationalization--although he has
proposed expropriating all British pro erty in Patagonia until
the Falklands dispute is resolved.
Such interventionist policies brought massive economic
growth to Menem's home province and boosted his personal
popularity, but have not been without significant costs.
According to the US Embassy, Menem employed tax incentives
authorized under Argentina's industrial promotion law to attract
private industry to his province. He spent extensively on roads,
schools and hospitals, and increased the public payroll by at
least 60 percent. The province, however, is essentially
bankrupt. Its budget is in chronic deficit; it has had to borrow
money from the federal government to pay off unbacked bonds
issued to the public; and it temporarily closed the Buenos Aires
branch of its insolvent provincial bank in late March to avoid a
run on deposits.
3
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Rere?a?se-2013/07/23 : CIA-RDP04T00990R000100680001-6
25X1
Foreign Policy--Disturbing Themes
On the foreign policy front, Menem can be expected to play
on themes that appeal to the Argentines' exaggerated sense of
independence and nationalism. The Peronists generally support
Alfonsin's foreign policy, including Argentine involvement in the
Non-aligned Movement, the pro-disarmament Group of Six, and the
Contadora Support Group, but Menem, who favors an increased
Argentine role in the Third World, may advocate a higher profile
in some of these groups. Of Syrian extraction, Menem is
interested in the Middle East and he may try to improve
Argentina's relations with Libya and the PLO, for which he has
sympathies. Menem will likely oppose any conciliatory gestures
on the Falklands and probably step up calls for Argentine control
of the islands, insisting that the sovereignty issue be included
in any negotiations.
Despite occasional claims to the contrary, we believe Menem
harbors anti-US views and that his campaign will feature attacks
on US interests and policies. This was most recently
demonstrated by his accusations that the US was responsible for
generating hostilities in the Persian Gulf. He blames developed
countries for Argentina's foreign debt and will undoubtedly
criticize US policy toward repayment terms. Unlike the Radicals,
who have avoided the issue, Menem's faction has denounced US
policy in Central America. Menem can also be expected to
criticize US support for the UK on the Falklands issue.
Dealing with the Military
The military may prove to be a pivotal factor for Menem's
prospects. He was imprisoned under the former military
government for several years for suspected leftist ties and is
still mistrusted by some sectors of the armed forces. His
populist policies and leftist sentiments will
prompt new concerns within the officer corps.
almost certainly
Menem knows he must gain.more support within the armed
forces and, according to press reports, has met with 4 number of
high ranking military officers to hear military grievances*.
Menem has stated that his primary goal is to heal the wounds
created by the war on subversion and the Falklands debacle that
have made the military an outcast since the return to democracy.
Opposed to the recently passed National Security Law designed to
*We believe that at least one of these officers has ties to
the group that orchestrated two Army rebellions over the last
year.
4
CVOPFT
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
25X1
25X1
25X1
Declassified in Part- Sanitized Copy Approved forRelease2013/07/23 : CIA-RDP04T00990R000100680001-6
25X1
reorganize the military into an apolitical, strictly professional
institution, Menem proposed instead issuing an amnesty for all
officers accused of committing human rights abuses during the
former military government--although we believe he would also
grant an amnesty to jailed leftist guerrillas. He also
reportedly strongly favors re-equipping the military,
particularly to counter any possible aggression from Chile.
The Road Ahead
Menem brings major strengths to the campaign against the
Radicals. His widespread popularity and his election in the
Peronist primary will enhance his image as an effective
politician. Moreover, the failure of the Radicals' economic
program will be a heavy burden for Angeloz and provide the
Peronists with some lucrative campaign opportunities. Menem may
well try to use the Peronist bloc in Congress to thwart any
further efforts by Alfonsin to restructure the economy over the
remainder of his term.
Nonetheless, Menem faces some major challenges in the long
period before the presidential election, the most important of
which is the need to avoid a party split. Menem's nomination and
the authority it lends him in party affairs will likely tempt him
to challenge Cafiero, who still commands a substantial following
in the party and intends to remain as party president. Public
squabbling by the Peronist leaders and the danger of renewed
factionalism would almost certainly cost the party votes.
Menem will also need to ensure that organized labor, which
played a key role in his campaign, does not become too big a
factor. Should Menem win the presidency, labor leaders will look
to him to restore union representation in both the party and the
government. Moreover, they will probably demand inflationary
wage hikes and a greater voice in corporate management. The
renewed political influence of labor--which still retains its
thuggish, authoritarian image--may alienate those in the
electorate who show an increasing preference for democratic
politics.
Another challenge to Menem will be to generate support among
Argentina's growing pool of middle class voters, who could
provide the needed margin of victory. These voters--many of whom
are Peronist and supported the Reformist candidates in the last
two national elections--may find Menem's views unpalatable.
Moreover, less than half of the country's 4 million registered
Peronists voted in the Peronist primary. Menem will need to woo
such voters assiduously over the coming months.
5
c.r.rinm,m
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
25X1
25X1
25X1
25X1
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6 25X1
We expect Radical Party presidential candidate Angeloz to do
all he can to nourish middle class fears of Menem, and to
encourage voters to view him as the only reasonable alternative.
Angeloz, who comes from the right wing of the Radical Party, has
the image of a responsible politician who advocates conservative
economic policies and a pro-West stance. Certain elements of his
platform, such as privatization, are gaining increasing support
from the population. Moreover, many of Angeloz supporters point
to the fiscal success of Cordoba Province under Angeloz' rule as
an example of his ability to govern. At the same time, however,
Angeloz' prospects will decline if the economy continues to
deteriorate under President Alfonsin.
6
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6 25X1
SUBJECT: Argentina's Peronists and the Rise of Menem
15 July 1988
Distribution:
External:
Original - James Black, National Intelligence Adviser,
Department of the Treasury
1 - Colonel Carter, Executive Assistant, Office of the
Army, Chief of Staff
1 - Robert S. Gelbard, Deputy Assistant Secretary of
State for South America Affairs
1 - Richard Howard, Director, Office of Southern Cone
Affairs
1 - Robert Pastorino, Senior Director for Latin
American Affairs, National Security Council
1 - Mark Sigelman, Desk Officer for Argentina, Commerce
Department
1 - James Buchanan, Chief, South America Division,
Office of Analysis for Inter-American Republics,
Bureau of Intelligence and Research
1 - John Caulfield, Argentina Desk Officer
1 - Luigi Einaudi, Director, Office of Policy Planning
Bureau of Inter-American Affairs
1 - Peter Field, Director, Office of South America
Int'l Trade Administration Western Hemisphere
1 - Jim Fall, Director, Office of Developing Nation
Finance, Main Treasury
1 Carlos Montoulieu, Director, Brazil-Southern Cone
Division, Office of South America
1 - Kim Fitzgerald, Office of Intelligence
1 - Captain Paul Howard Donaldson, US Navy, South
America Branch, Joint Chiefs of Staff
Internal:
1 - DDI
1 - 0/DDI,
1 - NIO/LA
1 - NIC/AG
1 - PDB Staff
1 - C/PES
1 - DDI/CPAS/ILS
1 - D/ALA
2 - ALA/PS
1 - ALA Research
5 - CPAS/IMC/CB
1 - C/ALA/SCD
1 - DC/ALA/SCD
1 - C/ALA/SCD/EB
3 - ALA/SCD/EB
1 - ALA/SCD/Files
DI/ALA/SCD/EB
Director
(15 July 88)
7
SECRET
Declassified in Part - Sanitized Copy Approved for Release 2013/07/23: CIA-RDP04T00990R000100680001-6
25X1
25X1
25X1