Crying For Argentina
Sunday December 23 6:41 PM ET
Argentina's New Chief Stops Payments
By EDUARDO GALLARDO, Associated Press Writer
BUENOS AIRES, Argentina (AP) - Adolfo Rodriguez Saa, a provincial
governor, was inaugurated as Argentina's interim president Sunday,
saying he will suspend payment of a crushing foreign debt - a move
that risks the biggest sovereign default in history.
The announcement by the 54-year-old leader, who was sworn in days
after deadly riots drove predecessor Fernando de la Rua from power,
prompted a rousing ovation from Congress. Minutes earlier, it had
voted 169-38 to appoint him as caretaker president following night-
long debate and wrangling.
Rushing to fill the term vacated last week by de la Rua during a
popular rebellion, Rodriguez Saa is to rule pending the results of a
special election on March 3.
``Let's take the bull by the horns. We are going to talk about the
foreign debt,'' Rodriguez Saa said in his inaugural address. ``The
Argentine state will suspend the payment of the foreign debt.''
``All the resources allocated in the budget to pay the foreign debt
will be dedicated instead to create jobs while debt payment remains
suspended,'' Rodriguez Saa added. ``The social emergency is
Argentina's most serious problem.''
``Ar-gen-TI-na, Ar-gen-TI-na!'' legislators and the public chanted as
he spoke.
But the new president made clear that suspending payments on the $132
billion debt does not mean repudiating it and that his interim
government will seek an early dialogue with creditors.
``Argentina's situation is very difficult. I ask for help,''
Rodriguez Saa said three days after deadly rioting and looting forced
de la Rua to resign. Twenty-seven people were killed and hundreds
injured.
Rodriguez Saa said his priority would be to help pull Argentina out
of a four-year recession that has left nearly 40 percent of the 36
million population in poverty. Some 18 percent are out of a job.
The measures announced by Rodriguez Saa mark a radical shift,
bringing the country closer to an all-out default on the foreign debt
and threatening to plunge Argentina back into inflationary chaos.
He ruled out a devaluation and dismissed calls to replace Argentina's
currency, the peso, with the U.S. dollar. Instead, he announced
without elaboration plans to introduce a new ``third currency.''
He also vowed to distribute food among poor families and to create 1
million jobs. ``Wherever an Argentine family exists without a job,
that will be our priority,'' he said.
Rodriguez Saa's announcement on suspension of the foreign debt
payment won widespread support, especially from his Peronist Party,
now returning to power after two years in opposition.
Support also came from ordinary Argentines, who often complained they
were paying a stiff price for de la Rua's policies and the
restrictions he imposed in order to pay the debt.
The restrictions including a partial freeze on access to bank
accounts - a measure expected to be lifted soon.
``They did the right thing in not paying foreign debt now,'' said
Francisco Cordoba, a deliveryman. ``We've got to get things in order.
There is a lot of poverty.''
But there was some criticism, especially from conservative
economists.
Manuel Solanet of the Foundation for Latin American Research called
the move ``typical Peronist demagoguery and populism.'' Jorge Avila
of the Center for Currency Studies warned that ``reality will crush
the president. In a few weeks he will have to face the United States
and foreign creditors. He will quickly loose his optimism.''
Rodriguez Saa easily won the Peronist nomination to become president,
but the debate was heated over the terms of his brief presidency. He
took over from Senate leader Ramon Puerta, who served as acting
president for two days after de la Rua's departure.
Seeking popular support, Rodriguez Saa raised cheers with a pledge to
seek better salaries for workers while cutting back those of
politicians, and selling airplanes at the disposal of the president,
including one known as Tango One. No politician, he said, will earn
more than $3,000 a month.
The economy will not be his only problem. Politics will also be
complicated as a campaign develops to elect his successor, who will
finish out the two years left in de la Rua's term.
After his inauguration, Rodriguez Saa swore in his cabinet members.
He eliminated seven of 11 ministerial jobs, leaving them in the hands
of deputy ministers.
*****
Sunday December 23 4:04 PM ET
Argentina Leader Known As 'El Adolfo'
By TONY SMITH, Associated Press Writer
BUENOS AIRES, Argentina - Adolfo Rodriguez Saa, Argentina's third
president in three days, is anything but a short-lived politician.
``El Adolfo,'' as he is known, is the country's longest-serving
governor, having ruled with a populist style for the last 18 years.
In that time, he has transformed his rural, landlocked province of
San Luis, bringing in modern industry to replace aging mines and
building 30,000 houses for the poor, along with reliable water
supplies and highways.
With his easy smile and seemingly permanent suntan, Rodriguez Saa,
54, hasn't lost a provincial election since 1983. In October, he won
more than 67 percent of the vote, the highest approval rating for an
Argentine governor.
