Benjamin Keen - A Short History of Latin America_ 307-313 by liuhongmei


									Benjamin Keen - A Short History of Latin America, 307-313

                                  THE PERON ERA


                                 Peron's Rise to Power

The military coup that overthrew Castillo in 1943 had deep and tangled roots. The fraud
and corruption that tainted both Conservative and Radical politics in the "Infamous
Decade" no doubt offended military sensibilities, and Castillo's choice of the Pro-Ally
Patron Costas as his successor also angered some of the military, who were divided in
their attitude toward the belligerents in World War II. But the coup of 1943 had deeper
causes. During the 1930s, the officer corps of the Argentine armed forces, predominantly
middle class in its social origins, developed an ardent nationalism that saw the solution
for Argentina's problems in industrialization and all-around technical modernization. The
interest of the military in industrialization was closely linked to its desire to create a
powerful war machine capable of creating a Greater Argentina that could exercise
hegemony in a new South American bloc. To industrialize it was necessary to end
Argentina's neocolonial was necessary to end Argentina's neocolonial status, to free it
from dependence on foreign markets. The pro-German attitude of many officers stemmed
in part from the German military instruction that they had received and from their
admiration for the supposed successes of the Nazi New Order, but even more, perhaps,
from the conviction that England and the United States had conspired to keep Argentina a
rural economic colony. Their pro-German attitude was not translated into a desire to enter
the war on Germany's side but rather into the wish to keep Argentina neutral in the great

As concerned domestic policy, the military proposed a massive speedup of
industrialization and technical modernization, even though it feared the social changes
and forces that such transformations might unleash. In particular, it feared the
revolutionary potential of the working class. In effect, the military proposed to build
Argentine industrial capitalism with a thoroughly cowed, docile working class. As a
result, one of the first acts of the military regime was to launch an offensive against
organized labor. The government took over the unions, suppressed newspapers, and jailed
opposition leaders. This policy of direct confrontation and collision with labor had
disastrous results and threatened to wreck the industrialization program. The military was
saved from itself by an astute young colonel, Juan Domingo Peron, who took over the
Department of Labor in October, 1943 and promptly raised it to the status of the Ministry
of Labor and Welfare.

Born in 1895, the son of immigrant and Creole parents of somewhat marginal economic
status (his father was a farmer), Peron ended the military college at sixteen and very
slowly rose in rank to captain in 1930. He played a minor role in the coup of that year.
During the next decade, he spent several years in Europe, where he was much impressed
by the German and Italian dictatorships. In 1941, Peron joined the Group of United
Officers, although only a junior colonel, and quickly rose to its leadership ranks. He was
prominent in the colonels' clique that replaced the GOU in power in 1944. Beginning
with a subcabinent post as secretary labor and welfare, Peron became the indispensable
man in the Ramirez government. He subsequently became vice president and minister of
war, in addition to secretary of labor and welfare.

Peron's genius lay in his recognition of the potential of the organized and unorganized
working class and the need to broaden the social base of the nationalist revolution. He
became the patron of the urban proletariat. Workers were not only encouraged to
organize but favored in bargaining negotiations, in which his department participated. As
a result, workers' wages not only rose in absolute terms but their share of the national
income grew. This, of course, increased mass purchasing power and hereby promoted the
process of industrialization. Peron also created a state system of pensions and health
benefits, with the result that employers' contributions for pensions, insurance, and other
benefits rose steadily until the year of Peron's fall (1955). In return for these real gains,
however, the unions lost their independence and became part of a state-controlled
apparatus in Peron's hands. Meanwhile, Peron was strengthening his position within the
military. In February 1944, he led a group of officers in forcing the resignation of
President Ramirez, who, as noted previously, was replaced by General Farrell.

Not all of the military was happy with Peron's prolabor policies or with his meteoric rise
to power. The end of the war in 1945 also provoked civilian demands for an end to
military rule and the restoration of the constitution. In October 1945, Peron's military and
civilian foes staged a cup that resulted in his ouster and imprisonment. But the organizers
of the coup were divided and unclear about their objectives, and Peron's followers
mobilized rapidly. Loyal labor leaders organized the Bueno Aires working class for
massive street demonstrations to protest Peron's jailing. The workers virtually took over
the city, without opposition from the armed forces. The bewildered conspirators released
Peron from prison. Thereupon, he resigned from his various government posts, retired
from the army, and began his campaign for the presidency in the 1946 elections.

