A. Executive summary
Argentina has long suffered from chronic institutional weaknesses. The collapse of its representative institutions in 2001-2002 was profound. Although the country’s core democratic institutions survived, many of them were badly weakened, and many of the rules of the game within the democratic regime, in fact, did not survive. The crisis had also a strong impact on the party system. Notwithstanding the relative stability of the Peronist voter base, the system as a whole suffered a partial breakdown. The most important (and oldest) non-Peronist party, the Radical Civic Union (UCR), practically disappeared. The same happened with Front for a Country in Solidarity (FREPASO) and Action for the Republic (AR). The result is a severe fragmentation of the party system, in particular the non-Peronist vote and a de facto single-party government. These weaknesses of the non-Peronist votes and parties might have negative consequences for the democratic process.
Since 1983, the weaknesses of non-Peronist parties at the sub-national level have given the Partido Justicialista (PJ) a virtual lock on both the Senate (in which all provinces are represented equally) and a majority of governorships. One result is that a non-Peronist party or party coalition can win the presidency (as in 1983 and 1999) but then has serious problems controlling Congress or establishing a strong local and regional presence. At the beginning of 2005, there is no movement toward a more consolidated party system. A structured social movement does not exist. The new configuration of some parts of civil society - the poorer segments (piqueteros and escraches) and the middle class (cacerolazos) – are cyclical phenomena, activated through materialist interests. The piqueteros negotiate with the government’s social plans and the cacerolazos in the meantime has disappeared.
Democratic stability may be at serious risk in the long run, if the following circumstances come about: the distance between the political elite and the population grows; social capital and social cohesion is weak; the crisis within representational and mediating structures continues; the balance between the executive, legislative and judicial powers is further disturbed; the tendency toward hyper-presidentialism is strengthened; the process of economic and social exclusion of broad segments of the population is not stopped; and the erosion of the state monopoly of coercion through violence and organized crime is not seriously attacked.
The survival of Argentine democracy and market economy after the profound systemic crisis of 2001-2002 is, in any event, one of the most striking and under- appreciated outcomes of this crisis period. Notwithstanding high levels of social protest and an atmosphere of chaos, the military refused to repress protesters or to change the government. The Argentine government has thus proven surprisingly robust; its citizens have demonstrated a high rate of frustration, tolerance and at the same time, democratic maturity. The level of acceptance of democracy as the most preferable form of government remained stable. The citizen and the democratic institutions have survived the hyperinflation of 1989-1990, the radical economic reforms of the 1990s, and, most recently, a terrible depression unparalleled in the country’s history.
B. History and characteristics of transformation
Throughout the 1990s, Argentina had been widely hailed as a case of successful market reform under a democratic government. The radical economic transformation undertaken by the government of Carlos Saúl Menem in his first term (1989-1995) ended hyperinflation and restored economic growth. For international financing institutions, Argentina, with its rigorous implementation of the prescribed policies, was the poster child of the neo-liberal adjustment policies under the “Washington Consensus.” Elections were free, civil liberties were broadly protected, the armed forces, which had toppled six civilian governments since 1930, suffered substantial cuts in their budget and largely disappeared from the political scene. Yet in 1998, Argentina entered a phase of recession, culminating at the end of 2001 in an extraordinary economic, political and social crisis. At the end of 1990, the Alliance for Jobs, Justice, and Education, a coalition of the centrist UCR and the center left FREPASO, appeared to offer a viable alternative to Menemism. Yet the De la Rúa government failed to deliver on both political and economic fronts.
