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One more President

Print edition : Feb 02, 2002 T+T-

Change of leadership fails to resolve the economic crisis in Argentina and quell the public anger against the neo-liberal policies of the government.

SOON after taking office in early January, Argentinian President Eduardo Duhalde warned his countrymen to be prepared for a long and difficult period ahead. Duhalde, a populist, is the second leader from the Peronist Party to become President within a span of two weeks. He succeeded Adolfo Rodriguez Saa, who quit in the face of mounting public protests and pressure from within his own party.

Saa belonged to the Peronist faction that was in favour of free-market policies. There were indications that he would, under pressure from international banking institutions, institute tough austerity measures. People were angry with Saa's decision to continue with his predecessor's move of limiting withdrawals from banks to $250 an individual, once every fortnight. Domingo Cavallo, the Finance Minister at the time, said that the restrictions were necessary but did not explain how ordinary people would be able to pay their electricity and gas bills.

Unemployment is rampant in Argentina, and many of those who are lucky to be employed have not received salaries for months. But what finally sealed Saa's fate was his insistence on a two-year term with broad powers. The Peronist Party refused to back him on this issue. The crisis was so deep that crowds rampaged through the building that houses the Argentinian Congress. Bereft of political support and faced with mounting public anger, Saa put in his papers. Senate President Ramon Puerta, who was next in line to take over as President, opted out of the top job by resigning from his post. Eduardo Camano, a Peronist and the head of the Lower House, was appointed caretaker President for 48 hours.

After Camano, Duhalde was appointed President for a couple of months. The plan was to hold elections in the middle of 2002. Duhalde was initially reluctant to be in office for such a short tenure and signalled that he would take up the difficult job only if he was allowed to continue for a fixed term of two years. The tenure of de la Rua, the Radical Party leader who had resigned as President following public protests, was supposed to end only in December 2003. The Radical Party also swung to the view that Duhalde needed a two-year mandate to rule effectively. The two major parties - the Peronists and the Radicals - realised that it was not correct to go to the people when the country was in turmoil.

If a similar situation had prevailed in the 1970s, the Army, which had a penchant for involvement in civilian affairs, would have stepped in as a matter of course. But after the military fiasco in the Falklands and the revelations of gross human rights abuses and killings during the long period of military rule in the 1970s and 1980s, the Army's credibility has perhaps been damaged permanently.

The Radicals and the Peronists also do not have credibility. During the two terms of Carlos Menem and the term of de la Rua, the Argentinian government implemented neo-liberal economic strategies with a vengeance. Before the country descended into chaos, almost all public services, including the oil companies and the national airline, were privatised. Now with a colossal national debt and massive capital flight, the state has nothing to fall back on.

Under Menem and de la Rua, Argentina blindly implemented the financial and political blueprint drawn up by Washington. One of the first things Menem did after returning to power in 1995 was to withdraw from the Non-Aligned Movement (NAM). He was the loudest cheerleader of the United States in Latin America. Washington duly rewarded Argentina with the status of a non-NATO (North Atlantic Treaty Organisation) ally, a status enjoyed by countries such as Egypt, South Korea and Israel. Now the Bush administration has turned its back on the country by stating that no new international measures will be taken to bail it out. President George Bush in fact warned the new Argentinian government that it should not take any "short-cuts" or "half measures" to resolve the crisis. Public anger is now focussed not only on the corrupt elite in Argentina but also on the U.S.

The anti-American mood is reflected in some of the statements made by Duhalde. Argentina, he said, would try to deepen relations within Latin America and "confront" the region's domination by the industrialised world. He went a step further and issued a call for a common front against the U.S' "protectionist" trade barriers against agricultural exports from Latin America. In what is described as a radical shift from Argentina's pro-American stance, Duhalde called for the creation of a common currency with neighbouring Brazil. Indications are that the two traditional rivals in the region would close ranks and demand changes in America's economic policies towards the region. Brazil is the biggest economy in Latin America and Argentina ranks third. Their tough stance threatens to derail the Bush administration's plan to establish a free trade area of the Americas, extending from the tip of Argentina to Alaska.

Duhalde has concentrated on maintaining political stability. Although he has cautioned his countrymen that Argentina is only "one step away from anarchy", widespread protests continue. Under the banner of left-wing groups, the unemployed stage demonstrations, which have on occasion turned violent. The focus of public ire is the freeze on bank deposits, which has prevented millions of people from withdrawing their savings. Foreign banks are the main target. Mobs have destroyed their computers and teller machines. In the middle of January, thousands of protesters marched on the Presidential Palace, demanding food, jobs and an end to the freeze on withdrawals from banks.

Duhalde has taken some important decisions. The government has announced that the Argentinian peso will no longer be pegged to the U.S. dollar, after defaulting on part of the country's debt of $142 billion. After the default, the peso stood effectively devalued by about 40 per cent, adding to the woes of ordinary people. Duhalde has promised to allow full withdrawals from bank deposits in dollars. But he has not specified a time-frame.

Duhalde is trying to shift the cost of the devaluation to foreign banks and privatised utilities by not allowing them to raise rates. He has promised to generate employment by promoting domestic industries, which were at a great disadvantage during the neo-liberal phase of the 1990s. Duhalde said he would provide the same kind of protection for domestic industry from foreign imports as "any other successful country in the world now".

Among the big losers are Spanish companies, which had invested over $40 billion in Argentina over the last decade. When the government was on a privatisation spree, they made a killing. Now Spanish Prime Minister Jose Aznar and his predecessor Felipe Gonzales are lobbying with Buenos Aires on their behalf. The two leaders have asked the Argentinian government to implement a foreign investor-friendly programme being recommended by the International Monetary Fund.

The influential business elite is clamouring for the President's ouster. The progressive forces in the country are too dispersed to fill the political space that exists as a result of the current crisis. In Argentina, there are no popular leaders of the stature of Hugo Chavez of Venezuela and Luiz Inacio da Silva of Brazil.

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