ARGENTINA: Nothing Will be the Same, says New President

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 23 2001 (IPS) - Argentina’s new caretaker president, Adolfo Rodríguez Saá, designated by Congress for a three-month term, announced a moratorium on foreign debt payments Sunday, along with measures to create jobs and tackle the acute social crisis.

“We’re going to take the bull by the horns,” Rodríguez Saá, 54, told the plenary session of Congress, which also scheduled presidential elections for Mar 3.

“We’re going to suspend foreign debt payments…and all of the money earmarked in the budget for those payments will go towards plans for the creation of jobs and social progress,” added the interim president, who was serving as governor of the western province of San Luis.

The senators and deputies present in the legislative assembly, which met through Saturday night until 10:00 AM local time (13:00 GMT) Sunday, gave Rodríguez Saá, of the Justicialista (Peronist) Party, a standing ovation.

Rodríguez Saá will be replaced in late March by whoever is elected on Mar 3 to serve out the remaining two years of the four- year term of Fernando de la Rúa, who resigned Thursday, politically isolated and brought to bay by social and economic chaos.

The government programme the new president presented for his brief three months in office will entail an abrupt shift from de la Rúa’s policies.

“More dangerous than not paying the debt is for Argentines to continue dying in the streets of hunger, poverty and marginalisation,” the new president told reporters after addressing Congress.

Rodríguez Saá said his decision did not signify “repudiation” of the foreign debt, but was merely a measure he was forced to take given the gravity of Argentina’s crisis. He also said he would keep Congress informed of all details regarding the country’s 132 billion dollar public debt.

In the short-term, the suspension of payments will affect debt servicing of 1.4 billion dollars that fall due in December and January.

Rodríguez Saá replaced Senate president Ramón Puerta, who served as acting president until Sunday.

The new president, whose designation resolves the power vacuum left by de la Rúa, announced that he would not modify Argentina’s currency-board scheme, or “convertibility law,” that has pegged the peso to the dollar for the past decade, which many analysts had already given up for dead.

But he also said that a third currency would be adopted to stand alongside the peso and the dollar, aimed at rekindling consumption. Marcelo Bonelli, a columnist with the Buenos Aires daily Clarín, said four billion dollars could be issued in the third currency, to swell the current money supply of 15 billion pesos.

Rodríguez Saá announced a plan to create one million jobs, food distribution programmes, and indemnification for owners of businesses that were looted in the tragic events of the past week, which led to de la Ruá’s resignation.

The new president will adopt drastic austerity measures within his own administration. An initiative he plans to immediately send to Congress will limit executive branch salaries to a maximum of 3,000 dollars a month. In addition, all of the cars and airplanes belonging to the executive branch will be sold.

The president’s salary currently stands at 4,280 dollars a month, although the cabinet ministers earn over 10,000 dollars. Last July the government announced that no executive official could earn more than 6,800 dollars a month, although the new rule was evaded by payments of special benefits.

It remains to be seen whether the members of parliament will join in the new austerity policy. Senators now earn around 10,000 dollars a month between salaries and travel expenses.

“As of today, nothing will be the same,” said the interim president, who added that capitalism by itself “cannot provide answers to unemployment, hunger and social exclusion.”

The anarchy that gripped Argentina, Latin America’s third largest economy, this week, leaving 27 dead in looting incidents or as the result of a brutal police crackdown on street demonstrations, marked a watershed in the history of this country of 36 million.

The downfall of the government of de la Rúa and of his powerful economy minister Domingo Cavallo, who resigned Wednesday, brought the end of policies aimed at meeting the demands of the international financial market. That was confirmed by the new president’s emergency plan.

Senator Rodolfo Terragno of the centrist Radical Civic Union (UCR), which was pushed into the opposition by de la Rúa’s resignation, declared his support for the cessation of payments, which he said was mere recognition of an already existing situation.

