Crying For Argentina
Sunday December 23 6:41 PM ET 

Argentina's New Chief Stops Payments
By EDUARDO GALLARDO, Associated Press Writer 

BUENOS AIRES, Argentina (AP) - Adolfo Rodriguez Saa, a provincial 
governor, was inaugurated as Argentina's interim president Sunday, 
saying he will suspend payment of a crushing foreign debt - a move 
that risks the biggest sovereign default in history. 

The announcement by the 54-year-old leader, who was sworn in days 
after deadly riots drove predecessor Fernando de la Rua from power, 
prompted a rousing ovation from Congress. Minutes earlier, it had 
voted 169-38 to appoint him as caretaker president following night-
long debate and wrangling. 

Rushing to fill the term vacated last week by de la Rua during a 
popular rebellion, Rodriguez Saa is to rule pending the results of a 
special election on March 3. 

``Let's take the bull by the horns. We are going to talk about the 
foreign debt,'' Rodriguez Saa said in his inaugural address. ``The 
Argentine state will suspend the payment of the foreign debt.'' 

``All the resources allocated in the budget to pay the foreign debt 
will be dedicated instead to create jobs while debt payment remains 
suspended,'' Rodriguez Saa added. ``The social emergency is 
Argentina's most serious problem.'' 

``Ar-gen-TI-na, Ar-gen-TI-na!'' legislators and the public chanted as 
he spoke. 

But the new president made clear that suspending payments on the $132 
billion debt does not mean repudiating it and that his interim 
government will seek an early dialogue with creditors. 

``Argentina's situation is very difficult. I ask for help,'' 
Rodriguez Saa said three days after deadly rioting and looting forced 
de la Rua to resign. Twenty-seven people were killed and hundreds 
injured. 

Rodriguez Saa said his priority would be to help pull Argentina out 
of a four-year recession that has left nearly 40 percent of the 36 
million population in poverty. Some 18 percent are out of a job. 

The measures announced by Rodriguez Saa mark a radical shift, 
bringing the country closer to an all-out default on the foreign debt 
and threatening to plunge Argentina back into inflationary chaos. 

He ruled out a devaluation and dismissed calls to replace Argentina's 
currency, the peso, with the U.S. dollar. Instead, he announced 
without elaboration plans to introduce a new ``third currency.'' 

He also vowed to distribute food among poor families and to create 1 
million jobs. ``Wherever an Argentine family exists without a job, 
that will be our priority,'' he said. 

Rodriguez Saa's announcement on suspension of the foreign debt 
payment won widespread support, especially from his Peronist Party, 
now returning to power after two years in opposition. 

Support also came from ordinary Argentines, who often complained they 
were paying a stiff price for de la Rua's policies and the 
restrictions he imposed in order to pay the debt. 

The restrictions including a partial freeze on access to bank 
accounts - a measure expected to be lifted soon. 

``They did the right thing in not paying foreign debt now,'' said 
Francisco Cordoba, a deliveryman. ``We've got to get things in order. 
There is a lot of poverty.'' 

But there was some criticism, especially from conservative 
economists. 

Manuel Solanet of the Foundation for Latin American Research called 
the move ``typical Peronist demagoguery and populism.'' Jorge Avila 
of the Center for Currency Studies warned that ``reality will crush 
the president. In a few weeks he will have to face the United States 
and foreign creditors. He will quickly loose his optimism.'' 

Rodriguez Saa easily won the Peronist nomination to become president, 
but the debate was heated over the terms of his brief presidency. He 
took over from Senate leader Ramon Puerta, who served as acting 
president for two days after de la Rua's departure. 

Seeking popular support, Rodriguez Saa raised cheers with a pledge to 
seek better salaries for workers while cutting back those of 
politicians, and selling airplanes at the disposal of the president, 
including one known as Tango One. No politician, he said, will earn 
more than $3,000 a month. 