On December 18 and 19, 2001, Argentina exploded in a wave of rioting and protest. The government unleashed brutal police repression resulting in at least two dozen deaths. De la Rúa resigned on December 20. On January 1, 2002, congress selected PJ senator Eduardo Duhalde as Argentina’s third president in less than two weeks. Confronted with a massive civic rebellion, rallying behind the slogan “throw everyone out” (“que se vayan todos”), the first move of the new government was to end the monetary convertibility system. Within a few weeks, the peso lost more than 70% of its value, triggering fears of hyperinflation. The economy fell into a full-scale recession, the banking system collapsed and economic activity ground to a halt. At the same time, the democratic institutions were near the breaking point, hostility toward the political elite and social protests increased more and more, to the point of triggering talk of military intervention. After the police had killed two protesters in June 2002, a badly weakened Duhalde was forced to cut short his own mandate. Finally, the presidential balloting was rescheduled for April 27, 2003.
Although the economy had began to recover in the second half of 2002, the political situation remained volatile. The party system was in disarray. FREPASO and Domingo Cavallo’s AR disappeared from the political map, and the UCR fell to less than 2% in the polls. Key UCR politicians abandoned the party to launch independent presidential bids. The PJ was paralyzed due to the power struggle between Menem and Duhalde. Desperate for a candidate to defeat Menem, Duhalde resigned and turned to Néstor Kirchner, the little-known governor of the southern oil-producing province of Santa Cruz. Locked on an agreed upon mechanism to select its candidate and the nomination process, the PJ opted for three candidates: Menem, Kirchner and ex-interim President Rodríguez Saá.
Contrary to expectations, the elections went smoothly and participation was strikingly high. Menem won 24.5%, Kirchner 22.4%, López Murphy 16.4%, Rodríguez Saá 14.1% und Elisa Carrió 14.1%. The PJ candidates won the first two places and could win 81% of the vote. The UCR suffered a devastating defeat. Their candidate won a paltry 2.3%. In the second round elections, the polarization that had benefited Menem in the first round turned dramatically against him. Having won in the first round, he dropped out of the second round, handing the presidency by default to Kirchner. Argentines from across the political spectrum had voted massively against a return to the past. The widespread anti-Menem attitude and support for Duhalde were the keys for Kirchner’s success.
The state’s monopoly on the use of force prevails throughout the country and it is not disputed through functional organizations. The dominant position held by Buenos Aires (both city and province) and the course of developments encouraged the emergence of a centralized federalism. This led to an increased shift of responsibility and competence to the provinces after 1983, but without corresponding allocations of resources to fulfill the new obligations. As a result, the reality in the poorer provinces has been financial and personnel shortages have impeded their ability to enforce the state’s monopoly on the use of force. At the same time, increasing violent crime and the emergence of private security services threaten at best to erode, and at worst to overwhelm, the state’s monopoly on the use of force in the urban centers. In addition, local protest emerged in the form of street blockades, social revolts and looting.
All citizens enjoy the same civil rights and duties. The preponderant majority fundamentally acknowledges the state’s constitution.
The state is defined as a secular order. Church and state are separate, and the political process is secularized. However, the Catholic Church is subsidized by the state and it speaks with authority on important issues. However, its political influence diminished under Kirchner. The president and the church came into conflict on the question of abortion.
The state’s fundamental infrastructure extends to the entire territory of the country, but its operation is to some extent deficient. In the 1990s, the inefficient and corrupt national administration was subject to various partial reforms, but the aims were only partly achieved and some gains were later reversed. The political-administrative network and the political parties channel the public funds but the distribution follows particularistic and non-transparent criteria. The state’s weakness is revealed by its incapacity to revert the high degree of tax evasion, which is one response of the population to the corralito. Tax evasion is also indicative of the population’s general mistrust of the public sphere and the prevailing rules of the game among the political class. The implementation of the second generation of structural reform, postponed since the 1990s and demanded urgently from international financial agencies, is not in sight. The public sector’s efficiency has not increased.
1.2. Political participation
There is universal suffrage and the right to campaign for office. Elections are administered correctly. With a few exceptions (primarily at the provincial level) governments respect the rules governing open and competitive elections. Some isolated attempts to manipulate elections were cleared up or at least morally sanctioned. General elections are held and accepted in principle as the means of filling leadership positions. The percentage of the absentee vote, blank votes and protest votes decreased considerably in the 2003 presidential and parliamentary elections.
