ARGENTINA: Many Knots to Untie

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Dec 29 2001 (IPS) - Thousands jostled and shoved outside local government offices in Argentina Friday seeking job application forms, while others stood in long queues outside banks in over 30-degree heat, worried about their savings.

The installation of a new government somewhat eased the tension triggered by last week’s looting and protests and the resultant resignation of president Fernando de la Rúa. But the uncertainty continues to run high given the difficulties and complexities of overcoming the country’s acute economic and social crisis.

“The fantasy of an adjustment without costs could collapse very quickly, and tolerance is likely to be scarce,” political scientist Marcos Novaro, a professor at the University of Buenos Aires, told IPS.

Political analyst Rosendo Fraga with the Centre of Studies for the New Majority, a local think-tank, said Friday that the designation of interim President Adolfo Rodríguez Saá in the wake of rioting, looting and demonstrations that cost 28 lives “is not a solution to our problems, but just one more chapter in a long crisis.”

However, the new government, in the hands of the hitherto opposition Justicialista (Peronist) Party, which replaced de la Rúa’s centre-left alliance, is attempting to revive hopes that things will improve, and middle-class sectors are cautiously hopeful.

“The middle classes that have no interest in politics are hopeful, but they don’t believe in Santa Claus,” Alberto Aquino, a computer technician who took part in the Dec 19 pot-banging protests demanding de la Rúa’s resignation, told IPS.

Rodríguez Saá, who was named president last Sunday by Congress, announced the suspension of payments on Argentina’s 132 billion dollar foreign debt, the creation of one million jobs, the reintroduction of the minimum salary, and a repeal of reforms that made labour practices more flexible.

He also promised that there would be no devaluation, and that one peso would continue to be exchanged for one dollar, as has occurred since the currency board scheme was created in 1991. Lastly, a new currency will be created, to run parallel to the peso, but without being backed by foreign reserves.

Argentines are still awaiting the effects of the moratorium on foreign debt payments.

But in the meantime, the unemployed – nearly 19 percent of the economically active population – are flocking to offices where they can apply for the promised jobs, the new currency is depreciating before it has even been born, and the peso, which stood at par to the dollar for a decade, has lost 20 percent of its value in practice.

“The illusion that our problems will be solved by not paying the debt is nonsense, because it’s not as if Argentina had the money to meet its payments and now it will channel those funds into social plans,” said Novaro, an adviser to the centre-left Frente País Solidario (FREPASO) party, the junior partner in the de la Rúa administration.

“The reality is that the money is simply not there, and as revenues continue to fall, it won’t be there in the future either,” he added.

With respect to the debt, the decision to suspend payments will have costs, which will begin to be felt “as soon as our foreign creditors’ New York lawyers return from their Christmas holidays,” said Novaro.

Regarding the national currency, the lack of confidence is already reflected by the emergence of a black market.

Despite the fact that the foreign exchange houses remain closed as ordered by the Central Bank, dollars are selling at 1.40 pesos on the streets of Buenos Aires, and in illegal transactions in the Ezeiza international airport, near the capital, the price has soared to 1.90 pesos.

In Chile and Brazil no one wants Argentine pesos, and when they are accepted it is only with a 60 percent depreciation, while in Uruguay, the Argentine peso has devalued nearly 40 percent.

Over the past 48 hours, thousands of people massed outside local government buildings in low-income neighbourhoods on the outskirts of the caital in search of the “one million jobs” promised by Rodríguez Saá.

“We walked 70 blocks to get here, and this is total chaos,” a jobless, penniless woman complained to a Radio Mitre reporter after trekking to a local government office in Lanus, on the southside of Buenos Aires, to apply for a job.

But in fact, the office had not yet offered any jobs.

The crowds gathered outside public offices in poor neighbourhoods of the Greater Buenos Aires swelled Friday, and there were fights, screaming matches and shoving in the struggle to get application forms.

Rodríguez Saá will be in office for just three months, until he is replaced in early April by the winner of elections scheduled for Mar 3. The victor will serve out the remaining two years of de la Rúa’s term, until December 2003.

But the new caretaker administration is attempting to transmit a “take-charge” image and show that it is willing to dialogue with all sectors.

Hundreds of savings account-holders, workers and pensioners took part in incidents this week in banks in downtown Buenos Aires, where they stood in long lines in temperatures of over 30 degrees without even being able to complete all of their transactions.

Deposit holders cannot withdraw more than 1,000 pesos in cash per month, in a maximum of four withdrawals a week – a restriction announced by the government of de la Rúa in late November, aimed at stemming a run on banks.

But now people are also facing difficulties in withdrawing even small quantities of pesos or dollars, and in receiving their salaries and pensions.

“I came because my fixed installment of 18,000 dollars expired, and I wanted to put it in a savings account,” Marta Martínez, a retiree, told IPS outside the Banco Galicia. “I came early, with a book, and I was even attended. The transfer was completed, but when I went to remove 250 dollars, the system crashed.”

However, Martínez’s case was less serious than that of clients of the Banco Ciudad belonging to the Buenos Aires city government, who were unable to enter the bank after waiting in endless queues Thursday, because the employees went on strike.

On Friday the line was even longer, and many of those trying to visit the bank were judicial employees who were told they would be paid in public bonds.

“If they actually pay people in bonds, (the workers) will burn down the bank,” said the secretary-general of the union of judicial employees, Julio Piumato.

The legal workers are upset because judges and other officials were already paid last week.

Hundreds of protesters gathered outside the central courthouse to call for the resignation of the members of the Supreme Court, beating on pots and pans just like demonstrators did last week to topple the government.

Although the atmosphere was not as stormy as it was on Dec 19, when the social eruption triggered the resignation of economy minister Domingo Cavallo and brought the entire government tumbling down a day later, discontent and unrest remain strong.

The de la Rúa administration played the risky game of pushing the situation to the brink, to obtain the support and the funds that would make it possible to govern – until society realised that all efforts were in vain, because things were out of control, said Novaro.

The same popular reaction could occur “at any moment” if the Peronists fail to settle their internal divisions, which stood out nearly from the moment the party’s leaders decided on Rodríguez Saá as interim president.

Some leaders of the Justicialista Party want Rodríguez Saá’s mandate to last until 2003, while others demand compliance with the agreement approved by Congress to call elections in March.

“There is great concern among political circles over the political struggle, which is much more out of control than initially thought,” said Novaro.

“Some lawmakers are already warning that if Rodríguez Saá stays on (until 2003), they will not approve the bills he introduces, which could push the government into a vacuum like the one de la Rúa fell into, but more serious, because there would be no party left” to pick up the pieces, as the Peronists did after the collapse of de la Rúa’s coalition government.

Meanwhile, Argentina received advice from the United States on Friday. President George W.Bush, on vacation at his ranch in Texas, said his government was willing to work with Argentina’s new authorities through the International Monetary Fund. But he also recommended that Buenos Aires get its budget and monetary situation in order, and that it design a new economic plan.