Eduardo Duhalde

Duhalde takes the oath of office as president of Argentina.

De la Rúa headed the country during an economic crisis, and resigned during the December 2001 riots. As his vice president had already resigned months before, Congress was convened to appoint a new president. Eleven provinces with low populations and Peronist governors had formed a bloc, the "Federal Front", and received the required votes to appoint the governor of San Luis Province, Adolfo Rodríguez Saá.[18] The first administrative actions of Rodríguez Saá caused renewed protests, and the PJ did not fully support him. He called for a meeting with governors in Chapadmalal, but only six governors out of twenty-three attended. He resigned a few days later,[19] and accused Duhalde of plotting against him, along with the governor of Córdoba, José Manuel de la Sota.[20]

The Congress was convened again to appoint a new president. The "Federal Front" was weakened by the failure of Rodríguez Saá, and the provinces with higher populations increased their influence. The likely candidates were Duhalde, De la Sota, and Carlos Ruckauf, the governor of the Buenos Aires province at the time.[18] Menem, who still had legislators loyal to him, wanted to prevent Duhalde from becoming president, and proposed to appoint the governor of Misiones Ramón Puerta instead. Puerta had been the acting president while Congress deliberated the first time, but he refused to be appointed president or even to serve as acting president a second time (Eduardo Camaño became the acting president as a result).[21] Puerta talked with Duhalde, and opined that without De la Rúa and Álvarez he was the politician with the highest legitimacy to be appointed president, as he had placed second in the 1999 elections and won the 2001 legislative elections in the Buenos Aires province, the district of Argentina with the largest population.[22] Alfonsín gave Duhalde decisive support, instructing the radical legislators to vote for him, and giving him two ministers, the radicals Horacio Jaunarena and Jorge Vanossi. The legislators loyal to Menem eventually voted for Duhalde as well. The radicals' support allowed Duhalde to govern for the remainder of De la Rúa's term of office, instead of governing for 90 days and calling for new elections, as was the case of Rodríguez Saá.[23] Duhalde was appointed president on 2 January 2002.

Depositors protest in February 2002 against the corralito, which forbade them from withdrawing money from their bank accounts. The measure was lifted in December.

Duhalde, Alfonsín, their parties, the unions and the Church all agreed to promote policies to increase the industrial growth of the country. For this purpose, Duhalde created the ministry of production, with functions that used to belong to the ministries of economy and foreign relations. The new minister was José Ignacio de Mendiguren, head of the Argentine Industrial Union. Alfonsín negotiated with him, on Duhalde's behalf, while Congress was still voting for the new president.[24] Duhalde announced at his inauguration that he would repeal the convertibility plan, considered the main cause of the economic crisis. Although Menem proposed a full dollarization of the Argentine economy, Duhalde preferred to instead stick to the peso and order a devaluation. Although it was initially expected to make a 40% devaluation, the exchange rate of 1 peso to 1 dollar jumped to 3 pesos to 1 dollar, a 200% devaluation.[25] The higher dollar price allowed for more lucrative exports, increased economic activity and a growth in the employment rates, but at the cost of a higher cost of living.[26]

The financial operations made in dollars were subject to a strong currency substitution to pesos, the "pesification". There were disputes over the exchange rate of such substitution, as the current price of the dollar in the open market would force most firms and individual debtor to bankruptcy. The initial policy was to make 1 to 1 substitutions to the operations below 100,000 dollars.[25] Another conflict was the corralito, imposed by De la Rúa, which attempted to stop the bank run by forbidding the withdrawal of money from bank accounts. Duhalde promised in his oath of office speech that "The one who deposited dollars will receive dollars". The minister of economy Jorge Remes Lenicov pointed out that that would be impossible, as the amount of dollars required was higher than even the foreign-exchange reserves of the Central Bank. Duhalde acknowledged two weeks later that he was mistaken.[27] The bank accounts in dollars would be "pesified" at a 1.4 exchange rate, and the state financed the banks for the different rates with other operations. The taxes of public services were "pesified" and fixed at their current values.[28] Most industries benefited from the "pesification" and the devaluation, as they could now export at higher prices, and the economy started to improve.[29] The jump in the international price of soybean in July 2002 also proved highly beneficial.[30] The devaluation also increased the price of imported products, which allowed import substitution industrialization. As the local prices became cheap in dollars, international tourism to the country was increased.[31] The national state absorbed the debts of the provinces and the bonds used as alternative currency, on the condition that they transferred the power to issue bonds.[32]

