The past few years have seen Argentina recover from its worst economic tumble, the 2001-02 peso crisis, and enter a period of hopeful buoyancy, floating on apparent prosperity thanks to a tourism boom, a new political era, and high prices for Argentine commodities on the global market. In December 2001, the Argentine peso, once on a par with the U.S. dollar, collapsed to less than a third of its former value. (At press time, the dollar-to-peso ratio is about 4 to 1.) Unemployment rose to more than 20%, businesses shut down, and many people who had trusted the banking system lost their entire life savings overnight. News networks across the world showed images of social unity, such as members of the middle class banging pots in the streets and shouting at police officers, followed by social breakdown, when those same police officers shot rioters on the pedestrianized shopping streets in the city's downtown.
While no one watching the news at the beginning of 2002 could have guessed that Buenos Aires would experience a tourism boom as a result of the peso crisis, that was exactly what happened. With hotels, restaurants, and shopping at barely a third of their former prices, the most expensive capital in South America suddenly became a bargain destination. Tourism is now the third-most-important sector of the country's economy. The peso crisis also forced locals to make do with their own resources -- to cook with Argentine ingredients, to design clothes made from local materials, and to turn to elements of their own culture, particularly the tango, for entertainment. Argentine culture was revived in Buenos Aires, rendering it a more vibrant city for tourists.
Politics changed dramatically when Peronist Néstor Kirchner was elected president in 2003. At the same time, the commodities Argentina has always been famous for -- grain and beef -- rose in value throughout the world, particularly with the growth of China and other Asian nations. The same was true of petroleum, another major Argentine export, the price of which rose substantially in the first decade of the millennium. The turnaround of the economy of Buenos Aires, and the nation as a whole, was spectacular.
The new economic situation led to inflation, however, with tourism a major driver. Much of the recent residential high-rise construction in Buenos Aires, particularly in Palermo and Puerto Madero, was speculated on the premise that foreigners would buy apartments to rent to other foreigners, hardly sustainable.
In the wake of her husband's success in revitalizing the country's economy, former First Lady and Buenos Aires province Senator Cristina Fernandez de Kirchner was elected president in 2007. The election was met with delight both around the world and within the country, but her immense popularity soon crashed. Her administration began to publish false inflation figures, claiming inflation was held at various points between 1% and 7% when it was as high as 25%. The government also enacted price controls and tariffs on grain and beef exports, causing international trade of these commodities to plummet at a time of high demand. Argentina's chance to grow wealthy from its natural bounty, as it had 100 years before, was lost. Meat production declined, causing the rise in prices that both Kirchners had been trying to avoid.
In anticipation of the 2010 Bicentennial, Buenos Aires spiffed itself up. The city renovated historical buildings, repaved and replanted boulevards, and expanded its subway system. Yet even this dramatic makeover was not without its controversies. The restoration of the Teatro Colón, the most important symbol of Buenos Aires's golden period, was years behind schedule and fraught with corruption on every level. If, at the 1910 Centennial, Teatro Colón represented the city in its most glorious period, the process of its restoration showed what it had become 100 years later -- a city of opportunity lost, but one that still longs to return to its former glory.
The years ahead are marked by political uncertainty. Néstor Kirchner died in October 2010. Argentine law limits presidents to two consecutive terms but allows unlimited terms if they are not consecutive. The Kirchners' plan was that each would run for office every 4 years, creating a new Peronist dynasty. Cristina Kirchner plans to run in 2011, and if she wins, she won't be able to run in the following election. Furthermore, the Peronists have already begun to splinter into various factions, meaning it should prove a brutal race.
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