Elected representatives have sufficient authority to govern, and the influence of actors with veto power has declined. The military is subordinated to civilian control. Economic corporations still assert influence, although their power waned visibly during the second half of the 1990s. This process of erosion of lobbying power increased under the Kirchner government. With his autocratic government style, the president knew how to defend himself against interest groups such as the military, industrial sector, privatized public companies, banks and the Catholic Church. In some cases the price was a contaminated atmosphere between the president and organized interest representation.
Citizens are free to establish political and civic organizations. Beyond the articulation of established interest, there was an emergence of basic organizations, self-help groups, and protest forms. With a few exceptions, the government reacted flexibly.
Freedom of information and freedom of speech are safeguarded. However, effective access and monopoly controls are lacking, particularly in television, which is dominated by a few companies. Overall, the media enjoys a good reputation. One result of the political crisis has been the media’s ability to establish itself, on many occasions, as a stage for, and principal actor in, politics. On the other hand, the relationship between Kirchner and one conservative sector of the press deteriorated. Based on some criticisms in the 2004 annual report of the International Association of Journalists, the renowned newspaper La Nación denounced Kirchner’s intervention in freedoms of opinion and the press through a particular policy on information in favor of minority and provincial press.
1.3. Rule of law
During the 1990s, the balance of power between the three branches has clearly shifted in favor of the executive, resulting in presidential hegemony. The judiciary has become increasingly politicized and governance-by-decree has become common practice; legal infringements of every sort generally go unreported. Although Kirchner has taken some important initiatives in the balance of powers, his administration is very autocratic, usually without coordination with the members of his cabinet and his own party, the PJ. His (and his wife’s) influence in parliament is visible in the legislation process, the nomination of judges for the Supreme Court of Justice and decisions about the composition of congressional commissions. Kirchner governs mainly by decrees, without any protest of the members of parliament, although the emergency period just finished.
Kirchner took some initiatives toward a more independent and reformed judiciary. He pushed for the resignation of the Supreme Court’s president and reformed the process of nominations, characterized until recently as non-transparent and dominated by the president. On the other hand, even Kirchner influenced the nomination process for the Supreme Court. The gap between expected and real rule of law continues to be extensive. At all political and administrative levels, there is vulnerability to corruption and political influence. The weakness of the rule of law is combined with a system of privileges violating the principle of equality. The system lacks transparency, efficiency and neutrality.
Endemic corruption is attacked, but only with partial success, as demonstrated on March 2005 by the drug trafficking scandal in Ezeiza, the international airport of Buenos Aires. Although criminal prosecution of corruption appears to be a priority in the eyes of the public and it was declared one of the priorities of the Kirchner administration, it is - beyond the presidential level - an exception in actual political practice. Abuse of office by elected officials usually goes unpunished. The new composition of the Supreme Court perhaps will permit a more effective prosecution. Obstacles to an efficient prosecution of corruption are not moral or legal but lie in a set of informal practices that discourage effective prosecution and frustrate investigations.
Civil rights and liberties exist and they are guaranteed, but since the police and the judiciary are politicized and corrupt, poorly paid and inefficient, legal action against violations is usually inadequate. The ability of citizens to seek redress for violations of liberties is disproportionately distributed. Members of the middle and upper classes have more access to justice than members of the lower classes. However, Kirchner embarked on a series of efforts to address past human rights abuses; his progress in this area is remarkable. Kirchner discharged some high ranking military officers, radically restructured the military and police hierarchies, maintained strong relations with the human rights movement, transformed the ESMA, an ill-famed center of torture under the military regime, into a memorial and removed the laws of Obedencia Debida and Punto Final. All this has elevated public sympathy for the president.