Rodriguez Saa was chosen interim president by the Peronist Party,
which was left in control of Congress after President Fernando de la
Rua resigned Thursday, forced out by violent street protests from
Argentines fed up with a four-year recession.
Peronist Senate leader Ramon Puerta served as caretaker for 48 hours
until Congress approved Rodriguez Saa as interim president.
Rodriguez Saa now must guide the economically troubled country until
an election in March. His first move after being sworn in Sunday was
to suspend payment on the country's $132 billion debt, saying he
would use the money to create jobs and fund social programs.
The decision is certain to shut off South America's second-largest
economy from international credit for years to come, but will help
the cash-hungry caretaker government confront a devastating domestic
crisis in the short term.
Born in San Luis on July 25, 1947, ``el Adolfo'' is married with five
children. He started his political career as a provincial deputy for
the Peronists.
A passionate bridge player, he loves order and logic, and, his
friends say, can be obsessive about control. He once said there are
two types of politicians: optimists such as Franklin D. Roosevelt and
himself, and pessimists such as De la Rua.
``We are governed by a generation of old-timers,'' he was quoted as
saying Saturday in daily Clarin. ``Argentina's next president should
be under 40, because this generation is ruined.''
With his colorful rhetoric and populist touch, Rodriguez Saa's image
couldn't be more different from De la Rua's solemn, technocratic
style.
But it is his track record in San Luis that perhaps will be most
inspiring to Argentines, downtrodden by years of an economic slump.
His transformation of San Luis' economy, its low jobless rate and
reputation for good state schools has made it a magnet for Argentines
seeking a better life. Its population has grown from 220,000 in the
1980s to 350,000 today.
Popular ``el Adolfo'' might be, but squeaky clean he is not.
Opponents such as Juan Jose Ibarra, a lawmaker from De la Rua's
party, accused him last year of amassing a fortune of $22 million
while in office.
Together with brother Alberto, a former senator, Rodriguez Saa
controls San Luis' only daily paper, El Diario, and several radio and
cable television channels.
The governor also survived a sex scandal a decade ago, when a
videotape circulated showing him cavorting with a young woman.
Official investigations ruled the governor had been framed,
kidnapped, and the tape was a fake. The woman got a 12-year prison
sentence.
Of his supposed misdemeanors, ``el Adolfo'' says: ``As they can't
beat me at the ballot box, or criticize the extraordinary growth of
San Luis, they invent all this.''
*****
Rosalinda Mejia Barón
rosalinda@artcamp.com.mx
[Source: Washington Post, Tuesday, December 25, 2001,
"Argentina's Crisis, IMF's Fingerprints," by Mark Weisbrot.]
IMF TO BLAME FOR ARGENTINE MORATORIUM, DESPITE IMF'S MEDIA SPIN
CAMPAIGN. Mark Weisbrot of the Center for Economic Policy and
Research penned an oped in Tuesday's {Washington Post}, holding the
IMF's crazy policies responsible for the Argentine debt moratorium.
Weisbrot warned that the IMF and World Bank, in the aftermath of the
Asian and Russian debt crises of 1997-98, became masters in
media "spinning" and are once again trying to "spin" the media
coverage of the Argentine sovereign default to emerge
blameless. "Argentina's implosion has the IMF's fingerprints all
over it," Weisbrot wrote. He cited the IMF-mandated maintaining of
peso-dollar parity as one of the chief sources of the crisis, noting
that the overinflated value of the U.S. dollar has brought the United
States a $400 billion trade deficit.
Once Argentina accepted the medicine of a dollar peg, they became
addicted to IMF bail-out loans, to keep sufficient dollar reserves to
feed the foreign banks. And "as if that weren't enough, the Fund
made its loans conditional on a `zero-deficit' policy for the
Argentine government. But it is neither necesasry nor desirable for
a government ot balance its budget during a recession, when tax
revenues typically fall and social spending rises." Weisbrot noted
that this insane policy did serve one purpose: It enabled the IMF to
cast Argentina as "profligate spenders" and blame that spendthrift
behavior for the crisis.
While Weisbrot's solution to the IMF nonsense was a devaluation
of the peso, he did, nevertheless, end his oped with the observation
that "The people will need a government that is willing to break with
the IMF and pursue policies that put their own national interest
first." He ended by ominously quoting Ari Fleischer at Friday's
White House briefing, that the Bush Administration hopes Argentina
will still continue to work through the IMF to solve its problems.
Source: BBC, Tuesday, December 25, 2001.]