Terragno said he had recommended that de la Rúa take that step and reschedule Argentina’s debt servicing payments, as had UCR Senator Raúl Alfonsín, who served as president from 1983 to 1989.

After their all-night assembly, Argentina’s lawmakers approved, by 169 to 138 votes, the Justicialista (Peronist) Party’s proposal to designate Rodríguez Saá as interim president. The initiative also scheduled elections for Mar 3, in which a president will be chosen to finish out the rest of de la Rua’s term, until December 2003.

The proposal set forth by the Justicialista Party, which holds a majority in the Senate and the largest minority in the Chamber of Deputies, won the backing of small parties.

But the opposition, represented by the UCR and centre-left parties, voted against the proposal, arguing that Argentine law stipulates that the president designated by the full legislative assembly should complete the four-year term that ends in 2003.

They also opposed the “ley de lemas”, a law that will govern the March elections, under which parties can field more than one candidate, whose votes are then added up. The winner is the candidate who takes the greatest number of votes within the party that receives the strongest support at the polls.

The Peronists opted for that system in order to avoid primaries that could seriously divide their party.

Opinion polls indicate that a majority of respondents back the decision to hold elections on Mar 3 for a president who will stay in office until 2003. The Centre of Studies on Public Opinion, a local polling firm, released the results of a survey Sunday in which 75.5 percent of those interviewed said the “right” thing was for voters to elect their future president.

But the opposition believes that given the magnitude of the crisis, it would be dangerous to apply the “ley de lemas”, because splitting up the votes between multiple candidates of the winning party could lead to a government with a weak mandate. They also argue that there is no time to lose in organising elections.

Four Peronist governors and one senator have already informally announced their intention to run in the Mar 3 elections.

According to the Centre of Studies on Public Opinion, parliamentary Deputy Elisa Carrió, a UCR dissident, is the poll- favourite.

However, the Peronists would take the largest number of votes as a party. Carrió, who founded the Argentina for a Republic of Equals (ARI) party, is in favour of elections, but opposed to the “ley de lemas”, which she considers “unconstitutional.”

Carrió, who has already launched her candidacy, delivered one of the fieriest speeches to the legislative assembly Saturday night.

Rodríguez Saá ruled out devaluation. Economic analysts said Sunday that privatised firms and banks had applied heavy pressure in the past few days against that measure, which was being studied by a technical team set up the Justicialista Party after de la Rúa stepped down.

But the Argentine Industrial Union – the biggest business association – and a number of economists believe the lifting of the dollar peg is the only way to allow economic growth to resume, after 41 months of recession.

Brazilian President Fernando Henrique Cardoso had also recommended a floating currency for Argentina, as a way of bringing about convergence with Brazil’s exchange rate policy. Argentina’s crisis led to a suspension of a summit of Southern Common Market (Mercosur) trade bloc leaders Friday in Montevideo.

Cardoso and presidents Luis González Macchi of Paraguay and Jorge Batlle of Uruguay announced in Montevideo that they would travel to Buenos Aires shortly to personally express Mercosur’s support for Argentina’s new government.

Rodríguez Saá governed the rural Andean province of San Luis, population 355,000, since 1983, achieving results that made the province one of the few shining exceptions among regional governments with their backs against the wall.

He kept unemployment down to just seven percent, compared to a national average of 18.3 percent. And while most provinces fought hard to ward off bankruptcy, the San Luis provincial budget posted a surplus, while it had millions of dollars in reserves instead of debts.

Rodríguez Saá, whose expressive demeanour and populist, dynamic governing style contrasts sharply with the dry, somber manner of de la Rúa, who was criticised as too slow when it came to making crucial decisions, arranged public works in San Luis, helping to ensure employment and economic activity.

The interim president will have a smaller cabinet. Social ministries, like those of education and social development, have disappeared, and their jobs will be transferred to provincial governments.

Argentina’s protracted crisis has driven one-third of the population below the poverty line.