Argentine Economic Minister Quits
As Bank Plan Falters

By Stephen Brown

BUENOS AIRES, Argentina (Reuters) - Argentina's economic minister resigned on Tuesday after Congress delayed the embattled government's unpopular plans to avert a banking collapse by giving depositors bonds instead of cash.
Economy Minister Jorge Remes Lenicov quit amid media speculation that others, including President Eduardo Duhalde, could be forced to step down and bring early elections due in 2003. Duhalde was put in charge by Congress in January after deadly riots and economic chaos forced the elected president to resign.
"Yes, it has happened," said an Economy Ministry official said when asked if Remes Lenicov, who returned empty-handed from Washington to ask the International Monetary Fund for help this weekend, had stepped down. There was no word on his successor.
Duhalde, who in January's upheaval became the fifth leader in two weeks, was due to meet with the country's powerful provincial governors at 6 p.m. (2200 GMT) to seek support for the bank rescue plan, criticized by Congress as tough on depositors and soft on banks.
Latin America's No. 3 economy was thrown into turmoil by January's devaluation of the Argentine peso, which was pegged at one to the dollar for over a decade to stabilize prices.
The peso has since tumbled beyond 3.0 to the dollar, bringing sharp inflation to a country whose economy has not grown in four years, which has 20 percent unemployment and rising poverty.
The banks were losing tens of millions of pesos in deposits a day as judges declared illegal a freeze on term deposits and limits on cash withdrawals decreed in December. The measures have starved the economy of cash and generated angry protests.
This week the government ordered all banks to shut until Friday while Congress debated the bonds-for-savings plan -- angering legislators who saw the bank holiday as blackmail.
"It's essentially a reflection of the failure of (Remes Lenicov's) bonds plan. Whereas it was going to be really grim for the man on the street, it was generally seen as the orthodox way out of a really nightmarish situation," said Ben Laidler, an analyst at UBS Warburg bank.
Christian Stracke, emerging market debt strategist at Commerzbank said it seemed Duhalde's support was "crumbling away" -- reflecting the atmosphere on the streets where protesters' anger is directed at the entire political class. The most common slogan is "They Must All Go!"
Argentine Cabinet Chief Jorge Capitanich, whose job was also reported to be on the line, put a brave face on Congress' reaction, saying it "was not meant as resistance but in a spirit of cooperation."
But legislators who faced taunting crowds outside Congress on Monday and fresh protests on Tuesday, said they did not want banks to get away scot-free, offloading depositors on the state via the issue of government bonds.
"One inescapable condition is that the banks don't evade their responsibilities," said Sen. Marcelo Lopez Arias of Duhalde's Peronist Party.
"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.
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.
Making huge provisions for Argentine operations, foreign banks are not keen to recapitalize them, raising doubts they will stay.
British banking giant HSBC said on 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."
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.
In a country of 36 million people bowed by 20 percent unemployment and 45 percent poverty, the growing desperation was evident.
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.
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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