- BUENOS AIRES, Argentina
(Reuters) - Armed police ringed Argentina's Congress Tuesday to protect
legislators from public anger at plans to convert their bank deposits into
government bonds in a last-ditch effort to save banks from collapse.
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- Mobs taunted and chased Congressional staff late Monday,
prompting police to escort frightened senators and deputies from the building.
Tuesday, hundreds of police blocked roads near the Congress to keep back
protesters who began to gather again, furious at the prospect of their
savings being converted into low-interest bonds.
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- "We won't accept these bonds under any circumstance.
We want our dollars back," said one man rallying a growing crowd of
protesters banging pots and pans.
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- Legislators planned to wait until nightfall to debate
the unpopular government bill that would convert savings into bonds issued
by a state which inspires little confidence, having defaulted on part of
its $140 billion of sovereign debt in January after four years of recession.
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- On the second day of a four-day bank holiday imposed
to halt the panicky exit of money from the financial system while the law
is processed, the misery for ordinary people deprived of access to cash
deepened with shopkeepers announcing they were suspending purchases with
credit and debit cards until the banks reopen.
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- "The suspension is general, not just in gas stations,
but in the rest of the shops as well," said Ruben Manusovich, head
of the shopkeepers' association Fedecamaras, as merchants do not want to
assume the risk of payments with cards issued by the banks.
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- "BLACKMAIL"
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- Latin America's No. 3 economy was plunged into chaos
in early January when it ditched a decade-old one-to-one peg to the U.S.
dollar.
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- Despite a freeze on term deposits and limits on cash
withdrawals imposed in December, the peso currency has since tumbled to
over 3 per dollar while the banks lose tens of millions of pesos in deposits
every day.
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- Some judges have ruled the freeze unlawful and ordered
savings returned. One judge even had the safe of a bank cut open Monday
to return a depositor's money.
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- But will all the banks closed, those with any money left,
were forced to comb the streets Monday and Tuesday looking for ATMs to
withdraw cash.
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- Some legislators see the protracted bank holiday as a
way of forcing them to speed through the drastic legislation "Saying
the banks will be closed until Congress votes is an unacceptable form of
blackmail," said Sen. Juan Carlos Passo of the opposition Radical
Party.
-
- But President Eduardo Duhalde said Monday the bank holiday
and bond swap were the only way to secure minimum financial support from
the International Monetary Fund, and told Congress, which made him caretaker
president until 2003 amid the January upheaval, that it could remove him
if it disagreed.
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- The IMF has conditioned any new aid on Argentina stabilizing
the banking system and bringing spendthrift provinces to heel. The reported
$5 billion of aid in the pipeline would only be enough to roll over Argentina's
IMF debt, but would likely open other channels of aid.
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- The World Bank's envoy to Argentina, Myrna Alexander,
told a business conference Tuesday she believed Duhalde was trying to "give
people the chance to get back their savings in the future."
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- BANKS' ROLE
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- Most legislators have agreed to pass the bill, but do
not want banks to get away scot-free, offloading depositors on the state
via the issue of government bonds.
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- "One inescapable condition is that the banks don't
evade their responsibilities," said Sen. Marcelo Lopez Arias of Duhalde's
Peronist Party.
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- "There are two positions: either we take the side
of the banks or we take the side of the people," said Peronist deputy
Mario Becerra.
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- Meanwhile, foreign banks here blame local authorities
for dashing faith in the financial system by declaring a freeze on deposits
in December in order to save Argentine-owned banks suffering liquidity
problems.
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- Making huge provisions for Argentine operations, foreign
banks are not keen to recapitalize them, raising doubts they will stay.
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- British banking giant HSBC said Tuesday it had no plans
to pull out of Argentina, but senior executive David Eldon added: "We
will not be inclined to put any more money into Argentina at this stage.
We would like to be in a position to work with the IMF, with the government,
with the regulators to see if there are ways in which we can assist."
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- Bankers are about as popular as politicians in a country
that has seen daily protests since the peso was devalued, triggering sharp
inflation and memories of the 5,000 percent hyperinflation seen here a
decade ago.
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- In a country of 36 million people bowed by 20 percent
unemployment and 45 percent poverty, the growing desperation was evident.
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- About 1,000 unemployed people marched on the town hall
of Duhalde's home town Lomas de Zamora, south of Buenos Aires, demanding
food. In two other suburbs, crowds grew outside supermarkets guarded by
mounted police, mindful of looting and riots in December in which 27 people
died, forcing an elected president to quit.
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- In the northwestern province of San Juan, unpaid state
workers attacked government buildings with stones for the fifth consecutive
day and police fired back with rubber bullets.
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