The economy recovered modestly in 1983 as a result of Bignone's lifting of wage freezes and crushing interest rates imposed by the Central Bank's "Circular 1050;" but inflation raged at 400%, GDP per capita remained at its lowest level since 1968 and fixed investment was 40% lower than in 1980.

[1] Naming a generally center-left cabinet led by Foreign Minister Dante Caputo and Economy Minister Bernardo Grinspun (his campaign manager), Alfonsín began his administration with high approval ratings and with the fulfillment of campaign promises such as a nutritional assistance program for the 27% of Argentines under the poverty line at the time, as well as the recission of Bignone's April 1983 blanket amnesty for those guilty of human rights abuses and his September decree authorizing warrantless wiretapping.

He sought to improve relations with Peronists by pardoning former President Isabel Perón in May 1984 for her prominent role in the early stages of the Dirty War against dissidents and for her alleged embezzlement of public funds, though his introduction of legislation providing for secret ballot labor union elections led to opposition by the CGT, Argentina's largest, and handed his administration its first defeat when the Senate struck it down by one vote.

Alfonsín initiated the first diplomatic contact with the United Kingdom since the Falklands War two years earlier, resulting in the lifting of British trade sanctions.

[2] Inheriting a foreign debt crisis exacerbated by high global interest rates, Alfonsín had to contend with shattered business confidence and record budget deficits.

Unable to finance the budget, the Central Bank of Argentina "printed" money and inflation, which was bad enough at around 18% a month at the end of the dictatorship, rose to 30% in June 1985 (the world's highest, at the time).

Alfonsín surprised observers in April 1986 by announcing the creation of a panel entrusted to plan the transfer of the nation's capital to Viedma, a small coastal city 800 km (500 mi) south of Buenos Aires.

His proposals boldly called for constitutional amendments creating a Parliamentary system, including a prime minister, and were well received by the Lower House, though they encountered strong opposition in the Senate.

Economic concerns continued to dominate the national discourse, and sharp fall in global commodity prices in 1986 stymied hopes for lasting financial stability.

The climate of tension between those on either side of the issue was aggravated by the suspicious death in 1986 of Defense Minister Roque Carranza while at the Campo de Mayo military base[7] and by the September 1987 discovery of the body of prominent banker Osvaldo Sivak, the victim of a police-orchestrated kidnapping for a ransom of over a million US dollars.

A severe drought early in 1987 led to a new decline in exports, which reached their lowest level in a decade, nearly cancelling the vital trade surplus and leaving a US$6 billion current account deficit.

A positive rapport between Alfonsín and the new, democratically elected President of Brazil, José Sarney, helped lead to initial agreements for a common market between the two nations and Uruguay in January 1988.

A new Minister of Public Works, Rodolfo Terragno, an academic with a long history in the UCR, prevailed on the administration to allow a novel, if controversial, search for needed foreign exchange: privatizations.

The President, in turn, preferred to see his struggling UCR (14 points behind in the polls) matched against Cafiero's rival, Carlos Menem, a little-known and flamboyant governor of one of the nation's smallest provinces.

The plan also included a fresh wage freeze, however, triggering a September 9 general strike by the CGT that turned violent when police repressed demonstrators at the Plaza de Mayo.

[10] Violent and white collar crime were of increasing concern among the public and, though the judicial system scored a victory when Banco Alas executives were convicted the same day for fraud committed against the Central Bank totalling US$110 million, their receiving a suspended sentence in exchange for the return of half the funds and the subsequent discovery of a sub-rosa "parallel customs" operated by National Customs Director Juan Carlos Delconte cast serious doubts on Alfonsín's commitment against large-scale corruption, which had become endemic to Argentine government and business during the 1970s.

Continuing military budget cuts and opposition to democratic rule led the extremist Carapintadas to stage a third mutiny on December 1, receiving support from disaffected members of the Coast Guard, among others.

A January 23, 1989 attack on the Regiment of La Tablada by a leftist armed organization led to 39 deaths and tested Alfonsín's improved rapport with the military, which was consequently given wide latitude to prosecute the matter, leading to the alleged torture of a number of the conspirators.

Polling revealed that economic anxieties were paramount among two-thirds of voters and Menem won in 19 of 22 provinces, while losing in the traditionally anti-Peronist Federal District (Buenos Aires).

[1] Having declared his intention to stay on until inaugural day, December 10, these events and spiraling financial chaos led Alfonsín to transfer power to President-elect Menem on July 8.