Jim Drysdale jimd48 at
Wed Dec 19 22:39:38 MST 2001

Thursday, 20 December, 2001, 05:12 GMT
Argentine economy minister resigns
Union members resorted to violence in Buenos Aires

The Argentine Economy Minister, Domingo Cavallo, has resigned amid mass
protests against the government's handling of the country's economic crisis.
Earlier, riot police fired tear gas to disperse tens of thousands of angry
protesters who had gathered outside the presidential palace in the capital
Buenos Aires.

Running battles broke out, with protesters throwing stones at the police,
and some rioters set fire to the economy ministry.
The latest protests began with people banging pots and pans and blowing car
horns, angry at the government's declaration of a state of emergency, which
went into effect at midnight local time (0300 GMT).

The government was responding to riots in which at least six people were
killed and dozens injured. Thousands of people went on the rampage,
ransacking shops and supermarkets in the worst civil unrest to grip
Argentina since 1989.

The BBC's Tom Gibb in Buenos Aires says most Argentines do not trust any of
their politicians and this appears to be a revolt against a whole political

Call for unity

Argentine President Fernando de la Rua blamed the riots on "enemies of the
republic" and called for political co-operation to tackle the crisis, in a
televised address to the nation.

Our correspondent says Mr Cavallo's resignation is very significant and it
will be very difficult for the government to carry on without him.

The emergency decree grants the government special powers to quell looting
and rioting and will last for 30 days.
It will allow the authorities to bring troops and other security forces onto
the streets. Public meetings are also banned.

The credit ratings agency Standard & Poor's has warned that Argentina could
default on its $132bn sovereign debt as early as next month.

"It is likely, though still not certain, that in the very short term,
Argentina will miss a payment on their debt," said the agency's managing
director of sovereign debt rating, John Chambers.

"That would be outright default."

A default would in effect cut off any lifeline from the International
Monetary Fund and send Argentina spiralling even deeper into a chaotic
economic crisis.

The government has acted swiftly to try to take control of the situation,
announcing it will start distributing free food.

The Labour Minister, José Gabriel Dumón, said the president had already
authorised the distribution of $7m worth of food, and he called on
Argentines to remain calm.

Running battles

Protests which began at the weekend escalated on Wednesday.
Dozens of stores were ransacked in Buenos Aires and the northern Entre Rios
province, while in the second-largest city, Cordoba, workers protesting at
government plans to reduce wages set fire to the town hall.

Looting of supermarkets was reported in at least half a dozen cities,
including Rosario, north of Buenos Aires, and Mendoza in the west.

In Santa Fe province, north of the capital, a 15-year-old boy was shot dead
by an unidentified gunman.

Elsewhere, a man was stabbed to death by a storeowner on the outskirts of
the capital, and a man and a woman were shot dead by shopkeepers trying to
protect their stores in the same area.

President under pressure

As the violence raged, the opposition-dominated Congress voted to repeal
special powers granted to Mr Cavallo earlier this year.

Similar unrest marked the last financial crisis in Argentina in 1989,
forcing the then president, Raul Alfonsin, to leave office early.

There is now growing pressure on President de la Rua to do the same.

The violence also resulted in the cancellation of the second-leg final of
the Copa Mercosur football competition between Argentina's San Lorenzo and
Flamengo of Brazil.

Argentina has been in a recession for almost four years, and unemployment
has risen to almost 20%.

Mr de la Rua and Mr Cavallo are desperately trying to avoid a devaluation or
a default on Argentina's foreign debt payments.

Earlier this month, the IMF refused Argentina a further $1.3bn in standby
loans, unless it balanced its budget for the year 2002.

Mr Cavallo has put forward budget proposals slashing government spending by
20% - but only by cutting public sector wages and reducing pension

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