ARGENTINE INTERIM PRESIDENT RODRIGUEZ SAA LAUNCHES JOB-CREATION
PLAN. Following through on his pledge to create 1 million new jobs,
interim President Rodriguez Saa announced the first phase of the job-
creation program on Christmas Day. 100,000 new jobs will be created
immediately, largely in the armed forces and in public works
projects, including forest management, urban renovation and flood
control. The new jobs will be paid from the issuing of new bonds,
constituting the third, purely internal currency, the argentino.
While the new secretary of treasury, finance and public revenues,
Rodolfo Frigeri, announced that talks will begin "soon" with foreign
creditors, the government has already said that it will not devalue
the peso. A high-level delegation will soon go to Washington to meet
with officials of the IMF and the Bush Administration.
A press conference by President Rodriguez Saa could take place as
soon as Thursday, at which more details of the government's economic
plan will be released, according to BBC.
*****
Thursday December 27 9:26 PM ET
Crisis May Change IMF Rescue Policy
By HARRY DUNPHY, Associated Press Writer
WASHINGTON (AP) - The violent protests that brought down Argentina's
government last week may force the International Monetary Fund to re-
examine its multibillion-dollar rescue packages.
The IMF and its major shareholder, the United States, are beginning
to look at new options after loans and belt-tightening measures
failed to revive South America's second-largest economy.
Policy-makers also are considering whether the Washington-based
lending agency's warnings about the deteriorating situation in
Argentina were strong enough.
Did it wait too long to call a halt to lending that clearly was not
pulling the country out of a four-year recession and an 18 percent
joblessness rate? And what happens the next time a government goes
bankrupt and can't pay its debts?
Allan H. Meltzer, chairman of an advisory panel that delivered a
highly critical report on the IMF and its sister institution, the
World Bank, said the Argentine crisis should give the IMF a ``greater
sense of realism on what it can and cannot do.''
He said the lending institution needs to do a better job of crisis
prevention by getting governments ``to make (economic) reforms up
front and provide incentives to stay on course'' so that bailouts
become unnecessary.
C. Fred Bergsten, head of the International Institute of Economics, a
Washington think-tank, said there will be some soul searching at the
IMF over how it handled loans to Argentina.
``The IMF is often accused of being too tough in its economic
prescriptions but in this case it was too soft,'' he said, in going
ahead with an $8 billion installment to Argentina in August that
``clearly was a mistake.'' Last December, the IMF provided the
government with $14 billion.
The interim government of Adolfo Rodriguez Saa took office in Buenos
Aires Sunday and promptly announced the suspension of payments on
around $50 billion in debt held by foreigners - the biggest
government default ever.
The interim government, which will remain in power until elections
are held in early March, also announced plans Wednesday to create a
``third currency,'' which some analysts regard as the first step
toward a devaluation of the peso, pegged one-to-one with the dollar.
On Thursday, Rodriguez Saa told the Argentine television station
America that he hoped to start ``necessary'' talks, with the IMF in
January.
Rodriguez Saa said he had spoken by telephone Thursday with the IMF's
No. 2 official, Anne Krueger, and asked her for the organization's
understanding and patience.
He said the decision to suspend debt payments ``does not signal a
break with the world, but a request for understanding from the
world.''
Critics of the IMF say it pushed Argentina over the edge Dec. 5 by
denying it a $1.26 billion loan installment after budget targets were
not met by the fallen government of President Fernando de la Rua, who
resigned last week after violent protests over his economic policies.
His government kept asking the country's 36 million people for short-
term sacrifices in exchange for promises of long-term stability.
After de la Rua left office, Peru's Finance Minister, Pedro Pablo
Kuczynski, said, ``The IMF is partly to blame because it didn't sound
the alarm in time and then took a tough stance at a moment when
things got extremely difficult.''
There was also criticism of the Bush administration for remaining on
the sidelines and letting the IMF take the lead in the crisis. The
Clinton administration was actively engaged in managing bailouts in
the 1990s for Mexico, Russia and Asian countries.
Treasury Secretary Paul O'Neill has said it was up to the Argentine
government, working with the IMF, to come up with sound economic
policies. ``It's not something that can be imposed from outside,'' he
said.
Last week, the IMF's chief spokesman, Thomas Dawson, said discussions
with Argentina over a stalled $22 billion loan package would resume
with a new government. He also made it clear that no new money would
be released until Buenos Aires adopted acceptable economic policies.
``Our aim has been to help Argentina develop - on their own - a
program that can be sustained both economically and politically and
that remains our goal,'' he said.
For the future, the IMF is examining how it can change the way crises
are handled. A new approach was outlined last month by Anne Krueger,
the No. 2 official at the lending agency.