In preparation for the election of 1946, Peron taking due account of the defeat of fascism
in Europe, cast himself in the role of a democrat ready to abide by the result of a free
election. He created a Labor party to mobilize the working class, the principal component
in a class alliance whose other major elements were the national industrial bourgeoisie
and the army. Peron's chief opponent was Jose Tamborini, candidate of the Union
Democratica (Democratic Union), a heterogeneous coalition of conservative landed elite,
the bureaucratic and professional middle class that traditionally supported the Radical
party, and even the Socialist and Communists parties. Peron defeated Tamborini, by
300,000 votes out of 2.7 million. He was helped in the election by the blundering foreign
policy of the United States, whose State Department issued a Blue Book blasting Peron
for his fascist ties. Peron countered by circulating a Blue and White Book (blue and white
were Argentina's national colors) that stressed the theme of Yankee imperialism.
Postwar Economics

The postwar boom enabled Peron to keep his coalition together. The export sector
produced large surpluses in the balance of payments, making available funds for
industrialization, mainly in labor-intensive manufactures. Between 1945 and 1948, real
wages for industrial workers rose 20 percent. Personal consumption also rose. Since there
was only a slight decline in the share of the national income that went to profits, the
redistribution of income to the working class did not come at the expense of any other
segment of the alliance. Industrialists kept profits up and benefited from increased
domestic consumption, which provided a growing market for their products. The only
sector of the economy that was slighted was agriculture.

Peron managed to win over a considerable sector of the dependent middle class through
his use of government patronage, just as Yrigoyen had done before. he kept the military
happy by his commitment to industrialization, an important aspect of his desire for
national self-sufficiency and by providing it with generous salaries and the latest
equipment for modern warfare.

One of Peron's greatest assets was his beautiful and stylish wife Eva Duarte de Peron,
known affectionately by Argentines as "Evita," who acted as his liaison to the working
class. Evita, a former dance hall girl and radio and movie star, headed a huge charitable
network that dispensed tremendous amounts of money and patronage. So beloved was
she that when she dies in 1952 at the age of thirty-two, Peron led a movement to get the
Catholic Church to canonize her. The president's popularity with the working class
suffered after her death. Evita strongly advocated women's suffrage, which was granted
in 1947. Consequently, women supported Peron in large numbers.

After 1948, however, the economic picture changed drastically. With the exception of a
short-lived recovery during the Korean War (1950-1951), Argentina entered a period of
severe recession, which included several drought-induced bad harvests. The late 1940s
brought the first signs that Argentina would face serious long-term economic difficulties.
Its export commodities began to confront increased competition from the United States
and from revitalized Western European agriculture. later, the advent of the Common
Market worsened Argentina's position. Balance of payments deficits replace the large
surpluses that had financed the nation's import-substitution industrialization. Industrial
production fell, as did per capita income. Real wages dropped 20 percent from the 1949
level in 1952-1953. It was in this decline that Peron's political failure was rooted.

There are two schools of opinion regarding Peron's economic policy. The first, typified
by the English scholar H.S. Ferns, is highly critical. According to this analysis, Peron's
policies were disastrous in the long run. In the first place, he drained the export
agricultural sector to the point where farmers had no incentive to expand acreage or
modernize production. Farm production dropped precipitously (although this was in part
due to bad weather during the early 1950s). Furthermore, higher real wages increased
internal consumption of Argentine foodstuffs, thus lessening the amount of food
commodities available for export.

In addition, the critics hold that the major portion of government expenditures was ill-
advised. Peron's economic policy revolved around two essential points: government
intervention in the economy on a large scale and reestablishment of Argentine control of
its own economy. The president nationalized the Central Bank, the railroads, the gas
industry, much of the electric power industry, the merchant marine, and the air transport,
insurance, and communications industries. The government controlled prices on
consumer goods and rents. Mismanagement and corruption permeated these state
enterprises, and this siphoned much of the utility and profits of these operations. The
critics also claim that Peron paid inflated prices for these nationalized enterprises, leaving
no money for capital improvements. The problem was especially acute with the state
railroads, which desperately needed new equipment and repairs. But Peron had paid the
British an enormous sum for the railroads and nothing left for improvements. In some
cases, the Argentine government paid off bonds at par years ahead of maturity, although
the bonds were selling on the stock exchanges for 60 to 70 percent of par, and they paid
low interest. paying off such debts, it is claimed, was financial madness.

