Buenos Aires: History

Pre-20th-Century History

A large expedition landed in present-day Buenos Aires in 1536, but it wasn't until 1580 that the area was successfully re-established by Juan de Garay. It remained a backwater for the next 200 years, subordinate to the Spanish city of Asunción (now Paraguay's capital), further up the Paraná river. Mercantile restrictions imposed by Asunción fuelled local frustration as Buenos Aires began to prosper on the back of trade in feral cattle and horses. Contraband smugglers were also doing a good trade with Portuguese and British vessels. In 1776, Buenos Aires became the capital of the new Viceroyalty of the Río de la Plata, acknowledgment that the region had outgrown Spain's political and economic domination.

Continuing dissatisfaction with Spanish interference led to the revolution of May 25, 1810, and eventual independence in 1816. However, independence revealed seething regional disparities that Spanish rule had obscured. The Federalists of the interior (conservative landowners, supported by the gauchos and rural working class) advocated provincial autonomy, while the Unitarists (cosmopolitan city dwellers) upheld Buenos Aires' central authority.

After a disastrous and tyrannical period of rule by the Federalist Juan Manuel Rosas, Buenos Aires and Unitarism prevailed, ushering in a new era of growth and prosperity with the federalist constitution of 1853. European immigration, foreign investment and trade were hallmarks of the new liberalism. However, excessive foreign interests made the economy particularly vulnerable to global recessions; wealth was ultra-concentrated and unemployment rose as small holdings failed. Finally, farmers were forced to leave the land and head for a capital ill-equipped to deal with the influx.

Modern History

It was in this climate of substandard living and unemployment that labor militancy grew, reaching boiling point in 1919 when striking workers were brutally suppressed by the military during La Semana Trágica (The Tragic Week). This set an unfortunate precedent for the coming decades.

During the 1930s, ambitious municipal projects transformed the face of the downtown area with a sprawling grid of wide avenues running through the heart of the city. Colonial-era streets vanished as Buenos Aires sought to stamp its flavor of European sophistication on South American tradition. Following WWII, Gran (Greater) Buenos Aires began to absorb surrounding suburbs. The weight of its growth, however, spawned problems with decaying infrastructure and public services, the spread of shantytowns, and rises in unemployment and inflation.

Political volatility, military brutality, growing wealth divisions and an unstable economy have all continued to plague the country. Since 1989, the Argentine economy has experienced a boom-and-bust cycle which has led to harsh restrictions on bank withdrawals, and cash shortages.

The upshot was that in December 2001, Argentina defaulted on a US$100000000000.00 loan repayment, the largest default in history. Rioting, looting and widespread civil chaos broke out on Buenos Aires' streets and 27 people were killed. Endemic political corruption only compounded the economic malaise. A revolving door of leaders reached its nadir in January 2002, when Eduardo Duhalde became Argentina's fifth president in two weeks.

President Duhalde unpegged the peso from the dollar; savings were decimated, but withdrawal and foreign exchange restrictions meant little could be done. However unpopular, the move was necessary to secure further aid from the IMF. Furthermore, the devalued peso has done better than expected in the world currency market.

Recent History

In 2003, Néstor Kirchner became president, managing to suspend Argentina's debt to the IMF and negotiate better terms. In 2006, the country paid off its entire IMF debt (its debts to private investors, however, are still a billion-dollar headache). Over the last three years, Argentina's economy has made a resounding comeback. Although inflation continues to be a threat, foreign investment is slowly returning.

Social unrest has also eased and BA's journey along the road to recovery - though plagued by pitfalls - has begun.

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