| BUSINESSWEEK ONLINE : OCTOBER 18, 1999 ISSUE | ||||||||
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| INTERNATIONAL BUSINESSS
Menem May Not Be Ready to Fade Away The President defends his legacy and ponders running again In his more than 10 years as President, Carlos Saul Menem helped tame runaway inflation, lift barriers to trade and investment, and privatize state-owned enterprises from the telephone system to oil company YPF. But as Menem, 69, winds down his time in office, Argentina is suffering through its worst recession in years. On Oct. 24, voters will choose a new President: either Fernando de la Rua of the opposition Alliance, who leads in the polls, or Eduardo Duhalde of Menem's Peronist Party. On Oct. 5 at the presidential residence in the Buenos Aires suburb of Olivos, Menem talked with Ian Katz, Business Week's Sao Paulo bureau chief, about the election, his legacy, and his plans. Note: This is an extended, online-only version of the Q&A that appears in the Oct. 18, 1999, issue of Business Week. Q: Who's going to be the next President? A: I'll give you answer when we see the last vote at 6 p.m. on Oct. 24. It's very difficult to make predictions. The opposition gives a double message. It says that with this plan that we put into effect in 1989, we've destroyed the provincial economies. Then they go abroad and say they will respect everything that we've done regarding stability and the [currency]. There's a contradiction between what they say here and what they say abroad. Q: What difference will it make to you who wins the election? A: I prefer for the health of Argentina that my party wins. In the very remote chance that the opposition wins, I am a man of democracy, so if I have to be in the opposition it will be [to be] constructive, not to destroy. Q: What is your legacy? A: Ending the animosity between the military and civilians. We have buried once and for all the subject of coups d'etats. We reformed the state, transferring to the private sector all the services the state had operated. We now have a market economy, and rigid fiscal and monetary discipline. This government is the most successful government in Argentina's history. Q: Would you do anything differently if you had these 10 years over again? A: No. I'd do it all the same. I don't regret what I've done. But the work of men is never perfect, it is to be perfected. You can never say a job is done. We've had the chance to see election campaigns in other countries, like the U.S. for example. No one can deny that President Clinton has had a very good government. He fixed the budget deficit, he has a surplus, employment has grown. But there are always things to do. Q: What specific measures would you like to do if you had more time right now? A: I would deepen all the measures already taken, especially in the area of labor flexibility, to provide greater flexibility to make more job creation possible. We have taken important steps in previous years, such as a reduction in the employer contributions, which has cost the state $4 billion in recent years. Business promised us that with [the money saved because of the] reduction it would create more jobs, but it didn't happen. Q: After two terms as President, you are prohibited from running again until you sit out a term. So now what are you going to do? A: I am president of the largest party [the Peronists], and I am going to keep fighting battles in the field of democracy and freedom. I have serious aspirations to compete again [for the presidency] in 2003. Q: If you were to be reelected in 2003, would you do anything differently? A: I'd have to see how the next government leaves the country. I couldn't have thought that I was going to receive such a disaster, a country in an apocalyptic state, when I took office in 1989. Well, that's what I got, a country on fire in all four corners. But we turned it around with the results that everyone now knows about. I can't give an opinion on how the country will be in 2003. If the future government continues with our plans, we'll keep growing. But if not, if the government tries to return to the past, to put us again in 1989, I feel pain for the future of Argentina. Q: You referred to the possibility of the next government deepening your program. What else needs to be done? A: I think the future government should pay close attention to social issues. We did the impossible. Never in the history of Argentina has there been as much investment in the social area as there has been during my government. They have to continue the investments and help the neediest sectors of society. That has always been our intention. But we didn't count on the crises that have broken out lately in the world, which stopped our growth. We had an average of more than 6% growth in recent years, which is double the growth of countries like the U.S., and triple [that of] other countries. This year, our growth was stopped, but now, little by little, it will return. Q: What caused the slowdown? A: Factors that come from outside the country. First, the Mexico crisis [in 1994]. Then the Southeast Asia crisis, followed by fears over the situation in Japan, and then the Russian crisis. Recently, the devaluation of the real in Brazil has created a sort of asymmetry in the economies in the region that we're trying to resolve. We're on our way toward doing that. Q: To reignite economic growth, what can...the next President do? A: If our policies are continued, growth will