1.4. Stability of democratic institutions
Compared to the quasi breakdown of democratic institutions at the end of 2001 and the first half of 2002, the democratic institutions, including the administration system and the judiciary, have recovered gradually. However, their good operation is not guaranteed nor is their interrelationship balanced and free from friction. On cabinet and ministerial levels, the process of coordination and agreement is very weak. Kirchner monopolizes decision-making power and gives his colleagues in the cabinet little margin for action. The president governs through decrees and the loyal PJ majority in both chambers gives him the necessary backing. The executive disposes exceptional faculties, ceded from the congress to the “jefe de gabinete” who can modify the budget, among other delegated powers. This competence is an innovation coming from the Duhalde
government and only comparable with the extraordinary delegated powers of the governor Juan Manuel Rosas in the 19th century.
Relevant actors are beginning to accept democratic institutions, but do not actively support them. The December 2001 slogan “throw everyone out” disappeared, but mistrust of democratic institutions, their ability to be representative and their performance has not disappeared. One exception is President Kirchner: his popular support oscillates between 60% and 70%. Organized veto powers are not in sight. The various forms of anti-institutional social protest, self-articulation and self-help experienced their peak in the first month of 2002 and have decreased in the meantime. The middle class in particular has lost their interest in direct forms of expression and protest as frozen assets were unblocked.
1.5. Political and social integration
The systemic crisis in 2001-2002 had profound impacts on the party system. Even though there is relative stability in the Peronist voter base, the system as a whole suffered a partial decomposition. The degree of fragmentation is high and the weight of different players is very unbalanced. The UCR is fighting for survival; FREPASO and AR have practically disappeared. The result is a de facto single party (or better, a movement) Movimiento Federal Recreart. Alternativa por un República de Iguales (ARI) and Movimiento Federal Recrear (MFR) are little more than personal vehicles of their leaderships. The weakness of the non-Peronist votes and parties, for instance the opposition, would have negative consequences for the democratic process. The PJ has a virtual lock on both, the Senate (in which all provinces are represented equally) and a majority of governorships.
The existing network of associations is relatively fragmented and dominated by a few strong interest groups. As a whole, the agenda-setting power, the political influence and the mediating capacity of the industrial and financial sectors as well as of the trade unions, have diminished. The established channels between organized interest groups and the executive branch were interrupted through the crisis of 2001-2002 and under Kirchner, with his propensity to unilateral and isolated decisions only partially reactivated. Trade unions weakened since the application of the neo-liberal adjustment programs in the 1980s and 1990s and fragmented into three organizations. In the Menem era, they were additionally weakened through the dramatic de-industrialization process and impoverishment. One result of this economic and social breakdown was that the leading position in the protest movement of 2001 and 2002 was occupied not by the trade unions but the piqueteros, estraches and cacerolazos. The weight and acceptance of these basic forms of protest, political articulation and self-help in vast segments of the society, and the rise of alternative trade unions, increasingly threaten the hegemonic presumption of established trade unions. In addition, the image of the trade unions as corrupt organizations has by no means disappeared. For a lot of people, trade union bosses form part of the political establishment and are included in the slogan “throw everyone out”.
Support for democracy (65% in 2002, 64% in 2004) is 11 points above the Latin-American average – and has not receded in recent years (1996: 71%, 2001: 58%). The sensitivity to rule breaking is also high. On the other hand, 46% of those interviewed are not against a non-democratic government, if this government is able to attack economic problems successfully. Moreover, 71% are convinced that the country is governed in favor of a minority with good organized interests and not in the interest of the people. The percentage of satisfaction with the performance of democracy grew significantly during the period of review: from pure 8% in the crisis year 2002 to 34% in 2003 and 2004, the same value as 1996. Satisfaction with the political management of Kirchner is, at 73%, the second highest in Latin America (after president Uribe in Colombia with 75%). Political protests target the political class as a whole, but do not tend to call into question the constitutional framework.
Since the 1980s, civil society is broadly organized and highly differentiated. As the economic and social crisis deepened in the late 1990s and parties’ sweeping failure to act as channels to articulate and mediate between society and the state became obvious, the various structures of civic organization, social protest and self-help became increasingly important. Self-organization and the construction of social capital advanced. But, while new social actors cooperate on the local level (more than one-third benefits from horizontal social networks), their relationships with parties, parliament and the government are marked by distance and, in part, confrontation.
