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Argentine Court Overrules Bank Freeze

February 02, 2002|From Times Wire Services

BUENOS AIRES — Argentina's Supreme Court ruled Friday that a widely hated banking freeze is unconstitutional, striking a surprise blow at government efforts to shore up the teetering financial system.

The court voted 5 to 0 against the freeze, ruling in favor of plaintiffs who had demanded their trapped savings.

It said that the executive decree authorizing the limits ran roughshod over citizens' rights to their savings, that it was "irrational" and that it virtually "annihilated" constitutional rights to private property. Three judges abstained.

It remained unclear whether the government will now be obliged to permit the full withdrawal of deposits.

The government of President Eduardo Duhalde had no immediate comment, with officials saying they were still studying the decision.

Economy Ministry sources, speaking on condition of anonymity, interpreted the ruling as a narrow decision that applies only to plaintiffs who filed lawsuits demanding their money from the banks.

But some constitutional experts said the ruling on a specific case set a precedent for what could be a wave of lower court cases by depositors wanting access to their cash.

"If this ruling applies to all accounts, then all you have to do is go to court and tell the judge you want your deposits to be returned. And the banks would have to do it," said Aldo Abram, an economist for the Exante consulting firm.

The banking restrictions have allowed most Argentines to pull no more than $800 a month from their accounts and were imposed Dec. 1 after anxious depositors yanked more than $1 billion from the banking system in one day.

Anger over the freeze and other economic crisis measures fueled the ouster of the last elected president, Fernando de la Rua, on Dec. 20.

Despite the efforts of Duhalde, protests have raged for weeks against the freeze and other austerity measures, occasionally triggering violence that included attacks on bank branches around the country.

The lifting of the curbs could spark a massive depreciation of the recently devalued peso if people use the freed money to buy safe-haven U.S. dollars.

The peso has lost nearly 50% of its value since Duhalde broke a decade-old currency peg that made one peso equal to one dollar. The peso sold at 2.05 to the dollar Friday, traders said.

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