Background
Argentina’s economy until 1975, despite their political whims, had 11 years of continuous growth. However, there could be alien to the world economic crisis of 1973. At those times, very important for the country, returned to power of Peronism’s hand Campora, who had a trend toward leftist Peronism. Economy Minister Jose Campora was Gelbard, a Polish immigrant, entrepreneur, with strong ties to the Communist Party, founder of the GEC (Entrepreneur Organization representing SMEs) and confidant of Peron. The country’s situation was quite agitated, Gelbard tried to make a social pact between the CGE and the CGT and the UIA to contain inflation and on the other hand, try a redistribution of wealth. The first year of his administration, he succeeded to some extent the goal, also helped initially by the high prices of agricultural products. The share of wages in relation to GDP increased by 20 in the period 1973-1974.Gelbard was the goal of reaching 1977 with a salary equal to 50 of GDP. At that time, price increases were allowed only if checked higher costs. To control them, they set very complicated regulations involving the Ministry of Commerce in various stages of development, marketing and sales, costs were reviewed and authorized the increases, which resulted in costs and compliance impossible situations, which led to the corruption. Gelbard’s plan was criticized by the left (with the obvious exception of the Communist Party) because he considered “reformist” and right as it is considered “communist”. But the international environment was becoming increasingly complicated. The oil crisis hit the whole world and Europe’s first reaction was greater trade protectionism, reducing both price and quantity, much of Argentina’s exports.Moreover, the rising cost of oil also had a direct impact in Argentina, being the country a net importer of basic product. And as if that were not enough, the exchange rate artificially low and a high fiscal deficit (14 of GDP), explains why in late 1974, Argentina had lost almost 2 / 3 of its international reserves. Price control was increasingly difficult to sustain, there was a growing shortage and increasing black market. At the same time, the monetary issue was out of control. Moreover, at regional level, the situation was increasingly rarefied. The center-left governments or directly from left had been replaced by military dictatorships. Gelbard hoping to save his plan was the signing of commercial agreements with Communist countries of Eastern Europe and China, for that toured the region and signed some agreements.However, in the midst of a polarized world, and a growing military power, totally anti, this type of cross were totally impossible for a country like Argentina. One example was the blocking by U.S. auto sales to manufacturing of American companies in Argentina to Cuba. After Peron’s death, the influence of Jose Lopez Rega in government (the man who made every effort to see fall Gelbard) increased significantly while the economic and political situation of the country began to deteriorate rapidly. The consensus sought in the Social Pact, and finally ends up breaking Gelbard’s position is seriously undermined. At the end of ’74, the economy minister resigned. He is replaced by Gomez Morales, former Central Bank president, and related to the orthodox right-wing Peronism, who tried an adjustment, devaluing the peso and easing price controls partially.In parallel, an ultra-liberal economist, conservative and strongly anti-Peronist, but with many contacts with power entrepreneur named Ricardo Zinn, begins to put together a plan to modify the structure of wages and economic power relationships.
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