By Marcela Valente
BUENOS AIRES, Oct 26 2004 (IPS)

In a legal decision that put a definitive end to thousands of lawsuits arising from Argentina’s late 2001 financial collapse, the Supreme Court ruled Tuesday that depositors of dollars whose savings have been trapped since then by the freeze on bank accounts can be paid back in pesos.

In response to the verdict, a small group of account-holders staged a protest in the corridors of the Supreme Court, where they broke windows and set fire to papers. At least eight demonstrators were injured by broken glass, blows from the police, and tear gas.

"We’re not going to let this just stand. We will continue fighting, and take this to the Inter-American Court on Human Rights," Carlos Báez Silva, with the Savers’ Association of the Argentine Republic (AARA), told IPS.

His group represents a portion of the account-holders whose savings in dollars were affected by the freeze on bank accounts declared in early December 2001.

The Supreme Court decision affects around 11,000 depositors whose savings in public and private banks were in dollars and who took legal action invoking their right to recuperate their money in the currency in which it was deposited.

At the time the deposits were made, the Argentine peso was pegged to the dollar under the convertibility, or currency board, system, which was in place for over a decade until it was scrapped in early 2002 by the interim government of Eduardo Duhalde. The value of the peso immediately plunged.

The ruling, however, is a relief for the centre-left government of President Néstor Kirchner as it gets ready to begin restructuring its huge debt to private creditors, which Argentina defaulted on in late December 2001.

The Supreme Court approved the conversion of fixed-term savings in dollars to pesos – known as "pesification" – by five to one. The president of the Court, Enrique Petracchi, abstained from voting as his savings were caught in the freeze on bank accounts when the crisis broke out.

The decision runs counter to a previous Court ruling handed down prior to the start of a purge of the Supreme Court that Kirchner began to push for shortly after he took office in May 2003.

In that verdict, the Court ruled against the "pesification" of a 247-million-dollar deposit belonging to the government of the western province of San Luis.

But since then, three members of the Court resigned when they were facing imminent impeachment by Congress for "improper conduct", and a fourth magistrate was removed.

All four had been appointed by former president Carlos Menem (1989-1999) and were being investigated for supposedly biased rulings in favour of that administration.

The early December 2001 freeze on bank accounts or "corralito" (which literally means playpen) was an attempt to stem the massive withdrawal of deposits from banks in Argentina which contributed, along with widespread protests and rioting, to the fall of the government of Fernando de la Rúa on Dec. 20.

Within a few months after the government of caretaker president Duhalde devalued the peso, its value crashed to over three to the dollar.

Duhalde decided that deposits in dollars should be returned in pesos, at a rate of 2.13 to the dollar. He also decreed that those who held loans in dollars could pay them back at the old "convertibility" rate, under which the peso was equivalent to the dollar.

But the banks protested over that difference and demanded compensation, which the state agreed to pay.

In the meantime, thousands of savers brought lawsuits demanding that their deposits – in some cases, their life savings – be paid back in dollars, instead of pesos.

But although lower courts had ruled that pesification was a violation of the right to private property and unconstitutional, the Supreme Court voted in the end to support the freeze on bank accounts and put an end to the lawsuits.

Referring to the freeze, which was an emergency decision taken in the face of financial crisis, Tuesday’s verdict stated that "private property is a secondary consideration when the common good is at stake".

The justices said the savers’ demand to be paid back in dollars was "an enormous fallacy" because "in Argentina, no one earns in dollars."

In addition, they said the account-holders had deposited their money in dollars to ensure the stability of their savings, and that it had not been demonstrated that the return of the money in pesos at a rate of 2.13 to the dollar "will not compensate the buying power of their deposits."

Further, the ruling states that "no one emerged unscathed" from the late 2001 crisis, and thus there can be no "privileged class" that benefits from the immediate return of their deposits in dollars.

In accordance with the verdict, a saver who in December 2001 had a fixed-term deposit of 100,000 dollars, worth 100,000 pesos at the time, will now receive 210,000 pesos.

But the depositors argue that if their savings had been returned to them in dollars, they would now be worth 298,000 pesos, based on the current exchange rate.

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