LATIN AMERICA WEEKLY REVIEW 23 FEBRUARY 1978[SANITIZED] - 1978/02/23

• Document Type: SPECIALCOLLECTION
• Collection: Argentina Declassification Project - The "Dirty War" (1976-83)
• Document Number (FOIA) /ESDN (CREST): 03016870
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 34
• Document Creation Date: April 3, 2019
• Document Release Date: April 12, 2019
• Publication Date: February 23, 1978

National
Foreign
Assessment
Center
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3.5(c)
EO 13526
3.3(b)(1)>25Yrs
EO 13526
3 5(c)
NR
Latin America
Weekly Review
23 February 1978
3.5(c)
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RP LAWR 78-008
23 February 1978
Copy
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�SECOr
LATIN AMERICA WEEKLY REVIEW
23 February 1978
CONTENTS
3.5(c)
Argentina: Problems for Martinez de Hoz'? 13
This publication is prepared for regional specialists in the Washington community by
the Latin America Division, Office of Regional and Political Analysis, with occa-
sional contributions from other offices within the National Foreign Assessment
Center and from other agencies within the Intelligence Community. Comments and
queries are welcome. They should be directed to the authors of the individual
articles.
Wed('
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Argentina: Problems for Martinez de Hoz?
Opponents of Economy Minister Martinez de Hoz,
architect of the junta's economic recovery plan, may be
planning to discredit him by publicizing alleged abuses
by Ministry officials. Such charges would add to exist-
ing popular dissatisfaction with the junta's economic
austerity program.
Those opposed to Martinez de Hoz hope to force the
regime to alter substantially its strongly market-oriented
approach, which stresses incentives to business and agri-
culture, austere fiscal and wage policies, and relaxed
controls on foreign investment.
Criticism of the junta's plan--from Peronists, labor
leaders, politicians, and some influential military of-
ficers--reflects a deep-seated clash of interests that
lies at the heart of Argentina's political turmoil. While
there is no broad agreement among these sectors as to
how the economy should be administered, each for its own
particular reasons has registered disapproval of the cur-
rent plan.
One of the alleged improprieties was a large-scale
illegal foreign currency operation involving high bank-
ing officials. A government investigation reportedly
concluded that Martinez de Hoz was not implicated, but
some officials are convinced he knew about the scheme
and did nothing to stop it. In the other impropriety,
officials of the National Bank made loans to private
bankers at noncommercial rates which allowed the recip-
ients to reloan the money at considerable profit.
The president of the National Development Bank has
,already resigned, possibly to avoid the repercussions of
public disclosures. But in the arcane world of Argentine
politics, another explanation is possible. The former
2' bank head, closely tied to a number of the opponents of
Martinez de Hoz, is regarded as a potential successor to
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the minister. He may well have pulled out to avoid close
identification with an economic program that could become
widely unpopular.
The most obvious point of popular dissatisfaction
is the squeeze on personal income as prices rise in the
face of controls on salaries. Inflation for January--over
13 percent--was the highest recorded for any month since
late 1976. This greatly unsettled the government, which
is publicly committed to a dramatic reduction of the
galloping inflation it inherited.
But opposition to the plan of Martinez de Hoz goes
much deeper. The pro-business, internationalist orienta-
tion of the junta's policy runs against the nationalist
and populist grain of urban workers, middle class wage
earners, Peronists, and other politicians who purport to
speak for these groups. Orthodox Peronism, in fact,
stresses income redistribution in favor of workers, strong
controls on foreign investment, and minimizes the im-
portance of agriculture. Those differences, which the
country's weak political institutions have consistently
failed to moderate, have resulted in political instability
since the 1940s.
Whether the charges of improprieties can be used
successfully is problematical. In the first place, pub-
lic opinion may not run strongly against Martinez de Hoz
for the deeds of his associates at a time when he had
his hands full with policy matters. Moreover, in a soci-
ety where official malfeasance is almost a way of life,
the public is not easily shocked. Indeed, these irreg-
ularities, if surfaced, may pale in comparison to the
flagrant abuses of the ousted Peronists.
Nonetheless, Argentines will continue to grumble.
It seems likely that as the junta's other main problem--
leftist terrorism--recedes, there will be even harsher
scrutiny of economic performance.
The chief source of potentially serious problems
is labor, long the best organized and most potent civil-
ian political group. Workers have already defied the
junta's ban on strikes to protest the austerity program.
The government has attempted to mollify workers by in-
creasing the amount by which wages can be raised. While
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total remuneration for workers has tended to rise over
the past year, labor is still substantially behind the
levels of real income it enjoyed under the Peronists.
Thus, since Argentine political groups view each other
strictly as enemies to be vanquished, it is unlikely that
labor sees this token wage flexibility as a conciliatory
gesture to be requited by its cooperation and forbearance.
Workers probably see this as a sign of weakness and an
invitation to further challenges on their part.
Some top military men are actively seeking to under-
mine Martinez de Hoz. Chief among them is Admiral
Massera, who has made no secret of his dissatisfaction
with the junta's economic policies. Several other top
officers, such as the commander of the Buenos Aires re-
gional Army corps, also are highly critical, though they
do not appear to share a common view of what solutions
are appropriate. The dissatisfied officers are regularly
advised by several Argentine economists holding a variety
of views.
So far, Videla and his chief economic aide do not
appear inclined to back down. Indeed, Martinez de Hoz
still appears to have the support of the Army, by far
the most influential of the armed forces.
Nonetheless, the issue is by no means decided. The
key will probably be the performance of the economy over
the next few months. An upturn from the recession or a
breakthrough on the inflation front could take the wind
out Of the sails of the detractors. But a continuation
of current economic trends will make Martinez de Hoz
even more vulnerable.
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