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Argentine State of Siege Lifted as New Leader Is Being Chosen

By: Clifford Krauss
The New York Times, December 21, 2001

BUENOS AIRES, — Congress was meeting today to appoint an interim president and probably set a timetable for new elections, a day after President Fernando de la Rúa resigned halfway through his four-year term.

Mr. de la Rúa, who remains president until his resignation is formally accepted by Congress, today lifted the 30-day state of siege he imposed after violent protests and looting erupted when his government failed to reverse a deepening economic crisis.

"Yes, it's lifted." Mr. de la Rúa told reporters who asked about the siege today after calm had returned to the country.

His resignation letter, which was delivered to Congress late Thursday, followed violent food riots and protests here and in several cities. At least five demonstrators were killed today, bringing the death toll to 21 since the protests began early Wednesday.

The president had made a last-ditch effort to form a unity government with the leading opposition party, but when that was rejected, he announced he would leave.

Argentina, with widening budget deficits, is heavily indebted to foreign lenders and is battling to prevent more defaults. After a series of budget cuts and a patchwork of economic programs, the country lacks a coherent economic and monetary strategy, and has no consensus as to what should be done.

Mr. de la Rúa's resignation puts the country's immediate future in the hands of the moderate opposition party that controls Congress and had recently begun blocking many of the former president's policies.

Ramón Puerta, the president of the Senate, has become Argentina's provisional president for at least 48 hours while the Congress decides how to prepare for new elections, which are likely sometime next year. Under the law, a new president should be installed within three months.

But Congress can change that, and how it will play its hand will be largely left to opposition leaders, including a former president, Carlos Saúl Menem, and Senator Eduardo Duhalde, who lost to Mr. de la Rúa in the 1999 elections.

Whoever takes power is expected to face the same tough choices that defeated the indecisive Mr. de la Rúa. Faced with recession and declining exports, some Wall Street analysts have predicted that Argentina will devalue its currency by unhinging the peso from its unusual one-for-one link to the dollar.

While such a move would lower prices and spur growth by making the country's goods more attractive, it could also prove ruinous to millions of borrowers and to the nation's banking system because most loans in the country are repayable in dollars, not pesos.

Mr. de la Rúa's government collapsed with surprising rapidity, as the police fired shotguns at demonstrators in front of his palace, tear gas seeped into presidential offices and fires filled the grand boulevards and avenues of Buenos Aires with towers of black smoke.

Thousands of demonstrators massed and set bonfires in front of the Congress and presidential palace throughout Thursday, until riot police, including some on horseback, stormed through the crowds this afternoon clubbing people while reinforcements fired water cannon and rubber bullets.

Defiant crowds chanted "Assassins, assassins, assassins!" making the scenes of anarchy reminiscent of the turbulent days of military rule from 1976 to 1983. With the five deaths today, more than 1,000 demonstrators and looters were arrested. More than 50 police officers were reported hurt in the disturbances in the capital alone.

But his assumption of emergency powers appeared only to incite greater protests, beginning with an outpouring of thousands of people Wednesday night onto the streets of Buenos Aires, banging pots and pans and demanding Mr. de la Rúa's resignation.

In an attempt to save his government, Mr. de la Rúa, 64, went on national television on Wednesday night and apologized to the people for their disappointment in his administration's performance. He called on the opposition party, known as the Justicialist party, "to participate in a national unity government in which they can bring in their ideas and programs."

When that call was rebuffed, Mr. de la Rúa told his closest aides that he had no choice but to tape a televised resignation address.

As soon as Nicolás Gallo, a senior personal aide to Mr. de la Rúa, told reporters late Thursday afternoon that the president had decided to resign, the streets began to calm. The text of the speech said the resignation was to "assure the peace."

Mr. Gallo told reporters, "the president wanted to avoid more suffering." He said "history will judge" how Mr. de la Rúa's administration would be seen. "It's been a very sad day," he added.

Most opposition party leaders have called for the devaluation of the peso and suspension of payment on the country's debts.

They are also suggesting that business and consumer loans that are now valued in dollars be revalued into new peso amounts that would reduce the overall debt. The lower loan amounts would benefit individuals whose income is expected to decline by 30 percent to 50 percent in a peso devaluation.

This plan is designed to help middle-class people with home mortgages and car loans that are currently valued in dollars.

The losers would be bank lenders because the loans would not be fully repaid. Other losers could well be Argentine businesses that owe dollar debts abroad but collect revenue in pesos at home. It would take a greater number of devalued pesos to repay their dollar loans.

Mr. de la Rúa's decline began in October 2000 with the resignation of his vice president, Carlos Alvarez, over the government's handling of charges that bribes were paid to opposition senators to pass a new labor law.

Mr. de la Rúa's ruling Alianza coalition of centrists and Social Democrats fractured, and his cabinet became a revolving door of officials and constantly changing economic policies.

Then, in October, his coalition suffered a devastating defeat in legislative elections that gave the opposition control of both houses of Congress.

Cabinet officials on Wednesday publicly accused the Buenos Aires governor, Carlos Ruckauf, a former vice president and one of the most powerful leaders of the opposition, of instigating the looting to overthrow the government.

During an emergency meeting of the cabinet on Wednesday, ministers debated whether to openly confront Governor Ruckauf with charges of treason. Some aides to Mr. de la Rúa argued that the federal government should seize Governor Ruckauf's Buenos Aires provincial police force in order to control the rioting that surged in the working-class neighborhoods that surround the capital city.