A four-month drive by President Raul Alfonsin to stabilize his democratic government with the political tools of alliance and national consensus has stumbled on roaring inflation and the conflicting demands of Argentina's increasingly impatient and divided society.
The reformist president's elaborate strategy snapped last week when his nine-month-old administration and the country's powerful, opposition-dominated labor unions bitterly parted ways. The General Confederation of Labor scheduled a 24-hour general strike Monday for its 3.5 million followers and halted what had been painstaking negotiations for a national accord on wages, labor laws and long-term economic policy.
Behind the sudden political confrontation were the alarming indexes of an economy approaching nightmarish hyperinflation. Prices surged at least 22 percent during August amid plummeting business investment, and a new government plan of wage and price controls was greeted with nearly universal skepticism.
The sense of crisis has been heightened by the government's continuing inability to reach agreement with the International Monetary Fund on an economic plan after six months of negotiations. Without an IMF agreement, Argentina's external funding has dried up and it has been unable to renegotiate overdue payments on its $43 billion foreign debt.
The confluence of pressures, government officials say, may make the month inaugurated by the national labor strike Monday decisive for the course of the struggling democratic government. Militant union leaders and their political backers in the populist opposition Peronist movement hope the strike will force the government to intensify its commitment to wage increases and stimulation of the economy.
At the same time, Argentina's business establishment, the IMF, foreign bank officials and some of Alfonsin's own economists are insisting that the government must face down the unions, moderate its current policies of economic expansion, and accept painful measures to control inflation. If it fails to settle with the IMF, Argentina will face another round of brinkmanship with banks -- with its latent danger of a national default -- over $1.4 billion in payments owed in September.
The rapidly widening gulf between the forces besieging the government is evident in Buenos Aires' characteristically hyperbolic rhetoric. "What is indispensable," said the General Confederation of Labor (CGT) in its strike declaration, "is a brainwashing that will cause us to think of Argentina from a different perspective from the monetary rule-makers from the IMF who have damaged the life of nations for three decades."
"The government has to realize that this is not possible," responded Jaques Hirsch, a director of the Argentine Industrial Union, a businessmen's organization. "Alfonsin has to make some choices. What we are saying to the government is, 'Stop spending so much money. Reduce public employment. Do something coherent with the rest of the economy.' The country can't go on with this inflation."
To adopt the advice of either camp would mean a resounding political realignment by Alfonsin's Radical Party government. Since the economic crisis and foreign debt negotiations began to preoccupy the nation last March, the president has subordinated his own ambitious reform agenda to a more traditional tactic of seeking to build alliances with the country's disparate power sectors, particularly unions and the business establishment.
At the heart of that strategy, say Radical Party leaders, is the perception of Alfonsin and his closest advisers that Argentina's troubles, inflation included, are largely political, rather than economic. The president himself has argued that purely economic factors explain only 8 percent of the monthly inflation rate, now hovering above 20 percent.
Similarly, government officials have consistently explained recent labor unrest, including the strike call for Monday, as largely the result of struggles for power within labor unions nearing elections and in the populist Peronist movement, which controls almost all major unions.
Since taking office, the Radicals have sought to manage the economy and curb inflation with middle-ground measures mixing higher salaries with moderate reductions in the rate of monetary expansion and elaborate schedules of controlled prices and interest rates.
The real thrust of policy since April, meanwhile, has been political. Since signing a formal agreement with opposition parties on the government's broad goals in June, Alfonsin has hoped to reach a similar accord with business and labor leaders committing the country to a consensus plan for wages and prices. The government believes that by eliminating speculation and political conflict, the plan would allow the country to grow while curing itself of inflation.
Even with the annual inflation rate now more than 600 percent and the CGT planning a national strike, Alfonsin's ministers persisted last week in plans for their economic "table of accord." The government released a new four-month schedule of gradually descending targets for wages, interest rates and prices, projecting a drop of inflation to 16 percent in September, and called on business and union leaders to meet to discuss it.
The Peronist CGT union leaders, however, refused to attend the meeting. While some acknowledge that labor militancy is intertwined with the competition between Peronists and Radicals, they argue that the government is ignoring the swelling of popular discontent with economic conditions.
"What is happening is that people's living standards are deteriorating and the government is not addressing their problem," said Jorge Triacca, one of four secretaries general of the CGT. "They are being eaten by inflation, and they are angry with that. They want action, and the labor movement has to respond to that."
For their part, business leaders and many economists say that Alfonsin's political orientation has caused the government to pay too little attention to the objective causes of inflation. Although government officials insist overall spending has been reduced, they concede that public employment has increased this year and that tax revenues are below expectations.
Several conservative critics have predicted that the government's deficit this year will be more than double the targets submitted to the IMF, making a real reduction of inflation impossible.
"The government can cook up all the political tactics it wants," said Anibal Martinez Quijana, an opposition economist, "but the laws of economics go on producing their natural results."
Ultimately, many politicians here predict that Alfonsin's strategy for controlling both the economy and the political situation will fall victim to the impossibility of blending the diverse policy demands of business, labor and foreign creditors. Already, they note, government officials appear divided on economic measures, with Economy Minister Bernardo Grinspun and Radical youth sectors resisting pressures from Central Bank officials and other advisers for a more orthodox approach.
"Alfonsin came in promising to reactivate the economy, raise wages and reduce inflation," said Hirsch. "He must realize it is impossible to do all three things. He cannot delay much longer in establishing the real priorities."