The plan would enable countries to get a type of ``bankruptcy
protection'' from their creditors if their debts become
unsustainable. The idea is similar to the Chapter 11 bankruptcy
protection available to private companies in the United States that
shields them from the threat of creditors' lawsuits while company
finances are reorganized.
*****
Friday December 28 11:47 AM ET
Argentina Must Get Monetary Policy in Order -Bush
WASHINGTON (Reuters) - Argentina must get its fiscal and monetary
policy in order and develop an economic plan, President Bush said on
Friday.
Bush said the United States would be prepared to provide technical
assistance to the crisis-hit country through the International
Monetary Fund, if the country asks for it.
``The key is for Argentina is to get its fiscal house in order and
get monetary policy in order and to develop a plan,'' Bush told
reporters in Crawford where he is vacationing at his ranch.
``The point we've made to the Argentine government, as well as to our
friends in the region, is that we'd be willing to help them develop a
plan if they ask for technical advice.''
*****
Saturday December 29 3:35 AM ET
Argentines Loot Congress in Protest Over Recession
By Brian Winter
BUENOS AIRES, Argentina (Reuters) - Argentine demonstrators clashed
with police outside the presidential palace and broke down the doors
of Congress on Saturday in anger at the new government's handling of
a deep recession barely a week after protests forced out a previous
president.
At least two police were injured as they used tear gas to break up
what had been a peaceful demonstration in which thousands of people
took to the streets to protest interim President Adolfo Rodriguez
Saa's decision to keep unpopular banking curbs and his appointment of
some officials widely seen as corrupt.
Some protesters pounded on the doors of the presidential palace,
while others forced their way into Congress, dragged out furniture
and set small fires that were quickly put out as general frustration
over a four-year recession boiled over.
Carlos Grosso, chief advisor to the Cabinet but suspected of
corruption during a stint last decade as mayor of Buenos Aires,
resigned after Argentina's decaying middle class flooded the streets
of the city to demand his departure.
About a dozen protesters hung from the metal bars shielding the
presidential palace doors, while others sprayed graffiti on its walls
before police in riot gear broke up the crowd, some of which then
broke windows at downtown banks and shops before apparently returning
home.
``These gangsters have got to go!'' yelled one woman on television as
she and thousands of others jumped up and down and beat pots and
pans, a symbolic way to express anger in Argentina as the recession
impoverishes thousands.
Television images showed a crowd of protesters push one police
officer to the ground and repeatedly kick him, but the unrest
appeared to be much less violent than the riots and looting that
killed 27 people last week and led Fernando de la Rua to resign as
president on Dec. 20.
State news agency Telam said two policemen had been injured during
the protests.
A very short honeymoon appeared to be over for Rodriguez Saa, who
suspended payments on part of Argentina's $132 billion debt after
being appointed by Congress on Sunday to serve until new elections in
March.
Argentina's third president this year has drawn fire for his proposal
for a new floating currency he hopes will kick-start consumer
spending but that some fear could quickly become worthless.
Some protesters also voiced anger over the Supreme Court's decision
on Friday to uphold curbs on cash withdrawals from banks, which De la
Rua's government implemented earlier this month to stop a run on the
beleaguered financial system.
The unpopular restrictions limiting Argentines to $1,000 in cash per
month from their bank accounts have further suffocated consumer
spending and led some to fear their life savings may be seized
outright by the cash-strapped government.
``I put my money in the bank for them to look after it, not to be
stolen,'' read one protester's sign.
BUSH APPEALS FOR STABILITY
Rodriguez Saa plans to create a currency called the ''argentino,''
which he hopes can ease a cash crunch but many fear risks massive
inflation since it will be backed only by government property like
the presidential palace.
In two weeks the ``argentino'' will be on the streets floating freely
alongside the peso, which has been pegged one-to-one with the dollar
for a decade -- although the government has not yet decided how many
it will mint.
President Bush urged Rodriguez Saa, who declared a moratorium on
Argentina's external debts when he took office last Sunday, to seek
``technical advice'' from Washington and consult the International
Monetary Fund about his plans.
``The key is for Argentina to get its fiscal house in order and get
monetary policy in order and to develop a plan,'' Bush said at his
Texas ranch on Friday. Washington would help ``if they ask us for
technical advice,'' he told reporters.
Bush was set to call Rodriguez Saa -- who will be in office until
March when new elections will be held -- later on Saturday, Argentine
officials said.
The United States is the largest shareholder in the IMF, which has
sent Argentina $22 billion of aid in the past year to try to avert
default, but withheld $1.3 billion this month when Argentina missed
stringent fiscal deficit targets.
Senior IMF official Anne Krueger spoke with Rodriguez Saa on Thursday
by telephone and the pair agreed their officials would meet in
January in the United States or Buenos Aires, after talks with the
previous government hit an impasse.
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