BUENOS AIRES -- Luis Barrionuevo, head of the Argentine national health administration and leader of the restaurant workers' union, was nothing if not candid when a radio interviewer asked him recently how he had made his millions. With his Italian suits and gold chains, Barrionuevo hardly looks like a man who has spent much time waiting tables. Could his fortune really have come from toiling in the food industry?
"No, I didn't make it working, because it's very difficult to make money working," said Barrionuevo, one of President Carlos Menem's staunchest allies and biggest campaign contributors. "There are other possibilities. Just holding office in a union or an insurance plan offers the chance for money that comes neither from the union nor the insurance plan."
The interviewer joked that later, away from the microphone, he would ask Barrionuevo to teach him how.
"No, I'll tell you now," Barrionuevo said. "You know how I've made a lot of money? From law firms and accounting firms. Take a union like the restaurant workers, so large, with so many outlets. You give an accounting firm 50 or 100 clients, and you're working."
There were enough kickbacks, he went on, that "all the companeros " in the union leadership could get their share.
This very public airing of The Way Things Work in Latin America made the front pages and got Barrionuevo in a bit of hot water. But within a week, a host of prominent defenders had lined up to say that Barrionuevo had been ambushed, or that his remarks had been taken out of context, or that he shouldn't be punished for simply saying what everybody already knows. The strongest rebuke President Menem could muster was: "It would be good if he talked a little less."
Much has been made, and quite rightly, of the sweeping economic changes under way in Latin America. Leaders like Menem in Argentina, Carlos Salinas de Gortari in Mexico, Carlos Andres Perez in Venezuela, Fernando Collor de Mello in Brazil and Alberto Fujimori in Peru are taking bold steps to kill the chronic inflation that has debilitated their nations for decades. A new orthodoxy has taken hold in the region -- cut, slash, trim, privatize, the party's over, eat your peas.
The Bush administration is smitten. U.S. Trade Representative Carla Hills went to an Organization of American States meeting in Paraguay last June and came back praising the "astonishing economic revolutions" taking place in the region -- a sentiment echoed by other administration officials who have made recent visits. On debt and trade, two old stumbling blocks, the United States has shown a new flexibility, a new willingness to help. But as President Bush prepares to leave tonight for a week-long, five-country swing through South America, it is worth pointing out that the revolution is far from complete. Right now, free-market economic policies are little more than a veneer. Underneath lies an engrained system of winks, nods, kickbacks, bribes and outright corruption that will take many years to root out -- and that will not go gently.
Consider, for example, this: The case of the Argentine railroad system, which at one point last year was losing $3 million a day. A crusading (and politically ambitious) prosecutor, Luis Moreno Ocampo, has begun to ask why the railroad seems so happy to lose thousands of lawsuits each year, to the point of not even appealing multimillion-dollar awards. Moreno Ocampo suspects a pattern of fraud that may reach $900 million, with lawyers representing the railroad and those representing aggrieved clients conspiring to share in the government's largess. Brazilian reporters are currently having a field day exposing influence peddling by a handful of powerful families in Alagoas state -- which happens to be the home of President Collor, whose wife belongs to one of the families involved. Collor's ultramodern, 21st-century image has been smudged by front-page pictures and interviews of his in-laws -- beer-gutted, ill-shorn, arrogant, looking and sounding all the world like minor feudal lords. In Chile, where officials have a reputation for public honesty, topic No. 1 is a multimillion-dollar financial scam run by officers of Gen. Augusto Pinochet's supposedly incorruptible army. The officers ran a private bank that was little more than a Ponzi scheme and that ended up costing some unsuspecting depositors their life savings. In the cocaine-producing countries of Colombia, Peru and Bolivia, U.S. Drug Enforcement Administration officials have long complained that their most stubborn obstacle is corruption on the part of local politicians, policemen and military officers. Privately they name generals, judges, even cabinet members who they say are on the take. Paraguay is in a class of its own, its elites acting not so much like an oligarchy as like a mafia. President Andres Rodriguez is one of the richest men in the country, having amassed a fortune -- he lives in a mansion said to be modeled on one of the palaces at Versailles -- ostensibly on the decidedly middle-class salary of an army general. His successful coup against Alfredo Stroessner nearly two years ago came shortly after Stroessner took actions that severely hurt the country's biggest and most profitable money-changing house, which Rodriguez happens to own.
There is an old joke that Argentines and Brazilians tell on themselves. Here is the Argentine version: When the presidents of Brazil and Argentina meet at the border, the Argentine shows up in a Ford Falcon and the Brazilian in a Mercedes. "How can you afford it?" the Argentine asks. The Brazilian points to a half-finished bridge behind him. "Where's the other half?" the Argentine asks. The Brazilian winks and pats his pocket.
