The Miami Herald
December 24, 2001

Argentina won't honor foreign debt

 New president vows to use money to create jobs


 BUENOS AIRES -- To shouts of "Argentina! Argentina!'' from applauding lawmakers, Adolfo Rodríguez Sáa, the new president of the financially crippled country, announced Sunday that his government would stop making payments on the nation's $132 billion foreign debt.

 The default, which could come as early as Wednesday, would be the largest in modern economic history.

 Rodríguez Sáa, 54, who ran the fiscally successful province of Santa Fé for 18 years, received the symbols of office -- a gold baton and a powder blue and white sash -- from Ramón Puerta, the Senate president who was caretaker president for 48 hours after the resignation of Fernando de la Rúa, the discredited president.

 Rodríguez Sáa promised a new type of government for Argentina, one that he said would end social injustice and create jobs. Legislators responded with cheers to these pledges and to his promise to compensate and help the families of many of the 27 people who died last week in violent anti-government demonstrations.

 The loudest applause came when Rodríguez Sáa declared that ``the Argentine state will suspend the payment of its foreign debt'' and use that money to create jobs for the millions of unemployed in public works and forestry programs.

 ``Argentina! Argentina!'' the combined session of senators and deputies chanted in the ornate congressional building, as if they were urging on the national soccer team.

 Although Rodríguez Sáa sounded like an old-fashioned populist, he made it clear that Argentina was not repudiating its debt, and that the country would resume
 payments when able. He comes from a line of Peronist politicians whose economic policies are more moderate than their fiery labor-oriented rhetoric.


 There was obvious relief among Argentines that a politician with a track record of accomplishment had taken office, even if Rodríguez Sáa will be chief executive for only 70 days. A new election for president will take place probably on March 3.

 Lawmakers had little trouble agreeing on Rodríguez Sáa as an interim leader, but they spent the last two days in a marathon session debating whether elections in March were legal, or whether he should hold office until 2003, when de la Rúa's four-year-term would have expired.

 De la Rúa was forced out of office Friday following two days of violent protests. He fled by helicopter from the roof of his official residence in downtown Buenos Aires -- the Casa Rosada -- but returned briefly on Saturday to sign photos of himself for aides.


 Rodríguez Sáa spoke in forceful terms at his investiture. He pounded the podium as he made clear that he will put Argentine interests first before those of the International Monetary Fund.

 IMF spokesman Bill Murray said Sunday the fund had no intention of turning its back on Argentina. ``If Argentina were to present some sort of new plan to us, under the circumstances it is certainly the kind of request that would be treated very seriously,'' he said.

 The IMF has made two attempts to bail out Argentina since late last year, agreeing to a delay of debt payments if Argentina instituted severe austerity at home. It was these measures, many Argentines say, that triggered last week's disturbances.

 Argentina, a nation of 36 million people, is in its fourth year of recession and suffers from an unemployment rate near 20 percent. More than one third of the population lives below the poverty threshold.

 ``Today, the transformation of our republic begins,'' Rodríguez Sáa said. ``What we need is an Argentina free of unemployment, free of social injustice. We have a right to that.

 ``The social emergency is the biggest problem in Argentina. We will create one million new jobs. We will implement a food plan,'' he said, to help the hungry, especially those among the unemployed and blue-collar segments of Argentine society who fueled the unrest last week by raiding supermarkets.


 Rodríguez Sáa said most of those who died in the protests -- many shot by security guards, store owners or police -- should be hailed as ``victims of popular protest.'' He said he intended to make sure their families are compensated by the state. He said some lawbreakers who smashed windows and torched banks did not have good intentions, however, and probably deserved being jailed. Rodríguez Sáa said the dollar, to which the peso is pegged on a one-for-one exchange, would not become the de facto currency of Argentina, a pledge that also was met with cheers.

 Instead he said that he probably will introduce another currency that will be used to build the proposed new infrastructure and to pay the new workers. He did not elaborate on whether the new currency could be exchanged for pesos or dollars.

 The De la Rúa administration hurt ordinary Argentines by putting all its energies into repaying debt instead of helping the long-suffering poor and middle classes, he said.

 The last time the Peronists held power was during the administration of Carlos Menem. Menem left office after a second term in 1999, damaged by an arms dealing
 scandal and other corruption charges. But Argentines remember that financial prosperity marked many of his years in office.

                                    © 2001