Continued political instability emerged into almost-open warfare until 1976, when the military ousted Isabelita in a bloodless coup that became the bloodiest reign of terror in Argentine history. General Jorge Rafael Videla headed a three-man junta that imposed a ferocious military discipline on the country.

Under its euphemistically titled Proceso de Reorganización Nacional (Process of National Reorganization), the military’s Guerra Sucia (Dirty War) killed up to 30,000 Argentines, ranging from leftist urban and rural guerrillas to suspected sympathizers and large numbers of innocent bystanders whose links to armed opposition groups were tenuous at most. Many more were imprisoned and tortured, or sent (or escaped) into exile. Only a few courageous individuals and groups, such as Nobel Peace Prize winner Adolfo Pérez Esquivel and the famous Madres de Plaza de Mayo, who marched around Buenos Aires’s central plaza in quiet defiance, dared to risk public opposition.

One rationale for taking power was civilian corruption, but the military and their civilian collaborators were just as adept in diverting international loans to demolish vibrant but neglected neighborhoods and create worthless public works like dead-end freeways. Much of the money found its way into offshore bank accounts. The horror ended only after the military underestimated the response to their 1982 invasion of the British-ruled Falkland (Malvinas) Islands; after a decisive defeat, the military meekly ceded control to civilians. The main coup plotters and human-rights violators even went to prison—an unprecedented occurrence in Latin America (though they later received pardons).

Following a 1983 return to constitutional government, Argentina underwent several years of hyperinflation in which President Raúl Alfonsín’s Radical-party government squandered an enormous amount of good will. President Carlos Menem’s succeeding Peronist administration overcame hyperinflation by pegging the peso at par with the U.S. dollar through a “currency basket” that ensured it would print no more pesos than it had hard currency reserves to back.

Menem’s strategy—really the brainchild of Economy Minister Domingo Cavallo—brought a decade of stability during which foreign investment flowed into Argentina. Privatization of inefficient state-run monopolies, which had had thousands of so-called ñoquis (“ghost employees”—who may or may not actually work for their paychecks) on the payroll, brought major improvements in telecommunications, transportation, and other sectors. The financial and service sectors flourished, giving many Argentines a sense of optimism through most of the 1990s.

The boom had a dark side, though, in the form of “crony capitalism” in which the president’s associates enriched themselves through favorable privatization contracts. At the same time, reform barely brushed the patronage-ridden provinces, which maintained large public payrolls and even printed their own bonos (bonds), “funny money” that further reduced investor confidence. The Menem years also saw still-unsolved terrorist incidents in the bombings of Buenos Aires’s Israeli Embassy in 1992 and AMIA Jewish cultural center in 1994. (In August 2003, Britain arrested the former Iranian ambassador to Argentina, Hade Soleimanpour, in connection with the AMIA bombing but refused to extradite him to Buenos Aires. He was later released for lack of evidence, but the British agreed to keep the case open.)