return. In this globalized world, with globalized economic policies, we have to be very aware of what happens in the entire region. This crisis affects not only Argentina, but also Brazil and Chile. Chile has had a very solid economy, but with the Southeast Asian crisis it lost a big part of its market. Accords that we have made recently with Chile open the borders, allow Brazilians and Argentines access to the Pacific, and give Chile access to the Atlantic Ocean. This entire bloc, as we work out our differences, will begin having sustained growth again. If the situation is handled well by the future government, Argentina will begin to grow rapidly, and with its neighbors, all the members of Mercosur. Q: Argentina and Brazil are engaged in the most serious arguments over trade since the Mercosur bloc came into being in 1991. What's the root of the problem? A: The devaluation of the real. It brought a series of distortions in trade that we're trying to resolve. There was a problem with shoes, textiles, steel, autos, paper. We're reaching agreements in some of these areas to allow faster development of trade. At first it looked like it would be very difficult to resolve. But now, because of the continuous and permanent dialogue we have, we are resolving the situation. Q: In Mercosur, many issues have been worked out in emergency fashion directly by the Presidents. Will this continue to be the way disputes are worked out? A: What Mercosur needs is institutions like those in the European Union, that would give the members of the bloc the possibility to work out their differences. But what is fundamental is a common currency for the region. This proposal I made almost four years ago, and since then I continue insisting on the subject. Brazil is already convinced that a common currency is absolutely necessary. This is one of the biggest solutions we can have. Q: You think the common currency should be the dollar? A: The name isn't important. I hope it would be convertible and it would be at parity with the dollar. We've done that in Argentina with excellent results so far. Q: And you think a common currency will be a reality? A: I don't have the slightest doubt that it will be. If we follow the pure style of fiscal responsibility of the Maastricht Treaty [that created Europe's new common currency zone], we can do it. Europe was working on it for 50 years. We did Mercosur in five years. And now we have to advance toward a common currency and continuing advancing with integration, which is the final objective. Q: What's stopping a deeper labor reform? A: Same as always, the unions. Some parts of the Argentine labor movement. But they're within their rights. They have to defend what they believe is fair for them. Q: The unions still have enough power to block labor reform? A: In the Congress they have strength, especially when we're in an election campaign. Q: Are you afraid that the next government will investigate you or members of your government on corruption allegations? A: If there is a government that frontally attacked corruption, it's my government. We dismantled structural corruption by [privatizing] state companies, where state workers, contractors, and suppliers got rich. Lately, [the opposition] says that while the people in the government drink champagne, there are poor people in Argentina. Now it occurs to them to talk about the presidential plane. Let them sell it! But what's the proposal? To have a government, a President, who doesn't have a plane for traveling? They say the plane is very new, very modern. Well, sure, they hope that I go down with the plane. They're so hypocritical that it makes you laugh. Q: But could a new government bring charges against members of the previous one? A: All the allegations have been made. And not only against my government. The opposition also has open cases. But if the opposition feels the need to make allegations against me, let them be made. There have been two allegations made against me, and I've been cleared of both. Q: Should people be afraid of a devaluation in Argentina? A: We Argentines have seen that devaluation movie many times. The last time we saw it, we had 5,000% annual inflation. Now we have $35 billion in reserves in the Central Bank. We have $80 billion in the financial system, which gives us an enviable stability for a long time, if the future government doesn't dare to change the situation. Q: What other plans do you have besides running the Peronist Party? A: I'll spend some time in La Rioja, my province, tending to my business in association with a partner. It's a wine business that's been operating since 1929, which my father started. My brothers sold their shares to my partner, so the two of us are left with the business, which is operating well now. But also, the Peronist Party, because of a decision by this president of the party, belongs to the international Christian Democratic Party. So I'll be traveling to different meetings for that, and I'll be receiving invitations all the time to go and explain what we did in Argentina to produce this true miracle. I won't have much time. My hobbies are sports. I don't have others. With my tennis I'm doing well; with golf, so-so. I think starting Dec. 10 my handicap will go down for sure. Like my friend George Bush said, "I realized I wasn't President anymore when I started to lose in golf." _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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