Jorge Remes Lenicov resigned in April, alongside ministers De Mendiguren and Capitanich. Peronist governors, legislators, and union leaders met at the Quinta de Olivos, amid rumors that Duhalde would appoint the populist Daniel Carbonetto as minister of economy. They gave their full support to the president and the economic policies instrumented so far. As a result, Duhalde appointed the conservative Roberto Lavagna. Lavagna was the Argentine ambassador to the European Union, and switched offices with Remes Lenicov. He was suggested by Governor Carlos Ruckauf and supported by Alfonsín.[33] He stabilised prices and the exchange rate with tight fiscal and monetary policies, and prevented the crisis from growing into a hyperinflation. The recovery also benefited from the idle capacity of the economy.[34]

On the political level, Duhalde's presidency was strongly influenced by his feud with Menem. Menem wanted to run for a new term as president in the 2003 election, and Duhalde wanted to prevent it. To this purpose, he sought other candidates that may have defeated him. Some of these potential candidates were Carlos Reutemann, José Manuel de la Sota, Mauricio Macri, Adolfo Rodríguez Saá, Felipe Solá and Roberto Lavagna, but none of those negotiations bore fruit. The scandal over the death of the piqueteros Maximiliano Kosteki and Manuel Santillán in the Avellaneda massacre forced Duhalde to rush the elections by six months.[35] As a result, he chose Néstor Kirchner, governor of Santa Cruz Province, despite his reservations.[36] Kirchner was fifth in the presidential polls, and was mostly unknown by the public. Duhalde speculated that, although Menem had a large number of willing voters to begin with, he was also very unpopular. Thus, Menem might have won the elections but if the results called for a ballotage, most of the population would rally under any candidate with a chance to defeat him.[37]

To harm Menem's chances even further, the 2003 election used a variant of the Ley de Lemas for a single time. This way, the Peronists Menem, Kirchner and Rodríguez Saá did not run for primary elections, but faced each other directly in the open election. None of the three candidates ran on the Justicialist Party ticket, but for special parties created for the occasion: Menem for the "Front for Loyalty", Kirchner for the "Front for Victory" and Rodríguez Saá (who run for president anyway, but as a critic of Duhalde) for the "Front of the National and Popular Movement". It was also announced that Lavagna would stay as minister of Economy during a presidency of Kirchner, to capitalize the support for the ongoing economic policies. Menem defeated Kirchner in the elections, benefited by the lack of popular candidates, but gave up running for a ballotage, fearing that he would lose this special election.[38]

US secretary of defense Donald Rumsfeld and Argentine minister of defense Horacio Jaunarena.

Duhalde was appointed president in the aftermath of the September 11 attacks, when the foreign policy of the United States was strictly focused on the War on Terror. Initially, the Argentine society was divided on how to manage the bilateral relations with the US. One group wanted to keep the close relations of the previous decade, as Argentina might need foreign help to deal with the crisis. The other group preferred to maintain more distant relations. Duhalde sought to strike a balance between both options, and eventually leaned towards the second when the US refused to help Argentina.[39]

Argentina voted in the United Nations condemning the human rights violations in Cuba, but refused to send military forces to Afghanistan and Iraq. Still, Duhalde proposed to send peacekeeping troops, and strongly criticized the regime of Saddam Hussein and international terrorism. Duhalde increased his criticism of the United States during the final years of his government, and changed the vote in relation to Cuba to an abstention. Those changes were motivated by the upcoming 2003 elections. Menem, who was running for a third term as president, supported the vote condemning Cuba and the military aid to the United States.[40]

The devaluation caused a diplomatic conflict with Spain, as Duhalde did not allow the Spanish service providers to raise taxes. So far, they received their income according to the dollar exchange rate, and intended to raise taxes to compensate their losses. The Argentine government considered that the effects of the crisis were already grave enough for the people, and further price increases would only worsen the situation. José María Aznar, prime minister of Spain, talked with Duhalde on behalf of the Spanish firms.[41] The taxes were not raised, but Aznar stayed on good terms with Duhalde, and ratified the good relations with the country regardless of the victor of the 2003 elections.[42]