However, for the medium term these forms of civil organization will not be able to displace the aggregating and mediating functions of the parties, just as little as the social networks can compensate for an articulated social policy. Regarding social capital, Argentina remains a country just in the bounds of the law. Fundamental social norms are poorly developed. Instead, rule-flouting individualism and interest groups determine behavior, and increasing poverty threatens to further erode their very foundations. Mutual confidence is still underdeveloped. Only 15% of Argentineans are convinced that one can trust in the majority of others (2001: 16%; 2002: 22%; 2003: 18%). On the other hand, the strong social crisis in 2001 -2002 triggered a wave of solidarity, mutual help and self-organization. It is uncertain if these new forms of horizontal solidarity and articulations of basic democracy can survive and be utilized through the political parties for constructive responses.
2. Market economy
2.1. Level of socioeconomic development
Argentina is ranked 34th in the 2004 Human Development Report and has changed
its position little between 1995 and 2004. Social exclusion dramatically intensified quantitatively and qualitatively since the second half of the 1990s. Key socioeconomic indicators, consequently, show a downward trend. Between 1999 and 2002, the GDP dropped a fourth of previous levels. The process of poverty related social exclusion hit the middle class, women and young people especially hard. Moreover, 20% of children were undernourished. This exclusion (in part structural) remained present in quantitative and qualitative terms, during the period of review. Though the Kirchner government started an emergency program for the most affected people, 57% of the population still lives under the poverty line, and 27% are absolutely poor. The program started during the Duhalde presidency under the name “plan jefas y jefes”, a program that considerably calmed social tensions. Income inequality also increased during the same period (the Gini Index is 52.2). On the other side, some important macroeconomic indicators were looking better in 2004: the inflation rate was moderate (6.1%), however with an upward tendency. The growth rate was spectacular (9%), as was the growth of tax receipts (36%) and foreign exchange reserves (from $14.1 billion to $19.6 billion). In the back of everyone’s minds though are the very low level of incomes and the growing preoccupation with the future inflation rate.
2.2. Organization of the market and competition
The key conditions for an orderly market economy exist in Argentina. There are uniform rules for all market participants, but they are weakly anchored in institutions and not sufficiently internalized by all market participants. Free competition and the protection of property rights are limited by corruption and political influence on the administration and the judiciary. Because of the economic crisis and the process of growing pauperization, the informal sector expanded dramatically during the last years. According to Latinobarómetro, only 16% of the population is satisfied with the functioning of the market economy, 54% are convinced that private enterprises are important for the development of the country and 56% think that only a market economy system makes development possible.
The privatization of public services led to the formation of monopolies and oligopolies, without adequate regulation mechanisms.
Foreign trade is completely liberalized. However, in the case of Mercosur, it has resulted in multiple protectionist measures and trade disputes, particularly with Brazil, Argentina’s most important trade partner. Even though a court for dispute settlement was established in 2004, protectionist measures and trade disputes did not disappear. Abandonment of the dollar-peso parity at the end of 2001 led to a slump in imports and investments.
The banking system and the capital markets are relatively well differentiated, but only foreign banks are internationally competitive and meet international standards. Banks remain susceptible to broad fluctuations because of their substantial dependence on external capital. Privatization and market opening brought mergers, oligopolic formations, as well as company and bank collapses. The economic breakdown in 2001-2002, including the default and the dry up of foreign capital, produced a banking system collapse. Some private banks closed and a number of international banks left. The remaining banks demanded compensation from the state for the abolition of the corralito. Credit volume stagnated despite the economic recovery. Therefore, the profitability of banks was threatened. If no new capital injections come, additional mergers and collapses are expected.