A second school of opinion, led by Jorge Fodor, defends Peron. This analysis maintains
that the dictator's maneuvering room was severely limited by world financial and market
conditions, especially in Britain and the United States. Argentina's alternatives were
governed by four crucial factors. First, much of the nation's export surplus was tied up in
Great Britain and virtually unavailable, because Britain was in the midst of an economic
crisis. Peron paid a high price for the railroads and perhaps some bonds because the
British used the enormous sum of Argentine money locked in their country as a
bargaining device.

Second, the amount of Argentina's gains during the world was vastly exaggerated. It was
true that Argentina received high prices for its farm commodities during and after the
war, but theses prices were deceiving, for Argentina, through its trading monopoly, the
Argentine Institute for Trade Promotion (IAPI), had to extend credit to enable Europe to
buy its products. This meant that Peron did not have as much capital to spend as his
critics have maintained. His money was tied up in England or on the Continent in credit.

Third, even if Peron had possessed these huge sums, he had no place to spend them. He
has been attacked for not sinking money into much needed public works, especially
railroads and roads, and into heavy industry. The fact is, however, that neither England
nor the Continent could supply these products, and the United States were unable and
unwilling to supply them. Argentine neutrality during the war meant that the United
States would not export capital goods and other industrial commodities to Argentina.

Fourth, and finally, Argentina's own economic forecasts predicted that its future as an
exporter of foodstuffs was bleak, given the economic condition of Europe and the specter
of growing competition. Peron, therefore, acted rationally when he shortchanged
agriculture in favor of industry. When the market conditions for agricultural exports
improved, Peron put money into this sector.

The critics appear to be on solid ground when they point to the enormous sums spent on
the military and on impractical military schemes for industrial self-sufficiency, such as
nuclear energy projects. Peron's defenders would underline that he had a very limited area
for maneuver and did the best he could.

Furthermore, many of Peron's moves were made to counteract or eliminate undue foreign
influence in Argentina's economy. He nationalized the Central Bank, not only because he
wanted to extend government control over fiscal policy, but because the Central Bank
was controlled by foreign banks. The establishment of the IAPI was also designed to
counteract foreign influence. During the war, the Allies established a joint purchasing
agency; this meant that Argentina, in effect, had only one market for its products. The
IAPI, the sole seller of the nation's commodities, had more bargaining power than
individual producers could have had. It played an important role in the rise of Argentine
industry through its monopoly on export cereals. Buying the cereals at low prices and
selling them on the world market at high prices, it channeled the surplus into industrial
development. But in the early 1950s, with world prices, the IAPI gradually lost its
capacity for financing industry.

Whatever one may think of Peron's economics, the fact remains that he solved none of
the country's major economic problems. The main roadblocks remained. Transportation
continued to be inadequate and obsolete, and a scarcity of electric power stood in the way
of industrial modernization. Argentina did not produce enough fuel to meet domestic
needs, and this created an enormous drain on the balance of payments. The nation's
industry remained limited for the most part to import-substitution light industry. Despite
his anti-imperialist rhetoric, Peron did not nationalize such key foreign-owned industries
as meat packing and sugar refining. Most serious of all, Peron did nothing to break the
hold of the latifundio on the land. As a result, agriculture was marked by inefficient land
use, which impeded long range development.

Peron's Downfall

After his reelection in 1952 and in response to the economic crisis of the early 1950s,
Peron formulated a new plan (the Second Five-Year Plan, 1953-1957) that, to a great
extent, reversed his previous strategy. He tried to expand agricultural production by
paying higher prices to farmers for their produce and by buying capital equipment for this
sector (tractors and reapers). He sought to increase the agricultural production available
for export by means of a wage freeze, which he hoped would restrict domestic
consumption. Although real wages declined, workers did not suffer proportionately more
than other groups. But the industrial bourgeoisie was unhappy, for labor productivity
declined while the regime's prolabor policies propped up wages. The industrialists,
supported by a considerable portion of the army, wanted deregulation of the economy so
hey could push down wages. But the major problem of the industrial sector was lack of
capital, since the agricultural sector no longer generated a large surplus.

