The Caudillo Clash.(Brief Article)

Jose Manuel de la Sota is a party boss of the classic Argentine mold. With a blunt manner and natural flair for the backroom deals of local politics, the Peronist party stalwart seized the governorship of Cordoba province in 1999 by promising both sweeping tax cuts and greater welfare spending. In fact, de la Sota comes from a place so deep in the provincial roots of Argentine political power that he is widely touted as a leading contender to replace President Eduardo Duhalde, should he become the latest in a string of fallen incumbents. That's also why he is perhaps first in the class of provincial rulers targeted by the incoming auditors of the International Monetary Fund.

This could happen only in Argentina, a loose federal state where power often trickles up from the provinces. At independence in 1810, rural landowning strongmen, or caudillos, resisted control from Buenos Aires. Their successors still boss the 23 provinces as semi-sovereign fiefdoms, and often push the central government as well. Argentina defaulted on $141 billion in debt this December, triggering deadly riots that would see Argentina ruled by five presidents in two weeks. Of those five, four were former governors in the provinces, which have been wasting a steady flow of federal tax dollars for years. By the time the latest IMF delegation arrived for negotiations last week with Duhalde, who is seeking $10 billion in emergency relief, the visitors were openly demanding an end to the profligate ways of the provincial caudillo culture.

Such an attack is unusual. The IMF typically avoids meddling in a nation's internal affairs. But in Argentina's case, the provincial connection is too critical to ignore. IMF officials believe that a 10 percent cut in spending by each provincial governor would translate into a 60 percent reduction of the federal deficit. Argentina's provincial governments collect, on average, only 35 percent of the money they spend--the poorest provinces rarely collect more than 10 percent--and get the rest from the Feds, who have no control over spending. "There is no federal oversight, none at all," says Julio Burdman, director of research at the New Majority Studies Center in Buenos Aires. "The provinces do not collect taxes, but they spend without control. They have total autonomy and no responsibility."

The results are predictably ridiculous. Provincial officials routinely award contracts at inflated rates to business associates, and give jobs to family members or political allies. "Inconsistency and ...