2.3. Currency and price stability
The most important parameter of the convertibility plan was inflation control, and it was successful until the plan was discarded at the end of 2001. However, when the fixed exchange rate was abandoned, fighting inflation lost its preeminent status in Argentina’s economic policy. As a result, the consumer price inflation index hit 42% at the end of 2002. Under Kirchner, controlling inflation and an appropriate foreign exchange policy are recognized economic policy goals. The inflation rate was under control in 2003 and 2004 (2003: 6.1%; 2004: 4.3%). This
is, of course, not a guarantee for the future because the institutional framework is continuously weak. In addition, in recent times, the fear of rising inflation reappeared because of the spectacular 9% growth rate in 2004.
There are some signs of a consistent policy for stability, but they are not sufficient and lack sound institutional safeguards for the future. Until now, a political and institutional guarantee against populist policy changes does not exist. On the other hand, in February 2005 Kirchner succeeded in forging a surprising debt swap arrangement with the majority of Argentina’s private creditors. The arrangements with the remaining (approximately 25%) of private creditors not participating in the debt swap are just as clear as the characteristics of a new longtime arrangement with the IMF. Another point of concern is the problematic relationship between the central government and the provinces with respect to the revision of financial equalization, emphatically demanded by the IMF.
2.4. Private property
Property rights and the regulation of property acquisition are defined in principle, but practical enforcement in accordance with the rule of law is problematic because of deficiencies in the judicial and administrative systems.
Private companies represent the backbone of the economy. The 1991 State Reform Law privatized large portions of basic industry, infrastructure and other public services (sometimes below their true value). At the same time, significant segments of local industry were bought up by foreign firms. Privatization was accompanied by a series of corruption scandals, and several undesirable side effects including mergers, monopoly formation, rising unemployment, shrinking real incomes, impoverishment of the middle class and increasing social inequality. The crisis of 2001-2002 motivated the government to freeze the tariffs of privatized public enterprises. This provoked a strong conflict between the government and the firms. While the government complained about lacking investment, the companies demanded compensation for their lost revenues because of the end of the dollar-peso parity. In consequence, the country slipped into an energy crisis. In addition, the corralito strongly violated private property rights and destroyed trust in the state as guaranteed by this right. The partial loosening of bank deposit regulations since autumn 2002 has partially restored this loss of trust. Another sign of regained confidence is the unexpected high participation of Argentine private investors in the new government bond deal. However, it will be a long way until local and international investors restore their commitments.
2.5. Welfare regime
Social networks are developed, but do not cover all risks for all strata of the population. Considerable portions of the population live in poverty and have no access to social safety nets. What began as a government-sponsored welfare regime has been retrenched in the spirit of neo-liberalism. This new concept called for compensatory social services to accompany economic growth. Until now, the government could not combat poverty systematically.
Welfare programs to alleviate poverty and other risks (such as old age, illness, unemployment and disability) were characteristic of Argentinean development until the 1970s, but have eroded continuously since then. Government efforts to fight poverty generally follow an assistance-based approach or they are focused on specific target groups. Empty coffers have led to a drastic deterioration of the state health care system. The social welfare model has consistently combined private and government funding for the common good, but both sides have run out of money since the exchange rate was floated. There are a number of institutions, government initiatives and basic organizations to compensate for gross social differences; however, they are insufficiently financed, uncoordinated or based on an articulated and integrated approach. Meanwhile, the most negatively affected groups are women and young people. Women have more or less equal access to higher education; however, the economic crisis has prevented many from taking advantage of this opportunity. On the other hand, Argentina has a lot of catching up to do with respect to equal wages and access to public office even though one-third of all candidate slots in legislative elections are reserved for women. Public attitudes about gender are traditional: 37% of the population is convinced that women are better at taking care of the family and men are better at working outside the home.
2.6. Economic performance
During the period of review, the economy has performed extremely well, as evidenced by macroeconomic indicators. The most promising elements are the growth rate (2004: 9%), balanced budget (2003: +1.3% of the GDP), inflation rate (2004: 4.3%); export growth (2004: 16.5%), unemployment rate (2004: 13.6%, compared with 18.3% in 2001) and the development of the public debt (a reduction 2004 of approximately $50 million). On the other side, the structural base for a sustained economic development remains fragile since dependence on external factors, investment and savings are relatively weak.
