- Argentina's middle classes were bracing themselves for
bankruptcy yesterday, as analysts warned that a financial meltdown had
already begun and the country's new Peronist leaders scrambled for an
rescue plan in the wake of nationwide rioting.
- 'I put up my house against a $20,000 loan to set up a
market stall, thinking there was still hope for Argentina. But I have no
hope in this new government. They are no better than the last. The country
is going down the tubes and I am going to lose everything,' said
Ricardo Martinez in Buenos Aires yesterday. 'The only thing left to do
is renew my Spanish passport and get out.'
- Viviana Villamil, who works at Morgan Stanley in Buenos
Aires, has just built a new home and is three months' pregnant. 'I don't
know what to think. All I know is that there are so many people in this
country with big debts that they have to find a way to help us.'
- As Argentina recovers from two days of looting and street
battles that sent President Fernando de la Rua into flight and left a
Peronist party to pick up the pieces, the country is closer than ever to
- In its fourth year of recession, foreign creditors have
refused desperately needed bail-outs to South America's second largest
economy, crippled by a colossal $132 billion public debt. The wealthy
classes face losing their jobs and life savings if bank deposits are frozen
or if the financial system collapses.
- Dazed people talked nervously yesterday on the battered
streets of this once grand capital city, waiting for interim president
Adolfo Rodriguez Saa to announce an economic rescue plan.
- Before assuming power, Saa said new austerity was needed,
but that he would not devalue the peso. But currency exchange facilities
were frozen until Tuesday, to stop panicking Argentines rushing for
and analysts said financial collapse had already begun.
- 'Whether you declare it or not, Argentina is already
in default and convertibility [the system pegging the peso to the dollar]
is already over,' political analyst Rosendo Fraga said yesterday.
- 'For sure if there is devaluation, there will be more
disorder on the streets. This crisis is only just beginning.'
- Argentina was the seventh richest nation in the world
a century ago, when thousands of European immigrants flocked here in search
of a better life. The country's name and its River Plata are reminders
of the days when silver wealth flowed through the port of Buenos
- The South American country now has more than 18 per cent
unemployment and soaring crime rates. The nation has a reputation in the
region for arrogance, its large middle class proudly enjoying European
standards of living for decades in a region dogged by poverty.
- But the middle classes are shrinking fast. A recent
said 2,000 people were sinking under the poverty line each day and 14
of the country's 36m population were living on less than $4 a day.
- Argentina's history is studded with social unrest,
coups and economic crises. For many last week's chaos was 'just another
revolution' in a country more used to crises than stability. But it was
the first time the middle classes have helped bring down a government,
as they spontaneously poured on to the streets in their thousands and
peacefully on the pink presidential palace, banging pots and pans until
the Economy Minister Domingo Cavallo resigned.
- After 18 years of democratic governments, since the end
of the bloody 1976-1983 Dirty War that left 30,000 dead or missing,
in the country's political classes is at an all time low', political
Roberto Bacman said. In October's mid-term elections, a record 40 per cent
cast blank or spoiled votes rather than choose a candidate.
- 'I just hope the political classes have heard the message
now,' said Umberto Sosa, a bewildered pensioner gazing at a burnt-out car
in the city centre. 'It's basta! [enough!]. We have had enough of
and incompetence. We need proper leaders but I don't know if there are
- 'It's a sign of how badly off we are that the Peronists
have to be our saviours now,' said Marina Peluffo, a 23-year-old
- Many of Argentina's problems have their roots in a
decade-old policy of fixing the peso at one dollar and making it impossible
for Argentina to compete with its cheaper Latin American neighbours.
- But some feel the problems run deeper than monetary
The Peronists are widely blamed for the country's crippling debts, and
former Peronist president Carlos Menem, recently released from house arrest
on charges of illegal arms trafficking, is remembered for allowing rampant
corruption and squandering resources on lavish public spending during his
- Menem, 71, remains president of the Peronists'
Party. He describes himself as an eagle that retreated to preen its feather
and sharpen its beak and is ready to soar again. Analysts say he has a
chance of winning presidential elections on 3 March despite constitutional
laws that forbid him returning to office until 2003.
- The interim president, Saa, 54, is a wealthy land-owner
and businessman, formerly a close ally of Menem.
- He has risen from obscurity in recent months, as governor
of one of the two small Argentine provinces that have balanced their books
as the rest of the country sinks into debt.
- 'Our politicians have never stopped digging into our
pockets. We need to get rid of the political dinosaurs and bring in some
new honest faces,' said Alfredo Gutierrez, 57, in Buenos Aires
- 'Argentina has all its natural resources intact, it's
a country that has no armed conflicts, there are no ethnic or religious
problems. So it could make itself into an island of prosperity and success,' said Marco Aguinis, ex-Culture Secretary and author of The atrocio
of being Argentines.