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President Carlos Saúl Menem Akil - 1989-1999

Prior to 1989, Argentine politics were characterized by populist leaders, sometimes democratically elected and sometimes not, who ruled with the overt support of the military. Coups and outright military rule were not uncommon. Economic polices were highly protectionist, with significant barriers and restrictions on foreign trade and investment. Markets were highly regulated and the state was heavily involved in many industries. Inflation was routinely high and growth stagnant.

Constant friction with the military, failure to resolve endemic economic problems, and an inability to maintain public confidence undermined the Alfonsin Government's effectiveness, which left office six months early after Peronist candidate Carlos Saul Menem won the 1989 presidential elections. As President, Menem launched a major overhaul of Argentine domestic policy. Large-scale structural reforms dramatically reversed the role of the state in Argentine economic life.

After their predecessors had hesitated for years, the governments of Carlos Saúl Menem in Argentina (1989-99), Fernando Collor de Mello in Brazil (1990-92), Alberto Fujimori in Peru (1990-2000), and Carlos Andrés Pérez in Venezuela (1989-93) imposed drastic stabilization plans shortly after taking office. Unexpectedly, these painful policies aroused little protest and much support -- or at least acquiescence -- in Argentina, Brazil, and Peru, while triggering unprecedented riots in Venezuela.

President Menem undertook a program of deregulation, liberalization and macroeconomic reform. The results were positive. After decades of economic decline and chronic bouts of inflation, Argentina under President Menem began an unprecedented, profound, and remarkably successful economic restructuring based on trade liberalization, privatization, public administrative reform, and macroeconomics stabilization.

A decisive leader pressing a controversial agenda, Menem was not reluctant to use the presidency's extensive powers to issue decrees advancing modernization when the congress was unable to reach consensus on his proposed reforms. Those powers were curtailed somewhat when the constitution was reformed in 1994 as a result of the so-called Olivos Pact with the opposition Radical Party. The 1994 political compromise between the two major parties paved the way for voters to elect a constituent assembly to revise the constitution. The new constitution, approved in August 1994, provided for the direct popular election of the president and permits him to run for a second consecutive term. It also provided for the direct election of the mayor of the Federal Capital and senators.

That arrangement opened the way for Menem to seek and win reelection with 50% of the vote in the three-way 1995 presidential race. In May 1995, following a first term marked by economic success and political stability, President Menem was reelected to a second four-year term with nearly 50 percent of the vote. The PJ also won an absolute majority in the Chamber of Deputies and retained control of the Senate.

The 1995 election saw the emergence of the moderate left FREPASO political alliance. This alternative to the traditional two main political parties in Argentina was particularly strong in Buenos Aires, but lacked the national infrastructure of the Peronist and Radical parties.

Argentina held mid-term congressional elections in October 1997. The opposition UCR-FREPASO alliance made major gains in the number of seats it held and deprived the Peronists of an absolute majority. The elections were widely seen as setting the stage for the 1999 presidential race. The government's pro-market policies remained unchallenged, but continued high unemployment and growing public concern over corruption hurt the government's standing in public opinion polls.

The resignation of Economy Minister Domingo Cavallo in July 1996 was initially greeted with skepticism from the markets. Cavallo was widely recognized as the man responsible for ensuring the convertibility of the peso by pegging it to the dollar, a move which saved Argentina from the hyperinflation and continuous drops in output which could have followed from the Mexican crisis in 1994. Confidence was quickly restored, however, with the appointment of Roque Fernandez, who promptly reaffirmed commitment to Cavallo's plan and introduced further measures for fiscal stability.

Argentine GDP growth in 1997 was 8.0%, up from 4.4% in 1996 and -4.4% in 1995. Argentina's growth, averaging over 6% from 1991 to 1997, had been driven primarily by domestic consumption. Immediately after the Mexican crisis, bank liquidity was restrained. However, deposits since returned to the system surpassing the levels that existed prior to the crisis and liquidity is very much improved. Lending also increased and consumer spending rebounded although it slowed somewhat due to the Brazilian crisis. The positive effect was that inflation, well over 150% at the beginning of the decade, was 0.4% in 1996.

Unemployment was still troublesome for Argentina, quite high at 15%. Menem's economic liberalization policies succeeded in attracting foreign investment. From the US alone, approximately $10 billion was invested by 1996. Investors had been most attracted to the telecommunications, finance, and energy sectors.

Argentina enjoyed a positive trade balance. The export economy was heavily weighted toward agriculture, which represented 60% of the total value of all Argentine exports. Primary products are livestock, oilseeds, and grain. Argentina's single biggest trading partner was Brazil, and the United States was the second. Primary imports were machinery, vehicles and chemicals.

In foreign policy, Menem dramatically made partnership with the United States the centerpiece of his approach. Argentina was the only Latin American country to participate in the Gulf war and all phases of the Haiti operation. The United States and Argentina enjoyed a close bilateral relationship, which was highlighted by President Clinton's visit to Argentina in October 1997. The efforts of the Menem Administration to open Argentina's economy and realign its foreign policy contributed to the improvement in these relations, and the interests and policies of the two countries coincided on many issues.

