Argentina: A Trolley Named Disaster

The Argentines last week estimated their government budget deficit for 1965 at $860 million—and that was just an optimistic guess. The actual deficit, say economists, is likely to be closer to $1 billion. Moreover, better than half of the red ink flows from a handful of state-owned enterprises that seem to succeed only in costing the country money. The state oil monopoly, Y.P.F., is expected to lose $120 million this year; millions more go for the state-run airline and merchant fleets.

The champion of them all is Argentina’s nationalized railroad system. The government estimate puts the 1965 rail loss at $318 million; the actual loss will be more than that in the first ten months. And what a Toonerville Trolley it is—57% of the 27,000 miles of track is more than 40 years old and is in bad shape; 30% of the diesel locomotives are out of service; most passenger and freight cars are obsolete.

Lost Coaches & Dead Cattle. Built by the British in the mid-1800s, Argentina’s railroads opened up the country, turned handsome profits hauling meat and wheat to the coast for export, and ran up a record for good service. Then, in 1948, Dictator Juan Perón decided on “economic independence,” and bought out the British for $600 million. Into top management spots went Perón’s political cronies. By 1955, the payroll had ballooned from 150,000 to 230,000 workers, who later bulldozed one government after another with strikes and strike threats for higher pay. The runaway railroad has helped steer Argentina into its present inflation, which has seen the value of the peso decline 50% in the past four years alone.

The service? The couplings on many passenger coaches are so faulty that the locomotive sometimes chugs out of the station leaving the cars behind. Trains from La Paz, Bolivia, and Asunción, Paraguay, often arrive three days late; the 250-mile trip from Santa Fe south to Buenos Aires often takes 14 hours and sometimes more. Cattlemen have angrily protested to the government about cattle trains from the pampas that arrive at the stockyards with 20% of the livestock dead.

Raises All Around. The only man who dared to flag down the railroads was ousted President Arturo Frondizi, who fired 40,000 useless workers in 1961. But the powerful 234,000-man railroad unions struck for 42 days until Frondizi called off his reforms and granted 30% raises all around.

Argentina’s current President, Arturo Illia, has granted one 30% wage increase since coming to office in 1963, but balks at union demands for yet another raise. Facing elections in March for provincial legislatures and one-third of the national Congress, Illia wants to use the money to meet the payroll of other government workers so they will not go to the polls mad. The rail unions have struck three times in the past five weeks in short walkouts, and now threaten a 72-hour tie-up—all of which should add a few more millions to the government’s deficit.