Don't Bray for Me, Argentina.(Carlos Menem)(Brief Article)(Interview)

Early in his tenure as president of Argentina from 1989 to 1999, Carlos Menem introduced sweeping economic reforms--from privatization to pegging the local peso to the U.S. dollar. The measures helped tame 5,000 percent inflation and boost economic growth. But critics now say the flamboyant leader also left behind massive debt and high unemployment, two of the problems that contributed to Argentina's current meltdown. Last year, after charges that he had led an illegal arms-trafficking operation, Menem was placed under house arrest. Freed in late November, he is now the target of new corruption allegations. NEWSWEEK's Jimmy Langman recently caught up with him in Santiago, Chile. Excerpts:

LANGMAN: What happened to Argentina?

MENEM: The situation in Argentina, starting on Dec. 10, 1999, began to deteriorate due to bad political leadership. That had a direct influence on the [economy and society].

That's the day Fernando de la Rua was sworn in. What exactly did he do wrong?

What he did wrong fundamentally was to increase taxes and cut pensions and [government] salaries, which subtracted profitability from production and took buying power from [consumers]. Property rights were tremendously affected by the freezing of bank deposits, which left people without resources, resources they had been saving for years. This paralyzed the economy.

Some say your administration shares the blame.

We left a country running smoothly, a country with more than $34 billion in the central bank. My government was criticized because the unemployment index climbed to 12 percent. But let's not forget that in 1995, when I was re-elected president, the unemployment rate was 18 percent. When I took over the presidency in 1989 poverty was 48 percent, and when I left it was 27 percent. The child-mortality rate went from 26 per 1,000 in 1989 to 18 per 1,000 in 1999.