The Fall and Fall of Argentina

By Christine Gorman

The crowd began to gather silently last Monday afternoon on the streets adjoining the Boerio Supermarket in Rosario, Argentina's third-largest city. The tin-roofed grocery store had served its middle-class neighborhood for years, so manager Luis Nicastro recognized many of the well-dressed people outside the store as his regular customers. Some of the others were toothless, hungry folk in tattered clothes, who came from nearby shantytowns. By 2 p.m., a mob of more than 500 filled the parking lot. "I thought of closing the doors," Nicastro says. "But what good would it do? With all this glass, there was nothing we could do but let them in."

The crowd held back while a group of 40 hungry women and children rushed into the Boerio and grabbed as much milk, flour and sugar as they could carry. As they fled, the ransacking began in earnest. Young, strapping men armed with crowbars knocked spaghetti, oranges and hunks of meat onto the floor as they rushed to scoop up groceries. Others carted off boxes of laundry detergent, frozen foods and toilet paper into their Peugots, Volvos and even waiting taxis. Within 20 minutes they had destroyed the bakery at the rear of the store, smashed out the windows and broken open the cash registers. As the looters left, one of them, laughing hilariously, asked Nicastro, "What time do you open tomorrow?"

After years of tottering on the brink of economic crisis, Argentina started sliding into chaos last week. In food riots that erupted in Rosario, Cordoba, Buenos Aires and other major cities, more than 2,000 people were arrested and at least 15 killed. The primary trigger: hyperinflationary price increases that have left even middle-class citizens unable to afford food and other necessities. Inflation for the month of May reached 75%, and is accelerating at a pace that would amount to more than 80,000% for the year. Said David Feldman, news director of Radio Rosario: "It's not just hunger. People are crazed. There is extreme tension here."

The upheaval began two weeks ago, with isolated outbreaks of looting in several provincial capitals. Widespread food riots broke out in Rosario (pop. 957,000) early last week, after lame-duck President Raul Alfonsin announced his fourth emergency economic plan of the year. Roving crowds, described by police as a mixture of the hungry, the criminal and the opportunistic, overwhelmed poorly prepared local police. Stores not gutted by looters closed their doors, creating widespread food shortages. The unrest then spread to the volatile working-class suburbs of Buenos Aires.

Alfonsin responded by declaring a 30-day state of siege, which entitles police to detain suspected looters without charging them. The President, following the lead of provincial leaders, also ordered the creation of hundreds of soup kitchens and the free distribution of food. Some measure of order was restored after four days, but many citizens were calling for Alfonsin, whose Radical Civic Union party was convincingly defeated by Peronist Carlos Saul Menem in May 14 elections, to step down before his term ends on Dec. 10. When the two men met last week, however, they apparently agreed that an early transition would suit neither one. Alfonsin wants a normal, democratic transfer of power -- Argentina's first since 1928 -- while Menem and his sharply divided party realize they have no comprehensive plan for stitching together the shattered economy.

The country's eruption was the second such outburst to hit debt-stricken Latin America this year. In February and March more than 300 people died in Venezuela during protests against an austerity program aimed at bringing down a foreign debt of $30 billion. Argentina, which has a $60 billion external debt, has made no payments since April 1988.

The economy, desultory even in the best of times, is now virtually shut ! down. Automobile, tire and auto-parts production have come to a stop. Ranchers have halted delivery of cattle because they are being paid with uncashable checks. The government cannot print money fast enough, so a severe cash shortage has prompted bank closings. Because the austral has lost 90% of its value since February, most people try to conduct their business in U.S. dollars, although it is now illegal to do so. According to private estimates, what is left of the economy runs on $500 million worth of austral notes and $5 billion in U.S. currency.

Food riots in a country considered to be one of the world's breadbaskets amounted to a devastating indictment of the Alfonsin government, which failed to act quickly enough to put Argentina's fiscal house back in order in 1983, when Alfonsin became the first civilian President in nearly eight years. The former human-rights activist valued political stability at the expense of wrenching but necessary economic changes to correct the country's low productivity, over-regulation, bloated public payroll and money-losing state- owned companies. By the time Alfonsin began pushing for economic reforms in 1985, his popularity had eroded, and the Peronist-controlled Congress was able to block his moves.

Now Argentinians have turned their eyes to Menem. But since the President- elect has yet to define a concrete economic plan, the situation seems bound to deteriorate further. Even Argentina's generals, who have never been shy about staging coups before, appear reluctant to intervene for fear of saddling themselves with the blame for economic ruin. "We are in a process of decline," says Federico Zorraquin, president of the Banco Commercial del Norte. "No one knows where it will end."

CHART: NOT AVAILABLE

CREDIT: NO CREDIT

CAPTION: Rising out of Reach.

With reporting by Laura Lopez/Rosario