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Argentina Falls Into a Pit of Poverty, Hunger

June 18, 1989|JAMES F. SMITH | Times Staff Writer

BUENOS AIRES — Argentines, who lived as well as the Italians and the French a few decades ago, face a staggering prospect: The minimum wage by the end of June could be worth $10 a month--less than that of Haiti, the world's poorest country.

One of the world's great granaries and beef producers is now coping with the unprecedented reality of hunger. The posh downtown bistros are still crowded, but the decaying industrial belt around the capital has slid into depression.

In May, the hardships and disparities became insupportable. Rioters destroyed hundreds of stores in an explosion of looting that left 15 dead, the first such unrest in Argentine history.

Argentines long have sought to find the causes of their protracted decline, hoping that, in the process, they might discover the road back to prosperity. All sectors seem closer than ever to a consensus on the diagnosis: equally greedy siphoning by the state itself, business and labor, that finally coalesced into a hypercrisis in a country accustomed to crises.

Inflation used to be expressed in annual terms, then monthly and even weekly. Now people think of a daily inflation rate: Prices were climbing in early June by 3% a day. In 1985, one Argentine austral was worth $1.20; by the middle of this month, a dollar was buying nearly 400 australs. The biggest bill, until recently, was 100 australs. This month, the mint began printing 50,000-austral notes.

The powerful trade unions, which staged 13 general strikes for better wages and benefits in the past five years, now are reduced to asking employers to give advance notice of layoffs and to rotate suspensions among the staff.

The food riots underscored President Raul Alfonsin's brinksmanship as he struggled to serve out his term. The government imposed a 30-day state of siege and rounded up 2,000 people in containing the violence. Aware that none of the basic causes has been addressed, few analysts are confident that the trouble will not recur.

The sense of desperation has never been more profound.

In San Miguel, an industrial suburb 20 miles northwest of the capital, three young men and a woman stood chatting a block from the site of some of the worst rioting the previous day. Their stories suggested the impact of the hyperinflationary implosion and the dangers ahead for Argentina.

One youth had been laid off by an air-conditioning firm two weeks before. Suppliers could not quote prices and refused credit, so the business closed. Another, laid off from construction, said: "Cement went from 80 australs a bag to 400 in two months. Who can build anything?"

Salaries Plummet

The woman, Maria Lopez, 46, said she had been dismissed two months earlier by a video machine assembler and was given 10,000 australs, then worth about $100, as severance pay after 14 years' work. She survives with her husband on his 4,000-austral ($20) salary as a security guard. Waving toward the looted shops and the cordon of helmeted police along the avenue, she said, "We are not subversives. We are hungry and have no work."

They are some of the victims of a graphic decline. Illustrations of the problems abound:

- Real salaries are at one-half to one-third of their level when Alfonsin took office in 1983.

- Retail prices rose 78.5% in May alone, and wholesale prices surged 104%.

- Suppliers who used to give customers 30 to 45 days to pay, now want cash on delivery, and credit is virtually unavailable.

Cesar Suraski, a downtown furniture store owner with his own factory in the suburbs, said his sales are 10% to 15% of the level they were two months ago, barely covering his store rent. With inflation approaching 100% a month, he can no longer sell on the installment plan or by credit card. He plans to close his store July 1--and his factory two months later--if things do not improve.

"I own the factory and also the machinery, and I don't owe a cent to anyone," Suraski said. "It's incredible: Without any debts, I am still going under."

The crisis has tarnished an event that should have been a triumphant expression of Argentine political maturity. President-elect Carlos Saul Menem of the Peronist party was elected in May to succeed Alfonsin of the Radical Civic Union, in the nation's first genuine constitutional transition of power from one party to another since 1916.

Fallen Back 20 Years

Disgraced by his economic failings and helpless as a lame-duck president with little credibility, Alfonsin announced last Monday that he will hand over power on or soon after June 30, more than five months early, to give Menem a chance to begin his economic program.

While some quick legislative maneuvering will make it legal, no one denies that the emergency changeover is itself a defeat for the nation's institutions, even if the leadership passes this time to another elected president rather than to the armed forces, as in the past.

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