The economy will not be his only problem. Politics will also be 
complicated as a campaign develops to elect his successor, who will 
finish out the two years left in de la Rua's term. 

After his inauguration, Rodriguez Saa swore in his cabinet members. 
He eliminated seven of 11 ministerial jobs, leaving them in the hands 
of deputy ministers. 

*****

Sunday December 23 4:04 PM ET 
Argentina Leader Known As 'El Adolfo'
By TONY SMITH, Associated Press Writer 

BUENOS AIRES, Argentina - Adolfo Rodriguez Saa, Argentina's third 
president in three days, is anything but a short-lived politician. 

``El Adolfo,'' as he is known, is the country's longest-serving 
governor, having ruled with a populist style for the last 18 years. 

In that time, he has transformed his rural, landlocked province of 
San Luis, bringing in modern industry to replace aging mines and 
building 30,000 houses for the poor, along with reliable water 
supplies and highways. 

With his easy smile and seemingly permanent suntan, Rodriguez Saa, 
54, hasn't lost a provincial election since 1983. In October, he won 
more than 67 percent of the vote, the highest approval rating for an 
Argentine governor. 

Rodriguez Saa was chosen interim president by the Peronist Party, 
which was left in control of Congress after President Fernando de la 
Rua resigned Thursday, forced out by violent street protests from 
Argentines fed up with a four-year recession. 

Peronist Senate leader Ramon Puerta served as caretaker for 48 hours 
until Congress approved Rodriguez Saa as interim president. 

Rodriguez Saa now must guide the economically troubled country until 
an election in March. His first move after being sworn in Sunday was 
to suspend payment on the country's $132 billion debt, saying he 
would use the money to create jobs and fund social programs. 

The decision is certain to shut off South America's second-largest 
economy from international credit for years to come, but will help 
the cash-hungry caretaker government confront a devastating domestic 
crisis in the short term. 

Born in San Luis on July 25, 1947, ``el Adolfo'' is married with five 
children. He started his political career as a provincial deputy for 
the Peronists. 

A passionate bridge player, he loves order and logic, and, his 
friends say, can be obsessive about control. He once said there are 
two types of politicians: optimists such as Franklin D. Roosevelt and 
himself, and pessimists such as De la Rua. 

``We are governed by a generation of old-timers,'' he was quoted as 
saying Saturday in daily Clarin. ``Argentina's next president should 
be under 40, because this generation is ruined.'' 

With his colorful rhetoric and populist touch, Rodriguez Saa's image 
couldn't be more different from De la Rua's solemn, technocratic 
style. 

But it is his track record in San Luis that perhaps will be most 
inspiring to Argentines, downtrodden by years of an economic slump. 

His transformation of San Luis' economy, its low jobless rate and 
reputation for good state schools has made it a magnet for Argentines 
seeking a better life. Its population has grown from 220,000 in the 
1980s to 350,000 today. 

Popular ``el Adolfo'' might be, but squeaky clean he is not. 

Opponents such as Juan Jose Ibarra, a lawmaker from De la Rua's 
party, accused him last year of amassing a fortune of $22 million 
while in office. 

Together with brother Alberto, a former senator, Rodriguez Saa 
controls San Luis' only daily paper, El Diario, and several radio and 
cable television channels. 

The governor also survived a sex scandal a decade ago, when a 
videotape circulated showing him cavorting with a young woman. 

Official investigations ruled the governor had been framed, 
kidnapped, and the tape was a fake. The woman got a 12-year prison 
sentence. 

Of his supposed misdemeanors, ``el Adolfo'' says: ``As they can't 
beat me at the ballot box, or criticize the extraordinary growth of 
San Luis, they invent all this.'' 

*****

Rosalinda Mejia Barón
rosalinda@artcamp.com.mx

[Source: Washington Post, Tuesday, December 25, 2001,
"Argentina's Crisis, IMF's Fingerprints," by Mark Weisbrot.]

