Carlos Menem, Argentine Leader Who Tamed Inflation, Dies at 90

(Bloomberg) -- Carlos Menem, the former Argentine president whose economic policies quashed hyperinflation during the 1990s but sowed the seeds for what became the largest debt default in history, has died. He was 90.

Menem had been in frail health for some time, including a 2020 bout of pneumonia, and was hospitalized in December with kidney failure.

President Alberto Fernandez decreed three days of national mourning in the country from Sunday and expressed “deep regret” at Menem’s death, his office said. Menem was “elected in democracy” and “persecuted and jailed during dictatorship”, Fernandez added in a tweet. Former president Mauricio Macri and others sent condolences on their Twitter accounts. Menem will lie in state in the Argentine Senate until Monday, according to La Nacion.

Menem, as famous for his policies as for his mutton-chop sideburns and schmoozing with models and celebrities, was elected president in 1989 for the Peronist party. A former governor of La Rioja province, he took office five months ahead of schedule when incumbent President Raul Alfonsin stepped down amid riots, looting and price increases that would reach 4,900% by year’s end.

After campaigning on pledges to protect national industries, Menem promptly threw open Argentina’s economy to foreign capital, selling state-owned companies ranging from utilities to airlines. Over 10 years in office, inflation was quashed, a new currency was created, the constitution was changed, imprisoned dictators received presidential pardons and compulsory military service was eliminated. His administration also scaled back social services and was mired in a number of corruption scandals.

“People remember the fight against hyperinflation, but Menem also found a country suffering large power shortages and put an end to them, and then made the country into a large exporter of oil,” Ramon Puerta, who served as governor of Misiones province during Menem’s presidential years, said in an interview in November 2016.

Tough Start

Menem’s presidency had a rough beginning, with his first economy minister, Miguel Roig, dying of a heart attack five days after taking office. After two replacement ministers left during the next couple of years, Domingo Cavallo took over the ministry in 1991.

With Menem’s blessing, Cavallo replaced the austral with the peso as Argentina’s currency and pegged it to the U.S. dollar. The peg, combined with his overhaul of state enterprises, fueled a wave of investment and the economy’s expansion through 1995.

On the back of the economic boom, Menem pushed constitutional changes in 1994 that allowed him to run for a second term the following year. He became the first Argentine president to serve two full consecutive periods since independence in the early 19th century.

Still, the country fell into a recession again in 1999, the last year of Menem’s presidency, as the currency peg made Argentine goods increasingly expensive and uncompetitive and the fiscal deficit widened.

“His big problems were that he couldn’t pull himself out of the monetary policy he created,” Puerta said.

Two years later, the new government defaulted on $95 billion of bonds and dropped the currency peg. Political and economic chaos ensued.

Syrian Immigrants

Carlos Saul Menem was born July 2, 1930, to Syrian immigrant parents in Anillaco, a rural town of 1,500 people at the foot of the Andes. Raised a Muslim, as an adult he converted to Catholicism. He trained as a lawyer and met his first wife, Zulema, another Argentine-born child of Syrian immigrants, on a visit to Damascus.

A student of Argentine history who loved to ride horses, he was elected governor of La Rioja in 1973 and served until the military coup of 1976. During the dictatorship that followed, he was placed under arrest as a political prisoner.

With the return of democracy in 1983, he was twice re-elected governor and held the office until 1989, when he won the presidency.

‘Winning Smile’

Drama and theatrics became as much a part of the Menem presidency as his politics. Shortly after his election, he accepted a Ferrari as a gift from a businessman. Following a public outcry from seeing the president driving the sports car, he vowed to donate it, defiantly saying he had a right to accept the gift.

His then-wife Zulema was blocked from entering the presidential residence after being evicted by Menem in 1990. A year later, Menem’s associate and appointed head of the state telephone company, Maria Julia Alsogaray, posed for the cover of the country’s main weekly news magazine wearing nothing but a fur coat “and an enticing smile,” as New Yorker magazine writer Alma Guillermoprieto described it at the time.

His former counterparts credit Menem for his creative style.

“Menem was a Pele, a Maradona. He knew how to play with his feet, his head, his arms, with everything,” ex-Brazilian President Fernando Henrique Cardoso told Bloomberg News in an interview in November 2020, comparing the Argentine with soccer’s top stars.

Rocket Ship

Menem left a legacy of grandiose announcements and controversial statements, including his 1996 promise to build a rocket ship that would carry people from Argentina to Japan through the stratosphere in 90 minutes.

His term was also marked by the terrorist bombings in Buenos Aires of the Israeli embassy in 1992 and the AMIA Jewish community center in 1994 that killed a total of 114 people. The bombers were never found and, in 2012, Menem was indicted as a suspect for obstruction of justice in connection with the investigation into the bombings.

In 2003, Menem made a new run for the presidency. He won the first round but pulled out of the runoff after surveys showed he would lose to Nestor Kirchner, a little-known governor from the Patagonia region who was succeeded by his wife, President Cristina Fernandez de Kirchner, in 2007. While they hailed from the same Peronist political party as Menem, both Kirchners regularly criticized Menem’s “neoliberal” economic policies.

In 2013, an appeals court upheld a conviction that found him guilty of involvement in weapons sales to Ecuador and Croatia. As a sitting senator, he avoided prison under a law granting legislators legal immunity.

Menem, who was twice divorced, is survived by three children: a daughter, Zulema, and sons Carlos Nair and Maximo

©2021 Bloomberg L.P.