Argentina and the United States often voted together in the United Nations and other multilateral fora. At the UN, Argentina was one of the US's closest collaborators. The Menem Administration supported the US campaign to improve human rights in Cuba and joined with the US in international disarmament efforts, the fight against international terrorism and narcotics trafficking, and efforts to control global warming.

On November 29, 1996 President Menem promised full support of investigations into Argentina’s actions during World War II and said Argentina would release all secret files on Nazis who fled to Argentina after the war.

Menem was an enthusiastic supporter of the Summit of the Americas process, which included Argentina's decision to host the Second Specialized Inter-American Conference on Terrorism in November 1998, as called for in the Santiago Summit of the America Action Plan earlier that year. Eager for closer ties to developed nations, Argentina pursued relationships with the OECD and left the Non-Aligned Movement. It became a leading advocate of nonproliferation efforts worldwide. A strong proponent of enhanced regional stability in South America, Argentina revitalized its relationship with Brazil; settled lingering border disputes with Chile; served with the US, Brazil, and Chile as one of the four guarantors of the Ecurador-Peru peace process; and restored diplomatic relations with the United Kingdom.

Under President Menem, Argentina's traditionally difficult relations with its neighbors improved dramatically and Argentine officials publicly deny seeing a potential threat from any neighboring country. In a solemn, historic setting, the Presidents of the Argentine Republic, Carlos Saúl Menem, and the Republic of Chile, Eduardo Frei Ruiz-Tagle, met in Punta Arenas and Ushuaia on February 15 and 16, 1999 to commemorate the important meeting held in 1899 by their predecessors, Presidents Julio A. Roca and Federico Errázuriz Echaurren. The visionary spirit of those men triggered a phase of renewed friendship between Argentina and Chile which, among other notable events, paved the way for the signature of the May agreements of 1902 -- the first agreements to limit weapons acquisitions.

In September 1995, Argentina and the UK signed an agreement to promote oil and gas exploration in the Southwest Atlantic, defusing a potentially difficult issue and opening the way to further cooperation between the two nations. In 1998, President Menem visited the UK in the first official visit by an Argentine President since the 1960's.

As of October 1999, Spanish Judge Baltasar Garzon had charged 186 persons with various crimes committed during the "dirty war" that the 1976-83 military regime conducted against alleged leftists. In November Garzon indicted the leaders of the military junta, including former military leaders General Leopoldo Galtieri, General Jorge Videla, Admiral Emilio Massera, and 95 other officers, including 1 active federal judge, on charges of torture, terrorism, and genocide. In 1983 the courts sentenced Videla, Massera, and Galtieri to life in prison, but President Menem pardoned them in 1990.

On 07 June 1999, President Menem relieved General Eduardo Cabanillas from command of the Army's II Corps, based on his distribution of a book entitled "Subversion: the Forgotten History," which contained harsh criticism of the Government, the business sector, the media, and political parties. However, early in June, a military tribunal tried Cabanillas for human rights abuses, including torture, theft of babies, and deprivation of due process, committed during the dictatorship. The trial followed allegations in the press that Cabanillas was involved in the theft of babies of women who had disappeared. While the court dropped the charges for lack of evidence, the army chief asked for his resignation. Cabanillas refused, stating that only the President could remove him from his post. In July President Menem discharged Cabanillas for insubordination.

Even though investment and economic growth soared during the mid-1990's, so did borrowing on international markets.The Menem Administration never really fully implemented the free market model in Argentina. Instead, the Argentine economy remained relatively noncompetitive, with a bloated public sector, while growth was financed with international borrowing. When a recession hit Argentina in mid-1998, the bubble began to burst. The IMF - with US support - responded by calling for increasingly harsh fiscal austerity measures.

The next presidential election was due in 1999. In accordance with the constitution, Menem, a member of the Peronist party, could not seek a third consecutive term. In an important development in Argentina's political life, all three major parties in the 1999 race espoused free market economic policies. In October 1999 voters elected Fernando de la Rua President for a 4-year term; he took office on December 10, replacing President Menem. The elections were considered free and fair.

Carlos Menem and 12 other people went on trial 13 August 2015 for allegedly conspiring to derail the investigation into the deadly 1994 bombing of a Jewish community center. Prosecutors allege that Menem and his co-defendants, including his former intelligence chief and a former federal judge, tried to steer prosecutors from linking the bombing of the Argentine Israeli Mutual Association building to a Syrian-born man, Alberto Kanoore Edul, who was suspected of taking part in the attack. The 85-year-old Menem, who became Argentine president in 1989 and served a decade, is of Syrian descent. Currently serving as a senator in the Argentine legislature, Menem denied the charges.

On 01 December 2015 an Argentine court sentenced former President Carlos Menem to four-and-a-half years in prison for embezzlement. Menem was a senator representing La Rioja province where he was born, a status as a lawmaker that protected him from being imprisoned. The local court also sentenced former Economy Minister Domingo Cavallo to three years and six months for his role in illegal payments to staffers authorized by Menem during his 1989-1999 presidency. Investigators said Menem and Cavallo were part of a scheme to overpay officials and later split the take among all of those involved. The overpayments were intended for security and intelligence expenses.