    IMF TO BLAME FOR ARGENTINE MORATORIUM, DESPITE IMF'S MEDIA SPIN 
CAMPAIGN.  Mark Weisbrot of the Center for Economic Policy and 
Research penned an oped in Tuesday's {Washington Post}, holding the 
IMF's crazy policies responsible for the Argentine debt moratorium.  
Weisbrot warned that the IMF and World Bank, in the aftermath of the 
Asian and Russian debt crises of 1997-98, became masters in 
media "spinning" and are once again trying to "spin" the media 
coverage of the Argentine sovereign default to emerge 
blameless.  "Argentina's implosion has the IMF's fingerprints all 
over it," Weisbrot wrote.  He cited the IMF-mandated maintaining of 
peso-dollar parity as one of the chief sources of the crisis, noting 
that the overinflated value of the U.S. dollar has brought the United 
States a $400 billion trade deficit.

    Once Argentina accepted the medicine of a dollar peg, they became 
addicted to IMF bail-out loans, to keep sufficient dollar reserves to 
feed the foreign banks.  And "as if that weren't enough, the Fund 
made its loans conditional on a `zero-deficit' policy for the 
Argentine government.  But it is neither necesasry nor desirable for 
a government ot balance its budget during a recession, when tax 
revenues typically fall and social spending rises."  Weisbrot noted 
that this insane policy did serve one purpose:  It enabled the IMF to 
cast Argentina as "profligate spenders" and blame that spendthrift 
behavior for the crisis.

    While Weisbrot's solution to the IMF nonsense was a devaluation 
of the peso, he did, nevertheless, end his oped with the observation 
that "The people will need a government that is willing to break with 
the IMF and pursue policies that put their own national interest 
first."  He ended by ominously quoting Ari Fleischer at Friday's 
White House briefing, that the Bush Administration hopes Argentina 
will still continue to work through the IMF to solve its problems.

Source: BBC, Tuesday, December 25, 2001.]
    ARGENTINE INTERIM PRESIDENT RODRIGUEZ SAA LAUNCHES JOB-CREATION 
PLAN. Following through on his pledge to create 1 million new jobs, 
interim President Rodriguez Saa announced the first phase of the job-
creation program on Christmas Day. 100,000 new jobs will be created 
immediately, largely in the armed forces and in public works 
projects, including forest management, urban renovation and flood 
control.  The new jobs will be paid from the issuing of new bonds, 
constituting the third, purely internal currency, the argentino.  
While the new secretary of treasury, finance and public revenues, 
Rodolfo Frigeri, announced that talks will begin "soon" with foreign 
creditors, the government has already said that it will not devalue 
the peso.  A high-level delegation will soon go to Washington to meet 
with officials of the IMF and the Bush Administration.

    A press conference by President Rodriguez Saa could take place as 
soon as Thursday, at which more details of the government's economic 
plan will be released, according to BBC.

*****

Thursday December 27 9:26 PM ET 

Crisis May Change IMF Rescue Policy
By HARRY DUNPHY, Associated Press Writer 

WASHINGTON (AP) - The violent protests that brought down Argentina's 
government last week may force the International Monetary Fund to re-
examine its multibillion-dollar rescue packages. 

The IMF and its major shareholder, the United States, are beginning 
to look at new options after loans and belt-tightening measures 
failed to revive South America's second-largest economy. 

Policy-makers also are considering whether the Washington-based 
lending agency's warnings about the deteriorating situation in 
Argentina were strong enough. 

Did it wait too long to call a halt to lending that clearly was not 
pulling the country out of a four-year recession and an 18 percent 
joblessness rate? And what happens the next time a government goes 
bankrupt and can't pay its debts? 

Allan H. Meltzer, chairman of an advisory panel that delivered a 
highly critical report on the IMF and its sister institution, the 
World Bank, said the Argentine crisis should give the IMF a ``greater 
sense of realism on what it can and cannot do.'' 

He said the lending institution needs to do a better job of crisis 
prevention by getting governments ``to make (economic) reforms up 
front and provide incentives to stay on course'' so that bailouts 
become unnecessary. 

