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PASTOR GENERAL'S REPORT, August 8, 1980
Page 12
ON THE WORLD SCENE
REPORT FROM SOUTH AMERICA--PART 2: ARGENTINA--BACK FROM THE BRINK OF
BANKRUPTCY AND SOCIAL UPHEAVAL The flight from Santiago de Chile to
Buenos Aires, Argentina--capital to capital--takes only 1 1/2 hours.
The miracle of jet travel almost makes one oblivious to the tremendous
natural barrier of the towering Andes Mountain chain which, along its
surruuit ridges, separates these two countries of the so-called "Southern
Cone" of South America.
The Andes, submerged mostly in clouds, pass underneath too quickly. Soon
one is over the more gradual eastern slopes of the Argentine side. The
foothills, in turn, soon flatten out into Argentina's most outstanding
feature--the fantastically fertile pampas, the "Midwest" of South America.
For the last hour of the flight we soar over this expansive plain, laid
out in a neat checkerboard pattern of farms and ranches, its many small
towns located at regular intervals along the arterial highways and rail
roads that carry the pampas' abundant harvests to the ports along the
Rio de la Plata and out to a hungry world.
The scene is so tranquil that it is difficult to imagine how appalling
the economic and social conditions were in Argentina only four years ago.
Similar to events in Chile during the same period, Argentina stood at the
very brink of international insolvency and outright civil war. Similar
again to Chile, new leadership stepped in and applied corruuonsense think
ing to rescue the country from oblivion.
In the very month that the military leaders ousted the ineffective
Isabel Peron, who had taken over from her late husband--in March 1976-
Argentina's yearly inflation rate soared, for a brief spell, to an
astronomical 17,000%! The country's freely disposable international
reserves stood at a paltry 23 million dollars. Argentina faced irruuinent
default on her international trade and debt retirement, leading to a
paralysis of industry, mass unemployment and to the destruction of the
whole economic structure, which could have triggered social chaos among
Argentina's 27 million people. Compounding the looming disaster,
treasury income was covering only 20% of the national budget. Tax
evasion was rife, and controls on interest earnings led to an enormous
monetary black market, with buckets of pesos fleeing the country into
safer havens overseas. The government was covering 63% of its budget
solely through printing more pesos. This was responsible for the
whopping inflation.
As in Chile, the junta which took over entrusted the economic program to
a new staff of people not beholden to special interests. Led by Minister
of the Economy Jose Martinez de Hoz, the economists tackled the fundamen
tal roots of the nation's problem. Martinez de Hoz--called ''Doctor Joe"
by many--was given a free hand to do what had to be done. Still in office
(until March, 1981), Martinez de Hoz said recently: "We have done what
an elected government with an election next year cannot do--we have
accepted short-term negative effects for long-term progress."
Free at last of the pressures from the Peronistas, the big labor unions
and other interests who were responsible for so much of the mess in the
first place,.Martinez de Hoz sold off 332 state-owned firms, most of them
unprofitable and operating at taxpayers' expense. He fired 60,000