The Washington Post
Tuesday, April 3, 2001; Page A12

Argentina's Economic Woes Devastate Its Middle Class

By Anthony Faiola
Washington Post Foreign Service

BUENOS AIRES -- In a dusty colonial quarter of south Buenos Aires, Eduardo Medina takes a deep breath before lifting the receiver of a public phone for a
weekly call to his elderly parents in the countryside. Then the 38-year-old unemployed law clerk starts to lie.

He lies about the new job he never found, the one in a posh downtown law office that does not exist. About the apartment he no longer has. He says anything but the
truth: that he has found himself reduced to living in a dingy, overcrowded homeless shelter.

"The truth would kill them," said Medina, still dressed impeccably in a woolen sweater and preppy pinstriped shirt five months after moving to the municipal shelter
filled with the economic refugees of the world's 10th-largest metropolis.

The truth is that Medina lost his $2,500-a-month job at the Justice Ministry during government layoffs in 1999. And that six months ago he lost a part-time job as a
waiter. And that he faced eviction from his apartment across town before resorting to the shelter to keep a roof over his head.

"If I tell my parents, it would force me to accept it as well," he said. "I've told myself this is just a brief setback. But then I look at the other guys here, and I wonder if
I'm not lying to myself, too."

Medina's story is emblematic of a tide of homelessness sweeping Latin America's showcase city. Massive unemployment from a 33-month recession and large-scale
downsizings during a decade of U.S.-backed free market reforms have wreaked havoc on the lives of residents here, especially as the once large middle class
tumbles down the ladder of prosperity.

Although its grand boulevards and belle epoque neighborhoods have long given Buenos Aires pretensions as "the Paris of Latin America," the city today recalls New
York during the Great Depression. The number of indigents in greater Buenos Aires -- the poorest of the poor who live on less than a $1.60 a day in a metropolitan
area of 12 million people -- rose to 921,000 people in 2000 from 324,810 in 1991, the year then-President Carlos Menem embraced the free market reforms that
swept across much of Latin America in the 1990s.

"We have never had to cope with a homeless population this large and diverse before," said Silvia Coralini, head of the city's Program for Families in Crisis, begun in
1997 to deal with the swelling tide. "And it's not like you can just go tell these people to get up and find a job. There are no jobs."

Two government surveys on the homeless -- taken in 1997 and 2000 -- show the population living in city shelters or on the streets has almost doubled in three years,
to 5,718 from 3,172 within city boundaries, where 3 million live. Aid groups place the actual figure far higher, arguing that the government does not count people
living in shantytowns called "misery villages."

At the same time, thousands of "afternoon homeless" pour into the city each day on boxcars attached to commuter trains from poor suburbs and the Argentine
interior. Most stay on the streets for a few nights, some standing in employment lines that snake for blocks. Others come to scour trash cans in search of aluminum
cans and discarded morsels.

The genteel middle-class neighborhoods that were the city's heart and soul -- and which long separated Buenos Aires from most other Latin American capitals,
where islands of wealth sit among seas of poverty -- are rapidly being transformed into pockets of dilapidated buildings, empty storefronts, rising crime and beggars.
Meanwhile, the very rich have retreated to gated communities, exiting for work in high-rise office buildings and shopping in designer boutiques in upscale parts of

In other words, Buenos Aires is starting to look like the rest of Latin America. This is taking a toll on the psyche of a city that has always fancied itself a First World
enclave in the developing world.

"We are facing a social breakdown in Argentina, and though we are trying to cope with the problem, Buenos Aires is reflecting the national crisis," said Daniel
Figueroa, the city's secretary of social services. "The middle class is slipping badly, sometimes slipping straight to the bottom. Buenos Aires has become like a boat
taking on water. We are helping as many homeless as we can, but there are more and more. We keep on bailing, but the boat is sinking."

Argentina, a nation of 36 million, has suddenly become the new focus of Wall Street jitters following the financial meltdown in Turkey. As a result, President
Fernando de la Rua is being pressured to cut the deficit by slashing expenses. At the same time, foreign creditors are encouraging Argentina to embrace reforms even
more, privatizing some of the last remaining state-run institutions.

The 1991 reforms at first helped stabilize the economy, eliminating runaway inflation and generating growth spurts. They also sparked badly needed modernization,
eliminating most government dinosaurs and making utilities such as telephone and electricity service more efficient. But privatization and the collapse of local
businesses unable to compete in a globalized marketplace have kept unemployment above 15 percent for almost a decade. Underemployment has hovered between
40 and 50 percent.

Many here blame what they call U.S.-style "Darwinian economics." But others contend that it is Argentina, and not the reforms, that is to blame. For some
economists, this nation has become a case study on how the benefits of the free market can veer off course because of corruption, weak government and a failure to
overhaul labor laws and enforce tax collection on the rich.

Whatever the reason, the effect on Buenos Aires has been severe.

Hector Aguilera, 40, leaned on a metal cane as he limped to the back of the Monteagudo homeless shelter in a downwardly mobile middle-class neighborhood.
Aguilera, formerly a phone company worker, was transferred to a subcontractor in 1994, a job that did not offer health benefits.

His bone cancer was diagnosed in 1998. By then, the public health system in the city was so overwhelmed that Aguilera feared his sickness would advance while he
sat on waiting lists for treatment. He spent his $35,000 savings on chemotherapy at a private hospital, becoming so ill during the treatment that he lost his job.

Aguilera was evicted from his three-room apartment in 1999. He moved into a boarding house, supporting himself on borrowed money and odd jobs until last year.

"I'm 40 years old and defeated," he said. "You try applying for a job in Buenos Aires these days with a bald head and a limp from cancer. You don't get very far."

Homelessness is not a new problem here. Even 80 years ago, when Argentina was one the world's 10 richest nations, homeless people dotted the expanding
industrial cityscape.

But today, the homeless population is not only at historic highs, but the profile of the homeless has substantially changed. Once more likely to be a population of
alcoholics and the mentally ill, the homeless now are more likely to be well-educated, middle-class and moderately poor individuals and families. Most have
employment problems or have fallen through the cracks of the social system, government officials and homeless advocates say.

Alejandro Arrieta, a well-groomed, soft-spoken 62-year-old, was laid off as a telephone operator at the Buenos Aires Children's Hospital during a wave of cutbacks
in 1993. He lost his family home in an upscale neighborhood to creditors in 1999. He had hoped to receive his government pension of $350 a month by then to help
pay his bills. But a year earlier, the government extended the benefits age to 65 in an attempt to reduce its deficit.

On the day the creditors came to auction his apartment and belongings, Arrieta packed a black plastic bag with dog-eared photographs of his parents, who had
bought the place in the 1940s. He slipped down the stairs, said a quiet goodbye to the doorman and lived on the streets for the next year.

Eleven months ago, he was picked up by authorities, interviewed and taken to a homeless shelter. Like so many others here, he is receiving psychological counseling
after falling so far, so fast.

Traditionally, individuals and families in dire need would have been supported by extended families. But the economic situation has become so tight that siblings,
parents, aunts and uncles find it difficult to take in unemployed relatives.

Monica Noemi Laveglia, 34, lives in a city shelter for families with her husband, Jorge, and their two children. They moved in with her mother when her husband lost
his job at a pie factory that closed in 1991.

The arrangement lasted for two years, but the financial and personal strain on her mother forced them to move into a cheap hotel in 1998. The $200 rent proved too
much for the $275 monthly salary her husband earned driving a taxi 16 hours a day, forcing the family into the shelter last year.

                                               © 2001