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Argentine Economy Head Leaves Void

 

By: Laurence Norman
 The Washington Post, April 24, 2002

 

 

 

Buenos Aires, Argentina President Eduardo Duhalde struggled Wednesday to devise a new rescue plan for Argentina's devastated economy and fill the void left by the resignation of his powerful economy minister.

Jorge Remes Lenicov resigned Tuesday after failing to gain bailout aid abroad and the political backing he needed at home for his strategy to end Argentina's deep downturn.

His departure triggered intense political wrangling and late-night talks between Duhalde, provincial governors and legislative leaders over who should fill the key economy post. Local reports said other Cabinet changes were possible.

Several candidates were reported in the running to replace Remes Lenicov, including a former Central Bank president, a foreign trade specialist who served under former President Carlos Menem, and other economists.

Presidential aide Anibal Fernandez said he expected Duhalde to name the new economy minister later Wednesday. He also signaled Duhalde was rethinking his overall economic strategy for arresting the 46-month old recession, the deepest on record.

"The new plan must lead to the reactivation of the economy," said Fernandez, quoted by the local news agency Diarios y Noticias.

Prominent newspapers Clarin and La Nacion both reported the president was re-examining everything from Argentine policy on the devalued peso currency to ways to handle successful lawsuits by Argentine depositors intent on removing trapped savings from a banking freeze.

Remes Lenicov quit as protesters gathered outside Congress to denounce his plan to give bank depositors their savings back in bonds rather than cash.

"Bonds no! Bonds no!" they shouted. Argentina's 5-month-old banking freeze allows only limited cash withdrawals. The Senate suspended plans to debate the bond proposal after Remes Lenicov submitted his resignation.

Remes Lenicov's resignation appeared to have thrown Duhalde's government into a major crisis and signaled further political upheaval. In December, President Fernando de la Rua was ousted following deadly street riots triggered by the economic crisis.

Economists said Tuesday's events now had all but dashed Argentina's chances of winning emergency bailout aid from the International Monetary Fund anytime soon.

"Remes was the only figure in the cabinet that had any credibility with the markets," said Alberto Bernal of the Wall Street consulting firm IDEAglobal.com. He said Argentina had few options left.

Argentina was thought to be seeking up to $23 billion from the IMF, a sum the government hoped would help lift the country out of recession. The country has defaulted on its public debt of $141 billion and sharply devalued its currency since January.

Reaction among Argentines to the latest political turmoil was mixed. Many of the protesters massed outside Congress on Tuesday were delighted by Remes Lenicov's resignation.

"I'm ecstatic he's gone. He was a disaster who did nothing for the country," said Carla Molino-Aguero, 64, who had $53,000 trapped in the banking freeze. "Now the whole lot should go."

Political analyst Felipe Noguera said Duhalde is now in a much weaker position, dependent on securing the support of his party's powerful, but often fractious, provincial governors.

Duhalde's political future "will depend on what he does in the next few days," Noguera said.

Despite Duhalde's search for consensus, many were already calling for fresh presidential elections, including senior members of the president's Peronist party.

Fernandez, however, dismissed such talk, telling reporters Duhalde, who has already announced plans for a September 2003 election, won't move up the vote.

Meanwhile, lawmakers were reportedly preparing a bill aimed at shoring up the financial system. The legislation would prevent savers who win lawsuits against the banking freeze from collecting their deposits until the government has had the chance to appeal the decision.

The government hopes the bill will discourage the thousands of successful claims that, authorities say, places the cash-starved banking system in danger of collapse.


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