Looting, bloodshed and panic as a nation's new poor explode over their economic meltdown

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The Independent US

The sad, slow strains of tango music used to be emblematic of Argentina, evoking suppressed longing and pent-up passion in some smoky café. But now the tempo is changing as the country smoulders after a day and night of food riots that left 16 people dead and 109 seriously injured.

The sad, slow strains of tango music used to be emblematic of Argentina, evoking suppressed longing and pent-up passion in some smoky café. But now the tempo is changing as the country smoulders after a day and night of food riots that left 16 people dead and 109 seriously injured.

The freefall of Argentina's economy is wrecking the lives of the country's once-prosperous middle class as much as its poor. An estimated 2,000 people a week drop beneath the breadline.

Yesterday tens of thousands of these desperate people were out on the streets again, clanging their pots and pans in noisy "cacerolazos" to show their discord. There's very little left to put inside those cooking pots wielded by hungry housewives and jobless workers, and the symbolism is blatant. They are clamouring for the head of Fernando de la Rua, the self-styled austerity President.

"Wasn't that something? The Argentine people finally showed they still have a little dignity left," said Margo Garcia, a Buenos Aires secretary who supports these peaceful protests after seeing the buying power of her pay cheque shrink month after month.

Estela Carlotto, the president of the Grandmothers of the Plaza de Mayo, a group which spearheaded protests against the military regime in the Seventies, said: "No one can stand it anymore. No one can be indifferent any longer. May God illuminate de la Rua and make him change but I'm not optimistic, this man is deaf."

Osvaldo Marrodan, a former shopowner who now drives a clapped-out taxi, complained: "Things are awful. We used to dine out often. Now eating out means moving a table to our porch."

With three shopping days left before Christmas, South America's second-biggest economy is near collapse and so is Mr de la Rua's centre-left government. His declaration of a month-long state of emergency, after a mob gathered outside the presidential palace to pelt him with stones and insults, has led to even more defiance, with thousands turning out to protest against a return of military repression.

A spontaneous demonstration against the draconian banking rules, which virtually confiscate personal savings accounts by freezing withdrawals to $250 (£170) per week, gathered early yesterday morning at the Plaza de Mayo, on the doorstep of the pink presidential palace, La Casa Rosada.

As the crowd gathered strength, news spread of the resignation of the Economic Minister, Domingo Cavallo. Police began firing tear-gas canisters into the throng, clearing away most of the peaceful demonstrators and enraging a group of hard-core opponents who proceeded to loot and set fire to the ground floor of the Economy Ministry across the plaza. One middle-aged man was hit in the belly by a rubber bullet and slumped on the steps, his blood trickling down. By morning, 76 police had been injured in riots across the country as had 33 civilians. At least 16 were dead from stabbings and bullets.

Some of the nation's top businessmen viewed the Plaza de Mayo protest as a positive sign. Jose Ignacio Mendiguren, head of the Argentine Industrial Union, said: "It is a good thing that Argentines can get together and hope for the future without anyone calling them to meet. The most important thing now is to have a plan on the table because nobody wanted the plan they were trying to implement."

Mr de la Rua met members of his Cabinet in an effort to reshuffle his administration. He called provincial governors together to form what he calls a unity cabinet, to help juggle crumbling finances. Government spokesmen announced that all his cabinet ministers handed in their resignations to give the President leeway to reorganise his government. Judge Julio Speroni slapped a travel restriction order on Mr Cavallo, alleging involvement in an old arms trafficking scandal during Carlos Menem's rule. The former economic minister was thus prevented from fleeing the country.

In a television address to the nation, the President called for calm. He said: "Many enemies of the Argentine Republic are taking advantage of the economic and social situation to sow discord and violence, seeking to create chaos to enable them to achieve what they could not at the ballot box." But even as he spoke, trade unionists organised more political protests and strikes.

In the high-class neighbourhoods of Buenos Aires, frazzled shoppers crowded into supermarkets early, pushing loaded carts toward the cashiers in an apparent attempt to stock up on Christmas supplies before another wave of looting emptied the shelves.

In the slums on the outskirts of the capital, most family-run corner stores remained shuttered. Korean shopkeepers had watched in horror as mobs besieged their locked metal doors, taking entire cases of beer and soda.

With troops on alert to protect from more looting, some supermarkets attempted to cooperate with the throngs by preparing bags of groceries for distribution. But they were overwhelmed by the sheer numbers. At some outlets, looters simply attacked lorries before their merchandise could be unloaded at supermarkets.

Scores of riot police patrolled and broke up more protests in Plaza de Mayo and irate commuters made a point of loudly honking their horns as they drove by Mr Cavallo's apartment building on Libertador Avenue in the middle-class suburb of Palermo, in jubilation that the villain of neo-liberalism had finally stepped down.

In March, the Harvard-trained economist was brought in from the opposition party as the last hope of saving Argentina's finances as the nation struggled with $132bn (£90bn) of public debt and 18 per cent unemployment. The technocrat was credited with ending runaway inflation under the Menem government, by pegging the currency to the dollar 10 years ago. Yet Mr Menem went on to squander millions of pesos on extravagant personal spending sprees. Recession hit Argentina hard in the last two years of his administration and has not let up.

Blame has also been attached to the International Monetary Fund. Peru's Economy Minister, Pedro Pablo Kuczynski, argued that not only did it fail to spot the warning signs soon enough, but when the going got tough, there was no leniency. "The Fund did not sound the alarm in time and then took a very hard line when things were incredibly difficult," he said.

In his budget for 2002, Mr Cavallo attempted to meet the IMF's requirements of a 20 per cent reduction in public spending by slashing 28,000 public sector jobs. The public could not stomach more adversity.

Ordinary Argentines are still grappling with how to pay bills and run businesses under financial rules that seem to change daily. Sudden caps have been imposed on international transfers of money, personal pensions have been seized and replaced with bonds, and all new loans must be in dollars. For most Argentines, it will be a sorry Christmas, with balances in the red.

Fearing overnight devaluation, in spite of the government's promises, people queue for hours to dump pesos for dollars or to use automated cash machines. Currency supplies frequently run out despite withdrawal limits. One desperate debtor called a press conference earlier this month to plead for financial help then blew his brains out with a pistol while television cameras whirred. Even the former middle classes must scrimp and barter goods or else move into economic exile in Europe. The visa queues at foreign embassies stretch even longer than the lines at banks.

The withdrawal limits mean heavy reliance on credit and debit; desperate applications for quick credit are clogging the system, particularly when moneyed clients are demanding multiple accounts to secure more spending cash. This week, patience ran out.

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