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Argentines Feel Betrayed by Economy's Shepherds


BUENOS AIRES — The timing of Sonia Cavallo's wedding at a church in an upscale parish Saturday night was, to say the least, unfortunate.

An unruly crowd unhappy with the way her father, Economy Minister Domingo Cavallo, has been running things pelted the wedding party with boos, insults, rotten eggs and water bombs as its members entered the historic Basilica of Our Lady of Pilar.

A day later, many Argentines deplored the ugly scene as a tasteless affront to the bride innocent of any responsibility for her father's efforts in coping with Argentina's failing economic policies. But the anger that drove the protesters to sully what should have been the daughter's brightest day was all too understandable.

"Cavallo deserved a few eggs. There is no faith in the government, no certainty about what will happen in the future and no hope," said artisan Gaston Contreras as he sold souvenirs in sunlit Recoleta Park on Sunday.

Anger and disgust with their politicians' mismanagement of the economy runs deep here. Lawyers, security guards, retirees and shop workers interviewed Sunday said they feel betrayed, confused and uncertain about what the future holds. It is a future that may become clearer when the markets reopen this morning after being battered last week.

"A devaluation, a civil war, an invasion by extraterrestrials--nobody knows," said Miguel Kenny, a tour guide and resident.

The mood has been sharpened by the government's announcement Wednesday of yet another round of massive spending cuts and higher taxes in a last-ditch effort to rein in budget deficits and restore confidence among investors at home and abroad.

Late last night, President Fernando de la Rua took to the airwaves to calm his countrymen. He announced that he had reached an agreement with some of the local governors to support his draconian pension cuts. The group also agreed to tighten budgeting and will be helped by the estimated saving of $50 million a month from governmental salaries that will be cut by as much as 13%. Bringing the budget into balance is considered a key step in reassuring the markets.

"We are saving the public from catastrophic consequences [that could happen] if these measures are not imposed," De la Rua said of the economic hardships. "We have to learn to live with what we have."

Economic misery is no stranger here. Accustomed to economic problems that off and on have beset this nation of 36 million for the better part of 20 years, Argentines said they feel a sense of foreboding that an impending economic collapse could make the previous three years of recession look mild by comparison.

Argentina's economy has been shrinking since June 1998, according to Abel Viglione of the FIEL think tank. The economy has lost 200,000 jobs this year, and the unemployment rate has risen to nearly 17%. "The rate is really higher than that. A lot of people have just given up looking for jobs," Viglione said.

The downward spiral is especially galling because Argentines suffered through wrenching changes in the early 1990s that were supposed to have brought about modernization and prosperity by now. State-owned energy, telephone and railroad companies were all privatized and tens of thousands of workers laid off.

But the outlook, at least for the working class, remains grim.

"There is a fatalism that things never go well in Argentina, that whenever there is an adjustment to be made, it's the middle class and the poor who suffer," said Manuel Mora y Araujo, who heads a polling firm here.

There were anecdotal reports of Argentines withdrawing huge amounts--as much as $1 billion on Thursday--from their bank accounts last week on fears the currency could be devalued.

"The words for how I feel are tricked, disillusioned and bitter," said Marcelo Baraibar, an attorney who works in the federal Department of Justice here and who could soon have his salary cut by as much as 13%. "I have four kids in school. I've already made all the adjustments to my standard of living that I can. There is no more to adjust."

Economists seem increasingly resigned to the likelihood that Argentina will have to default on $128 billion in debt or devalue its currency, or both. Economists worry that Argentina's implosion would ripple throughout Latin America and other emerging markets.

Last week's sell-off of Argentine stocks and bonds--and the losses in the currencies of other countries in the region, including Brazil and Mexico--reflects the expectation that last week's cost cuts are too little, too late.

Although a tentative political consensus seemed to have formed late last week around Cavallo and De la Rua, the president had not announced details of the spending cuts, leading analysts to think that the alliance was falling apart, as it has so often in Argentine politics in recent years.

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