Immediately following the collapse of Peron’s government in September, 1955, creating a power vacuum. Eduardo Lonardi, who followed as president, sought a moderate approach so as to avoid giving any advantage to the Peronists. The military, to which he owed his position, wouldn’t tolerate the slower, conciliatory approach.
By November, General Pedro Aramburu replaced Lonardi. Under Aramburu, the government launched a purge of everything Peronist, including the execution of pro-Peronist union officials and others in leadership. These executions were unprecedented.
Though these policies solidified their power, the military was faced with the problem of the economy. While the Gross Domestic Product (GDP) grew, the formerly solid agricultural segment did not grow in proportion. Some fundamental changes were necessary, but their civilian support began to split.
Arturo Frondizi, an economics professor, emerged as a leading candidate for president. Running a nationalistic campaign, he needed the backing of the Peronists to achieve victory, so he struck a deal with them to restore their party to legitimacy.
Though Frondizi might have been expected to launch a radical economic program (as he did), he also had to walk a political tightrope between the military and his Peronist supporters.
Economically, he moved to stimulate industry and agriculture. Relying upon foreign loans to accelerate industrialization, he began a policy of reducing state intervention (investment) in the economy. In the short-term, deficits began to mount and Frondizi was responsible to the foreign investors. He also felt the backlash of his nationalistic supporters who objected to his courting such massive foreign investment, particularly foreign oil companies. This imbalance prompted the military to force Frondizi to accept their economic strategists.
These strategists forced an austerity plan upon Argentina which devalued their currency, set limits on credit, decreased public spending by cutting the role and size of government, and set wage limits. What started out as an industrial-focused austerity soon resulted huge agricultural gains (97% in 1959) due to increased production, increased production, and exportation without restrictions. This incensed labor groups which called general strikes in April, May, and September of 1959.
Frondizi immediately saw his support evaporate. Neither the military nor the Peronists were happy with him. In March, 1962, the military removed him and replaced him with the Senate President Jose Maria Guido. By June, 1963, the military called for new elections. Arturo Illia, a Balbin Radical, won with a mere 27% of the vote. To compensate for the previous downturn in industrial production, he granted sizeable wage increased and simultaneously established price controls. These price controls angered the farmers because they artificially limited beef prices (and profits).
Labor unionists resisted the “charm” of Illia’s wage increases and took the battle to the ballot box, winning slightly more than 30% of the vote to Illia’s nearly 29%. From exile, Peron, encouraged by the results, sent his wife Isabel to negotiate with the Peronist factions.
The military, fearing a Peronist comeback, intervened when they saw a new inflationary cycle commence and government deficits begin to spiral out of control. The June, 1966 coup broke strongly with the past. General Juan Carlos Ongania led the so-called “Argentine Revolution.”
While his economic policies were a significant departure from the previously military-led governments, his political strategies harkened back to the previous repression of the military. This affected the Congress, academic freedom in the universities, and suppressed labor.
While being able to maintain relative stability in 1967 and 1968, Ongania faced a more entrenched opposition from labor. The more Ongania suppressed them, the more they fought back meeting violence with violence.
The nation itself was traumatized by the violence. Civil war had broken out. Ongania’s successor General Roberto Levingston immediately faced spiraling inflation and a deflationary trend in agriculture. Within eight months, General Alejandro Lanusse replaced Levingston. Inflation became even more pronounced. For Lanusse, he seemed more concerned with achieving political stability than economic stability.
In that vein, he risked allowing Peron to briefly return in late 1972. Peron’s proxy in the March, 1973 elections, Dr. Hector Campora, easily won 49% of the vote. The new government forged a coalition of labor, military, and agriculture around the “Social Contract.” Though there was hope, the odds were against them.
Violence continued to disrupt the fragile coalition’s attempts to stabilize the country, but great hope was now placed on Peron’s return. In September, 1973, he ran, along with his wife Isabel as vice-president, and won with 62% of the vote.
At 77, Peron was more of a symbol, rather than a stabilizing force. He oversaw the suppression of the radical left that had orchestrated his return. Just when the economic policies instituted by Camporo were beginning to bear fruit, pressure from labor brought new wage agreements. This was furthered compounded by Peron’s generous year-end bonuses to labor, undermining the anti-inflationary policy.
In July, 1974, Peron died, leaving Isabel to succeed him. With no political experience, she fell under the influence of the ambitious Jose Lopez Rega.