Argentina's Economy Minister resigns as thousands protest

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The Independent US

Economy Minister Domingo Cavallo, widely blamed for failing to halt Argentina's slide into economic ruin, offered his resignation as thousands of protesters poured onto streets, enraged by the government's declaration of a state of siege.

A government source, speaking on the usual condition of anonymity, told The Associated Press that Cavallo had tendered his resignation and President Fernando de la Rua would decide whether to accept it later Thursday.

There was no official confirmation.

The news came as thousands of protesters banging pots and pans took to the streets, outraged by President Fernando de la Rua's declaration of emergency measures to quell violent street protests that rocked Argentina Wednesday.

South America's second–largest economy, mired in its fourth, straight year of recession, has been teetering on the brink of economic and political meltdown in recent weeks.

The jobless rate has soared to near record levels of over 18 percent.

Austerity measures introduced by Cavallo, including a partial bank freeze designed to prop up the financial system, started discontent simmering, especially in poorer areas.

That unrest erupted in Wednesday's frenzied looting that left six dead and injured at least 108. Police made 328 arrests.

In a televised address to the nation on Wednesday night, De la Rua confirmed he was imposing a 30–day state of emergency nationwide, to "guarantee law and order across the country."

But that only provoked more anger from Argentines, whose patience with De la Rua's administration appears to be close to snapping.

As the protests swelled around the government house and the presidential palace, where De la Rua's cabinet was meeting, the government's future appeared to hang in the balance.

Outside the residence, crowds of thousands gathered shouting "Cavallo out" and "if we are not the people, then who is the people?"

Thousands more thronged the central Plaza de Mayo at the Casa Rosada government house, until riot police charged them, firing tear gas. Others rallied outside Cavallo's home on the swanky Libertador Avenue.

"It's great that Cavallo's gone," said Elena Sicilia, an actress rushing toward government house after hearing about the minister's resignation on television.

"But they all have to go, we don't want De la Rua and we don't want (Carlos) Menem back," she said, refering to De la Rua's Peronist predecessor. "We want a fair government of the people."

De la Rua announced he was taking special powers after mobs of enraged Argentines looted and trashed foodstores across the country Wednesday, frequently clashing with riot police firing tear gas and rubber bullets.

"I urge those who are exercising violence to cease such acts," De la Rua said. "With violence and illegality, we will not solve our problems."

Wednesday's decree marked the first time in 11 years an Argentine president has seized special powers that effectively grant security forces greater powers of arrest and allow them to ban public gatherings.

Such measures were last used by Menem in 1990 to quash an uprising by a right–wing anti–democratic militia group.

A year earlier, a state of siege failed to stop widespread looting and social chaos that eventually forced then–president Raul Alfonsin out of office.

If De la Rua had hoped to calm the nation's nerves, his address appeared to have the opposite effect.

"We're fed up with corruption, hunger and the poverty we're living in," said Ana Arce, a 75–year–old doctor, outside government house.

"I think that if they don't go, the people will kick them out," she said.

Sick for years, the economy has nosedived during De la Rua's two years in office.

His embattled government has tried to fix the economy with nine different economic plans and has faced eight general strikes.

Until Tuesday, Cavallo had been working on enacting another punishing austerity plan, pushing a belt–tighteing 2002 budget through Congress and staving off a default on Argentina's staggering dlrs 132 billion public debt.

Rising social tensions are expected to make it more difficult for De la Rua to push 2002's austerity budget slashing an extra dlrs 4 billion in public spending through a factious Congress.

Agreement on the budget is seen as key in persuading the International Monetary Fund to release dlrs 1.3 billion of emergency funds that cash–strapped Argentina needs to keep up payments on its debt.

Failure to secure IMF funding could lead to a default, which would probably spark more chaos and social unrest.

"This is not our fault, this is the government's fault, the President's and Cavallo's," said Sandra Guttierez, a 28–year–old unemployed mother of two, who left one ransacked supermarket loaded with bags of food Wednesday.

"Those two should resign straight away," she said. "We feel we've got no future, for us or for our kids."

In his speech, De la Rua called for a broad political consensus to assume the "historic responsibility" of pulling Argentina back from the brink of economic and political collapse.

But he made no concrete proposals, nor did he mention the fate of Cavallo, pilloried by most protesters Wednesday.

Congress handed the unpopular minister a vote of no confidence, though, taking steps to revoke special legislative powers granted to him earlier this year to help stem the economic crisis.

A meeting of the government's Internal Security Council was scheduled for Thursday and independent news agency Diario y Noticias said De la Rua could chair the meeting personally.

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