Although the goal of sustainable development was incorporated in Article 41 of the 1994 reformed constitution (known as the “polluter pays” principle), ecologically compatible growth receives only sporadic consideration and has only a weak institutional framework. Many questions remain open regarding, for example, the economic exploitation of the environment, as there is still no successful cooperation between different levels of government in this area. Macroeconomic growth is unbalanced and only partially environmentally sound. Sustainability lacks strong institutional roots, and short-term growth objectives have taken precedence over sustainability considerations. Public environmental awareness is still underdeveloped, and punitive measures for infringements are more an exception than the rule.
Argentina has a well-articulated system of primary and secondary education, but this is increasingly under-funded. The same holds true for the otherwise well-developed public university system, which has been complemented by a network of private universities since the 1980s. Academic opportunities increased in quantitative terms in all levels after the shift from the welfare state to a “post-welfare state” under Menem, but at the expense of quality. Furthermore, the structures necessary to administer the school system efficiently can only be developed in a few provinces, and the widening quality gap between rich and poor provinces is spawning a disturbing development. During the economic crisis of 2001-2002, many educational institutions suffered big financial problems. In 2004, the government started a campaign to equip 1,200 schools with computers. The public expenditures for education and culture amount to $3.3 billion (6.4%of the public budget). Overall, and despite shortcomings in reform, the foundations for a modern educational system exist. However, the country is still far from having an independent and elaborated science and technology policy. Total government spending in this area between 1997 and 1999 averaged only 0.23% of the GDP. The majority of national enterprises focus on increasing profit rather than innovation. The wretched state of the economy has resulted in a massive brain drain, which, in turn, impedes the country’s development chances even further.
3.1. Level of difficulty
The structural constraints at the beginning of the Duhalde government (January 2002) were very high. The economic, political and social situation of the country, after the breakdown of the alliance government, was a disaster. The democratic institutions were at a breaking point, the party system in disarray, the public trust in politics and politicians declined and the confidence in the external environment strongly affected. In addition, structural deficiencies existed in the rule of law, administrative efficiency and transparency, and institutional stability. The country showed marked rates of poverty and social exclusion, widespread corruption and severe deficiencies in infrastructure. Since the second half of 2002, however, there was a trend reversal, above all marked by the president’s majorities in the two chambers and the good figures in the international economy (high raw material prices, a weak U.S. dollar, recovery of most Latin-American economies after three years of stagnation and recession). The political affinities between the center-left governments in the Cono Sur also favored governability.
Civil society organizations played an important role during the transition period from authoritarian to democratic government. However, with the strengthening of the two major political parties, the PJ and the UCR, the political influence and weight of those organizations diminished. Nowadays, the field is very fragmented and the objectives are very diffuse. In the context of the 2001- 2002 crisis, many so-called civil society activities were spontaneous, minutely organized and focused on day-to-day problems.
There are no ethnic or religious cleavages, but recently society and political elites are increasingly polarized. The lines of division are decreasingly along social or ideological differences as consequence of a widespread discontent with bad political management and the meager output. One characteristic of the Argentinean society, some time ago, was the high influence of their middle class. Since the implementation of the radical reforms of the so-called “Washington Consensus” in the 1980s and 1990s, a big part of the middle class has disappeared, increasing the gap between a very rich profit-seeking minority and the impoverished majority. This process culminated in the 1980s and 1990s in different forms of social protest, such as rioting, street blocks and supermarket plundering. In 2001-2002, they turned into new social movements and forms of protest (piqueteros, cacerolazos), which, however, during the period of review, increasingly declined in intensity, violence and mobilization of power. The majority of protests was peaceful, did not infringe the legal order and were deactivated through concrete government responses or isolated from the societal environment. Violent incidents were exceptions.