C. Fred Bergsten, head of the International Institute of Economics, a 
Washington think-tank, said there will be some soul searching at the 
IMF over how it handled loans to Argentina. 

``The IMF is often accused of being too tough in its economic 
prescriptions but in this case it was too soft,'' he said, in going 
ahead with an $8 billion installment to Argentina in August that 
``clearly was a mistake.'' Last December, the IMF provided the 
government with $14 billion. 

The interim government of Adolfo Rodriguez Saa took office in Buenos 
Aires Sunday and promptly announced the suspension of payments on 
around $50 billion in debt held by foreigners - the biggest 
government default ever. 

The interim government, which will remain in power until elections 
are held in early March, also announced plans Wednesday to create a 
``third currency,'' which some analysts regard as the first step 
toward a devaluation of the peso, pegged one-to-one with the dollar. 

On Thursday, Rodriguez Saa told the Argentine television station 
America that he hoped to start ``necessary'' talks, with the IMF in 
January. 

Rodriguez Saa said he had spoken by telephone Thursday with the IMF's 
No. 2 official, Anne Krueger, and asked her for the organization's 
understanding and patience. 

He said the decision to suspend debt payments ``does not signal a 
break with the world, but a request for understanding from the 
world.'' 

Critics of the IMF say it pushed Argentina over the edge Dec. 5 by 
denying it a $1.26 billion loan installment after budget targets were 
not met by the fallen government of President Fernando de la Rua, who 
resigned last week after violent protests over his economic policies. 

His government kept asking the country's 36 million people for short- 
term sacrifices in exchange for promises of long-term stability. 

After de la Rua left office, Peru's Finance Minister, Pedro Pablo 
Kuczynski, said, ``The IMF is partly to blame because it didn't sound 
the alarm in time and then took a tough stance at a moment when 
things got extremely difficult.'' 

There was also criticism of the Bush administration for remaining on 
the sidelines and letting the IMF take the lead in the crisis. The 
Clinton administration was actively engaged in managing bailouts in 
the 1990s for Mexico, Russia and Asian countries. 

Treasury Secretary Paul O'Neill has said it was up to the Argentine 
government, working with the IMF, to come up with sound economic 
policies. ``It's not something that can be imposed from outside,'' he 
said. 

Last week, the IMF's chief spokesman, Thomas Dawson, said discussions 
with Argentina over a stalled $22 billion loan package would resume 
with a new government. He also made it clear that no new money would 
be released until Buenos Aires adopted acceptable economic policies. 

``Our aim has been to help Argentina develop - on their own - a 
program that can be sustained both economically and politically and 
that remains our goal,'' he said. 

For the future, the IMF is examining how it can change the way crises 
are handled. A new approach was outlined last month by Anne Krueger, 
the No. 2 official at the lending agency. 

The plan would enable countries to get a type of ``bankruptcy 
protection'' from their creditors if their debts become 
unsustainable. The idea is similar to the Chapter 11 bankruptcy 
protection available to private companies in the United States that 
shields them from the threat of creditors' lawsuits while company 
finances are reorganized. 

*****

Friday December 28 11:47 AM ET 

Argentina Must Get Monetary Policy in Order -Bush
WASHINGTON (Reuters) - Argentina must get its fiscal and monetary 
policy in order and develop an economic plan, President Bush said on 
Friday.

Bush said the United States would be prepared to provide technical 
assistance to the crisis-hit country through the International 
Monetary Fund, if the country asks for it.

``The key is for Argentina is to get its fiscal house in order and 
get monetary policy in order and to develop a plan,'' Bush told 
reporters in Crawford where he is vacationing at his ranch.

``The point we've made to the Argentine government, as well as to our 
friends in the region, is that we'd be willing to help them develop a 
plan if they ask for technical advice.'' 

