ARGENTINA: President Complains of Attempts at ‘Destabilisation’

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Jan 11 2002 (IPS) - Argentine President Eduardo Duhalde accused Thursday factions opposed to his emergency economic decisions, including the devaluation of the peso, of attempting to destabilise his government with unfounded rumours.

“We are going to face many difficulties, because there are sectors that are not happy with our change of direction, and will try to destabilise (the government), saying Duhalde wants to leave, and that there are ministers who want to resign,” the president told a meeting of non-governmental organisations.

“But I am very sure about what I am doing,” he underlined.

Duhalde, who became caretaker president on Jan 2 to govern until December 2003, was alluding to rumours that he would be replaced by the governor of Cordoba, José Manuel de la Sota, who is a member of his own Justicialista (Peronist) Party, and to a supposed threat from Economy Minister Jorge Remes Lenicov that he would resign.

Such talk in the midst of an acute economic and political crisis that Congress attempted to overcome by designating Duhalde as the fifth president in just two weeks came as a shock to the public.

The unrest caused by the rumours was aggravated by the fact that they began to circulate Wednesday, the day the government decided to postpone its decision to allow foreign exchange houses, which have been closed since Dec 21, to open. It is still unclear whether they will open Friday.

The economic emergency programme announced Sunday, after the 1992 convertibility law that pegged the peso to the dollar was overturned, creates an exchange rate of 1.40 pesos to the dollar for official transactions, and a parallel, free-floating rate.

The accusations issued by Duhalde, who did not mention names and asked his ministers to also refrain from doing so, were clearly directed at counteracting the possible impact of statements made by former president Carlos Menem (1989-99) on a visit to Chile.

Menem called Duhalde “inept,” and said the economic measures he was implementing were “abominable” and would drive the country to ruin.

The former president has remarked on several occasions that he is in favour of dollarising the economy. During the administration of Fernando de la Rúa, who was forced by rioting and protests to resign on Dec 20 after just two years in office, he recommended that Argentines “buy dollars” to prepare for a change in monetary policy in that direction.

He thus attempted to make a final defence of the model based on the currency peg. It was Menem who implemented the convertibility law and sold off the country’s public enterprises, whose new owners are now at loggerheads with the Duhalde administration due to the losses they will suffer as a result of the change of system.

Duhalde’s decision to devalue and to switch the rates of public services from dollars to pesos dealt a blow to the privatised companies, which every year have transferred their earnings abroad in dollars.

Their remittances will be significantly diminished by the nearly 30 percent depreciation of the peso.

Meanwhile, the naming of Ginés González García as Argentina’s new health minister Thursday could open a new front of conflict, this time with the pharmaceutical industry.

González García was the author of a Buenos Aires provincial law that permits doctors to prescribe generic drugs, in order for patients, with the advice of pharmacists, to choose the most affordable brandname.

Oil companies are also complaining these days. A representative of the sector and governors José Luis Luzurume of Santa Cruz, and Jorge Sobisch of Neuquen, two southern provinces with a large number of oilwells, met Wednesday with Duhalde to hash out a cooperation arrangement.

However, there were contradictions Thursday regarding the decisions reached at that meeting.

Luzurume and Sobisch said the president had asked the oil companies to advance payment to the state of one to 1.4 billion dollars to cover a new royalty on oil exports, in order to ease the crisis in the banking sector.

But that announcement was refuted Thursday by cabinet chief Jorge Capitanich, who remarked that “the government will not agree to swap with the oil companies the royalties for a loan, because the country cannot fall any further into debt.

“We do not approve of any kind of financial operation for the public sector; what we want is straightforward cooperation,” he added.

Capitanich pointed out that the economic emergency plan approved by Congress on Sunday authorises the executive branch to charge oil companies royalties over the next five years.

“We aim to enforce that law with the determination that characterises President Duhalde, in the framework of an alliance with the productive sector,” he emphasised.

With the money taken in through the new royalties on oil exports, the government will attempt to assist the banks, which have been hit hard by the shift in economic policy.

However, the amount needed by the banks to face up to the costs of the new measures is significantly higher than the money that is to come from the oil companies.

The new law stipulates that mortgages of up to 100,000 dollars, credits for home repairs or remodeling below 30,000 dollars, and personal loans of less than 10,000 dollars are to be converted into Argentine pesos at the old currency rate of one-dollar-one- peso.

But along with that measure aimed at protecting indebted individuals from the cost of the devaluation, Duhalde also decided that the savings that banks were ordered by the government to hold on to since Dec 3 would be released in the same currency in which they were deposited.

To comply with that decision, the banks will need assistance.

On Thursday, the government announced a timetable for the release of savers’ deposits, which will begin in March with accounts holding less than 10,000 pesos, and will end with fixed- term deposits over 30,000 dollars, with the money to be released in installments starting in September 2003.

The deposits will be released in four to 24 quotas, depending on the amount, at seven percent interest in the case of deposits in pesos, and two percent for dollars.

Employees and pensioners, who were required to open savings accounts in which their pensions or paychecks are deposited, will be able to withdraw up to 1,500 pesos a month at one time, while the holders of simple savings accounts will be allowed to remove up to 300 pesos a week.