In order to solve the capital shortage, Peron abandoned his previously ultranationalistic
stand and actively solicited foreign investment. In 1953 the government reached an
agreement with a North American company, the Standard Oil Company of California, for
exploration, drilling, refining, and distribution rights in Argentina. Peron hoped thereby
to reduce the adverse effect oil purchases abroad had on the balance of payments. The
following year, the government entered into a partnership with H.J. Kaiser, an American
businessman, to produce automobiles. Argentina's aviation industry, a pet project of the
military, was converted to auto production. Foreign capital used the most modern
technology and machines, which required fewer workers and, therefore, tended to create
unemployment in the affected industrial sectors.

In order to maintain government expenditures and a bloated bureaucracy in the face of
declining revenues, Peron printed more money. The amount in circulation increased from
6 to 45 billion pesos during his two terms. By 1954 he had had some success in
stabilizing he economy; he achieved a balance of payments surplus, and capital
accumulation showed an upward curve. But his new economic strategy had alienated key
elements of his coalition of workers, industrialists, and the armed forces. Peron then
sought to divert attention from economic issues with disastrous results.

Peron adopted two new strategies. First, he attempted to enhance his moral and
ideological appeal. Second, he began to employ greater coercion to suppress a growing
opposition. The vehicle for his ideological and moral appeal was justcialismo, Peron ideal
of justice for all--a third route to development that was neither communist nor capitalist.

Peron's strategy included attacking the church. Starting in 1951, the new regime grew
more repressive. The government suppressed and took over Argentina's most famous
newspaper, La Prensa (1951). Further, Peron used his National Liberating Alliance, a
private army of thugs, and the thirty-five-thousand-man federal police force to intimidate
the political opposition. Torture, imprisonment, censorship, purges, and exile became the
order of the day. After 1954, even the General Confederation of Labor became a coercive
force, whose prime function seemed to be to suppress opposition within the labor

Peron's reluctance to go along with the industrialists' desire to push down wages and
increase productivity alienated that group; the industrial bourgeoisie then joined forces
with the agrarian interests, which had long and bitterly opposed Peron. This desertion
ended Peron's once highly successful coalition. Inevitably, Peron's hold on the working
class loosened as the wage freeze and inflation reduced the value of their wages. The
death of Eva Peron in 1952 contributed to the deterioration in the relations between Peron
and the working class. She had served as her husband's ambassador to the workers. With
Evita (little Eva) no longer at the head of the Social Aid Foundation, a vast philanthropic
organization that distributed food, clothing, and money to the needy, Peron's relations
with labor did not go so smoothly.

Despite economic adversity, Peon could not have been overthrown had not the military
abandoned him. For the better part of a decade, he had masterfully balanced, divided, and
bribed the military. Most of the senior officers owed his both their rank and their
prosperity. The army was heavily involved in industrial production, and this provided an
excellent means to become rich. In addition, to win its allegiance, Peron had showered
the military with expensive military hardware and excellent wages. however, his relations
with the armed forces began to disintegrate when he altered his economic policy to lessen
emphasis on industrialization and self-sufficiency. On this score, his concession to
Standard Oil in 1953 was the last straw for the nationalist military. The military was also
affronted by the dictator's personal behavior (he had an affair with a teenage girl), and it
objected to his virulent attacks on the Catholic church, a pillar of traditionalism, during
1954 and 1955. It also resented Peron's efforts to indoctrinate the military in the tenets of

Thus, in struggling to extricate the nation from an economic quagmire, Peron undermined
the multi-class coalition that da brought him to power and sustained him there. When the
final successful revolt took place in September 1955, after a failure in June, enough of the
working class was alienated to assure the military's success. Peron briefly threatened to
arm his working class supporters, the descamisados (the shirtless ones), but instead fled
into exile.

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