*****

Saturday December 29 3:35 AM ET 

Argentines Loot Congress in Protest Over Recession
By Brian Winter

BUENOS AIRES, Argentina (Reuters) - Argentine demonstrators clashed 
with police outside the presidential palace and broke down the doors 
of Congress on Saturday in anger at the new government's handling of 
a deep recession barely a week after protests forced out a previous 
president.

At least two police were injured as they used tear gas to break up 
what had been a peaceful demonstration in which thousands of people 
took to the streets to protest interim President Adolfo Rodriguez 
Saa's decision to keep unpopular banking curbs and his appointment of 
some officials widely seen as corrupt.

Some protesters pounded on the doors of the presidential palace, 
while others forced their way into Congress, dragged out furniture 
and set small fires that were quickly put out as general frustration 
over a four-year recession boiled over.

Carlos Grosso, chief advisor to the Cabinet but suspected of 
corruption during a stint last decade as mayor of Buenos Aires, 
resigned after Argentina's decaying middle class flooded the streets 
of the city to demand his departure.

About a dozen protesters hung from the metal bars shielding the 
presidential palace doors, while others sprayed graffiti on its walls 
before police in riot gear broke up the crowd, some of which then 
broke windows at downtown banks and shops before apparently returning 
home.

``These gangsters have got to go!'' yelled one woman on television as 
she and thousands of others jumped up and down and beat pots and 
pans, a symbolic way to express anger in Argentina as the recession 
impoverishes thousands.

Television images showed a crowd of protesters push one police 
officer to the ground and repeatedly kick him, but the unrest 
appeared to be much less violent than the riots and looting that 
killed 27 people last week and led Fernando de la Rua to resign as 
president on Dec. 20.

State news agency Telam said two policemen had been injured during 
the protests.

A very short honeymoon appeared to be over for Rodriguez Saa, who 
suspended payments on part of Argentina's $132 billion debt after 
being appointed by Congress on Sunday to serve until new elections in 
March.

Argentina's third president this year has drawn fire for his proposal 
for a new floating currency he hopes will kick-start consumer 
spending but that some fear could quickly become worthless.

Some protesters also voiced anger over the Supreme Court's decision 
on Friday to uphold curbs on cash withdrawals from banks, which De la 
Rua's government implemented earlier this month to stop a run on the 
beleaguered financial system.

The unpopular restrictions limiting Argentines to $1,000 in cash per 
month from their bank accounts have further suffocated consumer 
spending and led some to fear their life savings may be seized 
outright by the cash-strapped government.

``I put my money in the bank for them to look after it, not to be 
stolen,'' read one protester's sign.

BUSH APPEALS FOR STABILITY

Rodriguez Saa plans to create a currency called the ''argentino,'' 
which he hopes can ease a cash crunch but many fear risks massive 
inflation since it will be backed only by government property like 
the presidential palace.

In two weeks the ``argentino'' will be on the streets floating freely 
alongside the peso, which has been pegged one-to-one with the dollar 
for a decade -- although the government has not yet decided how many 
it will mint.

President Bush urged Rodriguez Saa, who declared a moratorium on 
Argentina's external debts when he took office last Sunday, to seek 
``technical advice'' from Washington and consult the International 
Monetary Fund about his plans.

``The key is for Argentina to get its fiscal house in order and get 
monetary policy in order and to develop a plan,'' Bush said at his 
Texas ranch on Friday. Washington would help ``if they ask us for 
technical advice,'' he told reporters.

Bush was set to call Rodriguez Saa -- who will be in office until 
March when new elections will be held -- later on Saturday, Argentine 
officials said.

The United States is the largest shareholder in the IMF, which has 
sent Argentina $22 billion of aid in the past year to try to avert 
default, but withheld $1.3 billion this month when Argentina missed 
stringent fiscal deficit targets.

Senior IMF official Anne Krueger spoke with Rodriguez Saa on Thursday 
by telephone and the pair agreed their officials would meet in 
January in the United States or Buenos Aires, after talks with the 
previous government hit an impasse.