Even before the partial debt default of late 2001, the economy contracted and Argentines began to suffer. After the resignation of Menem’s feckless and luckless successor Fernando de la Rúa in December, the country had a series of caretaker presidents before the congress chose Peronist Eduardo Duhalde (whom De la Rúa had defeated two years earlier) to serve until elections in late 2003. In a controversial move, Duhalde ended Cavallo’s convertibility policy and devalued the peso, which lost nearly 75 percent of its value within a few months. At the same time, he continued De la Rúa’s corralito policy, which restricted bank withdrawals to maintain hard currency reserves, but also strangled the country’s economy.

As the economy stagnated and unemployment rose, homelessness also rose and scavengers became a common sight even in prosperous neighborhoods. Strikes, strident pickets blocking bridges and highways, and frustration with politicians and institutions like the International Monetary Fund (IMF) contributed to the bronca (aggravation). Under pressure, the ambitious Duhalde advanced presidential elections to early 2003, but also manipulated Peronist primary rules to favor his chosen successor, left-of-center Santa Cruz governor Néstor Kirchner, over his political nemesis Carlos Menem. (Buenos Aires Herald columnist Martín Gambarotta described the political maneuvers of Duhalde and Menem as “two men playing a chess match with boxing gloves.”)

Facing near-certain defeat after finishing a weak second in the primary, Menem declined to participate in the runoff, leaving Kirchner the winner by default. Without a mandate, though, Kirchner soon acted as if he had one by consolidating his own power base and simultaneously marginalizing pro-Duhalde Peronists. At the same time, Kirchner took full credit for Argentina’s economic rebound in a country that had nowhere to go but up after the 2001–2002 collapse. To keep domestic peace, he co-opted labor and picket forces by controlling prices for utilities and primary goods—even prohibiting the export of beef to make it more affordable for the domestic market.

As an economic nationalist from a thinly populated province, the confrontational Kirchner blew off concerned European businesspeople and diplomats as well as presumptive Mercosur allies such as Brazil’s President Luiz Inácio Lula da Silva and Uruguay’s Tabaré Vásquez, in favor of populists such as Bolivia’s Evo Morales and especially Venezuela’s erratic Hugo Chávez. He also upset neighboring Chile by failing to honor existing natural gas contracts and then passing on higher prices for gas exports after negotiating high prices for Bolivian natural gas with Morales.

In 2007, Kirchner declined to seek a second term, instead supporting his wife Cristina Fernández, then a senator—making the husband-wife team suitable successors to the Peróns in governing on personal charisma and loyalties rather than through institutions. In 2009, however, the effects of the international economic crisis, Fernández’s own confrontational approach, and concern over issues such as manipulation of the federal statistics agency INDEC, brought a midterm electoral catastrophe for the ruling party. It has even brought speculation that Fernández—who has denounced a “conspiracy” among Vice President Julio Cobos, the middle-of-the-road Clarín newspaper, and even the federal courts—might not finish her term.