The 1990s was a decade dominated by Carlos Menem - the son of Syrian immigrant parents - and was an era characterized by radical reforms and hefty doses of controversy. Menem had been governor of a relatively minor province in the interior of the country, La Rioja, at the outbreak of military rule in 1976 and, as a Peronist, he had spent most of the dictatorship in detention or under house arrest. His Justicialist Party ( Partido Justicialista or PJ) was Peronist in name but - once elected in 1989 - not in nature, and he was to embark on a series of sweeping neo-Liberal reforms that reversed virtually all planks of traditional Peronism.

His most lauded achievement is that he finally slew one of Argentina's most persistent bugbears - inflation . This he achieved in 1991-92. With the backing of international finance organizations, Menem and his Finance Minister, Domingo Cavallo , introduced the Convertibility Plan ( Plan de Convertibilidad ). At the beginning of 1992, this pegged a new currency (the new Argentinian peso, worth 10,000 australes) at parity with the US dollar, and guaranteed its value by prohibiting the Central Bank from printing money that it couldn't cover at any one time with its federal reserves. Inflation, which at one point was running at 200 percent per month, had fallen to an annual rate of eight percent by 1993. Throughout the 1990s, inflation remained in single figures.

The next stage of economic reform was one that horrified traditional Peronists: Menem's administration abandoned the principal of state ownership and the dogma of state intervention. The 1990s saw the privatization of all the major nationalized utilities and industries, many of which were moribund and a desperate drag on government finance. Electricity, gas, the telephone network, Aerolíneas Argentinas and even the profitable YPF, the state-owned petroleum company, were sold off, and this time, investment came primarily from Spanish, not British, corporations.

Free-market development policies also saw the cessation of all Federal railway subsidies in 1993 (a move that signalled the end of Argentina's love affair with the train); and the introduction of massive public spending cuts . In 1995, many regional trade barriers fell, as a consequence of the full implementation of the Mercosur trading agreement. This created a free-trade block of Southern Cone countries - Brazil, Argentina, Uruguay and Paraguay, with Chile developing close ties later on.

These economic readjustments caused seismic reverberations throughout Argentine society. Although people trusted the peso, huge numbers had none to spend. The downsizing of newly privatized industries and the removal of protective tariffs caused unemployment rates to rise to eighteen percent, but underemployment also became endemic, and acute financial hardship resulted in strikes and sporadic civil unrest, as more and more people fell beneath the poverty line.

One thing about Menem's Peronism that stayed faithful to Juan Perón's original was the style of government. A cavalier populist , Menem never stinted in trying to develop the "cult of the leader". He portrayed himself as a "man of the people", modelling his image on that of a provincial caudillo such as Facundo Quiroga, the famous La Riojan warlord of the 1830s. Not known for his modesty, he preached austerity at a time when he seemed to be developing a penchant for the life of a playboy.

The president increasingly became associated with trying to rule by decree . One of his most controversial aspects of this policy was the issuing of executive amnesties in 1989 to those guilty of atrocities during the 1970s. Although the amnesty included ex-guerrillas, public outrage centred on the release of former members of the military junta, including all the leading generals. To Menem it was the pragmatic price to pay to secure cooperation of the military; to virtually the rest of the country, it was a flagrant moral capitulation.

In August 1994, he secured a constitutional amendment that allowed a sitting president to stand for a second term, although the mandate was reduced from six years to four. Voters, trusting Menem's economic record, elected him to a second term.