What's wrong with Argentina? Why did the Argentine market collapse last week, dragging down currencies across the world, including the almighty U.S. dollar?

 There is a virtual agreement among U.S. economists and diplomats that the problem is political: Investors are not confident that beleaguered President Fernando de la Rúa can muster the political support he needs to enforce budget cuts without which the country can't meet its foreign debt payments.

 POLITICALLY UNDERCUT

 De la Rúa not only lacks the congressional votes of the Peronist Party opposition -- whose last president, Carlos Menem, is in jail awaiting trial on corruption charges -- but is constantly sabotaged by the leader of his own party, former President Raúl Alfonsín. The country is a textbook case of political cannibalism, they say.

 Perhaps it's a symptom of a new phenomenon in the Latin American landscape: coalition governments that can't get their act together.

 Many countries -- including Argentina, Brazil, Mexico and Chile -- have gone from strong presidential systems to fragile coalitions that sometimes are paralyzed by
 internal strife.

 Some of them are suffering from an additional political curse: irresponsible former presidents. Like Brazil's former President Itamar Franco, who in his new capacity of Minas Gerais governor sparked a 1999 devaluation of the currency by declaring a moratorium on his state's debts to the federal government, Alfonsín is the big spoiler in Argentina's current market collapse.

 Alfonsín was Argentina's first democratic president after the 1976-1983 military dictatorship and stepped down in disgrace amid a 5,000 percent inflation rate. He has become one of the most reckless politicians in the Latin American arena in his new incarnation as president of Argentina's ruling party.

 WORDS MOVE MARKETS

 Last week's market collapse was largely prompted by Alfonsín's statement that de la Rúa's proposed budget cuts were ``unfair.'' You didn't have to be a genius to figure out that if the president of the ruling party opposed de la Rúa's economic program, the plan was doomed, because it wouldn't have the congressional votes to be carried out.

 ``Alfonsín is a small-town politician of the '60s who doesn't understand that whatever he says in Argentina is immediately heard in New York, London and Frankfurt,'' a U.S. diplomat once told me. ``He doesn't have a clue about how the world economy works.''

 Argentina's previous financial stampede took place on Nov. 2, 2000, after Alfonsín suggested in a variety television show that Argentina should declare a two-year
 moratorium on payments of $20 billion due this year. A few weeks earlier, on Oct. 12, he had sparked a run on the market by saying that Argentina's fixed
 one-peso-to-the-dollar exchange rate was a ``death trap.''

 Earlier last year, during a trip to Argentina, I couldn't believe my eyes when I read a July 13, 2000, interview in the daily La Nación a day after he had created another run on the markets by attacking the country's fixed exchange rate. Asked what he was proposing to do with the exchange rate, Alfonsín answered, ``How do we get out of this? I don't know. Ask some economist.''

 Arturo Porzecanksi, chief economist for emerging markets at ABM Amro Securities in New York, told me that ``a lot of investors ask me, `How can it be that a president who had to leave office because of hyperinflation was later elected president of the ruling party?' It's hard to explain. There hasn't been a generational change.''

 Other Wall Street analysts ask why de la Rúa allows himself to be given public lessons in economics by a man who may be responsible for one of the world's record
 hyperinflation rates. Could anybody imagine the head of the U.S. Republican Party lashing out on television against President George W. Bush's economic policies?

 ``Alfonsín is relevant because de la Rúa is unable to exercise control over his own party,'' says Michael Gavin, executive director in emerging countries research at UBS Warburg in New York.

 ``You always have irresponsible politicians; the problem [in Argentina] is that you have a weak president.''

 Argentina's financial roller-coaster would not go away, but would be greatly diminished, if the country adopted U.S. or Mexican solutions for dealing with post-presidential depression problems.

 In the United States, former President Bill Clinton has joined the lecture circuit at a reported $100,000 per conference, Jimmy Carter is busy leading programs to monitor foreign elections and help rebuild poverty-stricken U.S. neighborhoods, and Gerald Ford has been invited to every golf tournament around.

 In Mexico, former presidents are sent into exile.

 Former President Carlos Salinas has been living in Cuba and Ireland since he left office. Another former president, Luis Echeverría, was appointed ambassador ``to
 Australia and the Fiji Islands,'' to make sure he got the message that he was wanted as far away from Mexico as possible.

 Perhaps Argentina should start creating a lecture circuit industry, or thinking about new ambassadorships.

 It sounds simplistic, but if last week's events teach us anything, it is that the combination of a weak president and an irresponsible ruling party leader can be disastrous.

                                    © 2001