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Friday, Dec. 21, 2001

"De la Rua is finished," political scientist Hector Marteau told United Press International.

At least 20 have been killed in the mayhem. Looting continued throughout the country Thursday, with thousands arrested and injured.

Officials from the country's two most powerful political parties - de la Rua's Radical party and the opposition Peronist party - discussed how power would be transferred.

The president's resignation occurred less than a day after the resignation of Economy Minister Domingo Cavallo.

"The economic plan is history," said Marteau. A new economic plan geared towards re-activating the country's economy after a four-year recession is expected to be inevitable. "This would likely include a devaluation," said Marteau.

Argentina's government has implemented a series of austerity measures to avoid a default on $132 billion debt and a currency devaluation. But the measures have only increased poverty and the unemployment rate, which has soared to 18 percent.

The president boarded the presidential helicopter and left the Casa Rosada, presidential office building, where protests had flared.

De la Rua had reached out to opposition politicians Thursday to create a coalition government, which was rejected.

Senators and congressman have been told to cancel travel plans as a special session of both houses was being prepared to deal with the day's events.

"The political times of the president of the nation are finished," said the Peronist lower house leader, Humberto Roggero.

Protests which centered around the country's Plaza de Mayo in front of the presidential office building, spilled out to Buenos Aires' main 9 de Julio Avenue and the Congress building.

'We Are Ruined'

"We are ruined," said one man in the midst of stealing a display of soda from a grocery store outside Buenos Aires.

He told United Press International he had never looted before. "I have been out of work for six months. I have three kids. I do not know what I can give them."

Sirens screamed across Buenos Aires as firemen rushed to extinguish burning cars abandoned in the streets, bank buildings, and other debris strewn on the ground. Black smoke rose over the city from the conflagrations. Paramedics lifted the injured into ambulances.

Downtown, squadrons of police officers on motorbikes fired tear gas and rubber bullets. Armed vehicles launched tear gas and water at protesters Thursday who bombarded riot police with stones and Molotav cocktails.

Barricades made of pillaged wooden office furniture and metal panels taken from construction sites dotted the streets of downtown Buenos Aires.

The protests follow weeks of growing social tensions that erupted on Wednesday when Argentines rioted and looted supermarkets throughout the country to protest the government's austerity measures.

The face of demonstrators changed Thursday as more protesters affiliated with the country's old left wing, union members and other groups opposed to the government and its economic policy joined in the action, said Marteau.

IMF: It's Not Our Fault

The International Monetary Fund said it was in no way responsible for Argentina's reeling on the verge of bankruptcy.

Thomas Dawson, IMF's external affairs director, said the agency "did not request any specific policy to be pursued by the Argentine authorities."

At a news briefing in Washington, Dawson said de la Rua's government independently came up with plans to boost the economy. Moreover, the IMF's lending program to the ailing country "had the highest degree of national ownership," and had not imposed itself upon Argentina unwillingly, he said.

Since December last year, the IMF has provided $22 billion, but the country still has at least $155 billion in public debt, more than five times its annual exports. While there had been concern at the beginning of this year that Argentina's financial woes could trigger a contagion effect and lead to an economic meltdown of the entire region, it became clear as the months progressed that Argentina's problems would be more or less contained within its own borders.

"The markets are showing that they are differentiating among [emerging] markets. And while the latest news from Argentina were unexpected, the markets have been quite able to deal with them," Dawson said.

That view means little to Argentines, who have seen a government resort to desperate measures to stave off financial collapse. Unemployment has soared to 18 percent after a four-year recession. Recently implemented banking measures do not allow Argentines to withdraw more than $1,000 a month, fanning fears the government could seize bank savings in a desperate effort to avoid defaulting on its debt.

Last week, for example, the government raided pension funds to meet $700 million in debt obligations that came due Friday.

With Christmas around the corner and even more austerity measures in sight, social tensions exploded Wednesday as Argentines rioted and looted supermarkets throughout the country, forcing the government to declare a state of siege to get the situation under control.

Labor officials said the reason for the rioting and looting was clear and urged the government to address the country's social problems. "There are millions and millions of Argentines who are starving," the head of the leading CGT union, Rodolfo Daer, said on local television.

Nevertheless, the government anticipates slashing the budget by $9 billion next year to eliminate deficit spending.

The view that Argentina's problem would be contained within the country led the IMF to stop providing any additional financing to the troubled nation, as the agency refused to provide $1.3 billion last month that Cavallo had depended upon to keep the country afloat.

Living on $4 a Day

Since his appointment in March, Cavallo had endeavored to cut back on public spending but also insisted on pegging the peso to the U.S. dollar, a policy he introduced when he previously held the same post from 1991 to 1996 under President Carlos Menem. The strong dollar made Argentine exports expensive and uncompetitive in the global market, however, and the number of people living on less than $4 a day has climbed to more than 14 million.

"Argentina faces a very difficult situation, and there is a need for the new authorities that will come in to search for a new economic program. The IMF stands ready to work with the new government and its decisions," Dawson said.

Meanwhile, the United States has said it would let the IMF take the lead in directing Argentina on a firmer path for recovery, with U.S. Treasury Secretary Paul O'Neill stating late Wednesday he hoped the IMF could help the country toward sustainable growth. White House spokesman Ari Fleischer echoed those sentiments Thursday. Copyright 2001 by United Press International.

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