At the next meeting, the Argentine shows up in a Rolls Royce. "How in the world?" asks the Brazilian. The Argentine points to an empty field. "See that airport?" he asks. "No, I don't see anything at all," the Brazilian says. The Argentine winks and pats his pocket. But the Way Things Work is much more pervasive than the big, high-profile examples cited above. Take taxes, for example. Argentina, a nation of 31 million people, has only 1.9 million individuals and companies registered on its tax rolls. Of that paltry number who bother to register, according to Health and Social Action Minister Alberto Kohan, at least 200,000 are tax cheats.
"Of course it's worrisome," Kohan told reporters recently. "What do you want us to do?"
This is not to say that Latin Americans are any more venal or dishonest than other people. On the contrary, these are warm, generous societies. Andin part, corruption results from absurd bureaucratic rules and requirements. To bring an electronic device into Argentina -- a microwave oven, say, or a stereo bought in Miami -- requires paying a huge tariff and spending days standing in various lines to get various papers stamped. It can be done. But it's much simpler and cheaper to just slip a hundred bucks to the customs agent at the airport and be on your way.
Civil servants in Latin American countries often work in depressing surroundings for subsistence wages. Police recruits in Peru are lucky to get boots, uniforms, a couple of rounds of ammunition and one hot meal a day. Argentine port examiners, or building inspectors, or telephone repairmen are struggling to put food on the table. If someone is willing to buy a phone line "privately" for a couple of thousand dollars rather than join the years-long official waiting list, what's the harm?
And it can be dangerous to draw the line of illegality too boldly. Jaywalking is illegal in most cities around the world, and the good people of Toronto, for example, obey the law. Washingtonians don't. Tax evasion here is seen as the moral equivalent of jaywalking -- certainly not anything to lose sleep over.
In a breakfast meeting with foreign reporters earlier this year, Menem was asked how he intended to convince Argentines he was serious about "moralizing" the country when the civil servants most visible to the public -- the police -- were so widely viewed as having itchy palms. Traffic violations are routinely settled with bribes, and a cop on his beat never has to dig into his pocket for lunch money.
Throughout the session Menem had been gracious, even charming, but now he became angry. The question -- more importantly, the concept behind the question -- didn't register. He had more important things to worry about, he said. "You're asking me about the police?" he snapped. "You're asking a president about a policeman on his beat, and whether, after walking for eight hours, he should or shouldn't take something to eat for lunch without paying? Please, let's talk about serious things." Diversity of cultural values is a wonderful thing, and let a hundred flowers bloom. But The Way Things Work down here has implications for the success or failure of the economic recovery projects now under way, and by implication for U.S. policy in the region.
To what extent can a government successfully exercise macroeconomic control over an economy when anywhere from a third to a half of all transactions are in the "informal" sector, meaning off-the-books? Do the promising economic numbers now coming out of Latin American really mean anything? Does anybody really know?
When international lenders eventually decide that Latin America has mended its ways and begin to make new funds available, as now seems likely, are there any guarantees that the money will be more scrupulously applied this time than in the money-gushing 1970s? Or will there simply be more non-existent airports, as in the old joke? More luxury mansions along the beach at Punta del Este?
Perhaps most important of all, what are the long-term implications for income distribution in a region where the gap between rich and poor is getting wider every day? The fact that people don't pay their income taxes has led governments to adopt more regressive tax strategies, like value-added taxes that come down harder on the poor. Government would not have to cut so deeply into subsidies and services for the needy if the middle class and the wealthy paid their fair share.
"Moralization" is a word heard often in Latin America these days, not only from Menem but from Collor, Fujimori and the others. They speak of changing old attitudes, of fostering public-mindedness, of obliterating an I've-got-mine mentality that everyone agrees is destructive.
They might well have begun such a process, but it would be foolish to bet that change will come quickly. It might be instructive to look back to a time when officials were more up-front about private enrichment at public expense.
According to historian Felix Luna, in 1881 the legislature of Buenos Aires province gave then-president Julio Argentino Roca a huge ranch. Asked why he accepted the property in the face of public criticism, Roca responded that he had always wanted to be a rancher and that "my aspiration was to amass a fortune of my own that would make me invulnerable to any political changes that might occur." Period.
It took hundreds of years for Latin America to get this way. Anyone who believes things have changed overnight is likely to be disappointed.
Eugene Robinson is South America bureau chief of The Washington Post.