Argentina's powerful economy minister quits, throwing government into disarray

Wednesday, April 24th 2002, 12:00 am
By: News On 6

BUENOS AIRES, Argentina (AP) _ President Eduardo Duhalde struggled to repair his cabinet after his economy minister quit amid crumbling support for the government's economic rescue plan.

Jorge Remes Lenicov resigned from the Economy Ministry post on Tuesday, unable to gain political backing for a plan to prop up the banking system and unsuccessful in winning international bailout aid.

Several candidates were reported in the running for the job, including Javier Gonzalez Fraga, a former Central Bank president, and Alieto Guadagni, a foreign trade specialist and diplomat.

Also Tuesday, there were protests for a second day outside Congress, where demonstrators denounced a plan to give bank depositors their savings in bonds rather than cash, an idea chiefly developed by Remes Lenicov. ``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.

The government had no public comment on a successor. Meanwhile, Duhalde's confidants sought to cast a positive light on Tuesday's events.

Anibal Fernandez, a presidential aide, said Duhalde would take the opportunity to breathe new life into a government increasingly besieged by popular unrest.

``The president understood that social peace was in jeopardy and decided to undertake a general review of his strategy,'' Fernandez said on television.

He said there could be further cabinet changes on Wednesday.

Most observers felt Remes Lenicov's resignation had thrown Duhalde's government into a major crisis and signaled further political upheaval four months after an elected president, Fernando De la Rua, was ousted in December following deadly street riots.

Economists said Tuesday's events 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, adding Argentina had few options left.

Argentina was thought to be seeking up to $23 billion from the IMF, a sum the government hoped would lift the country out of a four-year 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' 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.''

But others, like salesman Ricardo Franconi, feared the latest turmoil would just worsen things.

``The resignation is not going to help ... There's been lots of people coming and going over the last few months, but the problems aren't getting better,'' said Franconi. ``This is an absolute mess. We can't carry on like this.''

That was a view shared by political analyst Felipe Noguera, who 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. ``I'll be watching very closely his relationship with the governors.''

Late Tuesday, Duhalde held meetings with about a dozen governors. He also spoke with labor leaders and lawmakers about the best way forward.

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

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

Also Tuesday, lawmakers announced they would push through 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.