Argentina slowed by massive strike

BUENOS AIRES, Dec. 13 (UPI) -- Much of Argentina ground to a halt Thursday due to a 24-hour general strike by several of the nation's most powerful labor unions protesting the government's handling of an economic crisis.

Hundreds of thousands of Argentines were unable to go to work because the strike shut down most public transportation, and protesters blocked key roads around Buenos Aires.

The strike was called by three of Argentina's most powerful labor unions in response to recent measures implemented by the government to avoid default on the country's $132 billion in debt. Argentina has also suffered through nearly four years of recession.

"The government has not responded to anything," said Hugo Moyano, head of the Truck Drivers Union. "It is chaos, it is chaos. The government has turned the country into chaos."

Moyano, along with other union leaders, criticized the government's decision nearly two weeks ago to limit to $1,000 a month the amount of cash Argentines can withdraw from bank accounts and claimed the government has done nothing to counter rising unemployment and growing social problems.

Argentine President Fernando de la Rua said the strike was not justified.

"The reasons for the strike are not clear," said de la Rua. The president has had to deal with seven strikes during his two years in office.

Earlier Thursday, local television stations showed images of burned-out taxis abandoned in different parts of Buenos Aires, and buses damaged by stone-throwing protesters, a warning for workers to adhere to the strike.

Meanwhile, the streets of Buenos Aires were noticeably quieter as residents and tourists stayed away even as many shops, restaurants and cafes opened for business.

Carlos, who owns a newsstand in the usually busy Florida pedestrian walkway in downtown Buenos Aires, said business was off by a third because of the strike.

"I would not be here today if I did not have to pick up some newspaper deliveries," he said. "But this strike is not going to solve any problems."

Carlos, who declined to give his last name, said the economic crisis has gotten so bad it is impossible to stay in business without bending the law. So he plans to close his shop and leave Argentina for California.

On Thursday, de la Rua also met with his predecessor, Carlos Menem, in an attempt to settle their differences and gain his support for the country's economic plan.

The administration must persuade a skeptical Congress to approve dramatic spending cuts as part of the country's 2002 budget in order to eliminate a chronic budget deficit and gain access to needed assistance from the International Monetary Fund.

Last week, the IMF said the country must pass a balanced budget before it will resume lending under two aid packages worth $27.5 billion. The agency also refused to immediately disburse $1.3 billion in funds the country had planned to use to pay imminent debt obligations.

The budget contains $8 billion in spending cuts --part of which will come from a restructuring of the federal debt. The de la Rua administration has already exchanged some $55 billion in bonds held by local financial institutions, saving the government $3.5 billion in interest payments next year.

Economy Minister Domingo Cavallo said the government plans to raise corporate taxes in order to boost tax revenues by some $4 billion and narrow the country's budget deficit. The measures mean reversing tax breaks that were part of a "competitiveness" plan he implemented soon after being appointed to his post earlier this year.

As social tensions grow, de la Rua reiterated that his government has been forced to implement deep cuts to social programs in order to deal with a debt leftover from past administrations, namely that of Menem. On the other hand, Menem has blamed the crisis on de la Rua, saying the current president lacks the leadership to inspire confidence in the country.

But the two rivals agree on at least one issue.

"A devaluation is impossible because it would be a disaster," Menem said at a press conference following his meeting with de la Rua.

Many Argentines and local businesses have accrued debt in dollars during the last decade and a currency devaluation would likely create bankruptcies and generate further uncertainty.

Analysts have said that a devaluation of the country's currency, the peso, could be imminent if the economic crisis is not solved soon.

Argentina's peso has been tied to the dollar at a one to one parity since 1991, when the Menem administration implemented the plan to fight hyperinflation.

Menem said he presented an economic plan to de la Rua in which he recommended adopting the dollar as Argentina's official currency in order to increase consumer confidence and dispel fears the country will be forced to devalue the peso.

The nation's labor unions, however, are opposed to the idea, saying the country's current one-to-one peso to the dollar has made Argentine labor and many products less competitive than neighboring countries.

"Why can't we sell anything to anyone? Because of our exchange rate system," said labor leader Moyano.

The protests began on Wednesday as many small businesses, shopkeepers, unemployed and union members participated in marches and demonstrations centered around the country's Congress building and near the executive office building, the Pink House.

Protesters on Thursday said de la Rua was not able to govern the troubled country and called for Cavallo to resign.

One sign, showing a caricature of Cavallo as an ugly bird, read: "The Great Vulture Cavallo." Protesters said the government's austerity measures had been particularly damaging to the country's poor and working class.

Unemployment in Argentina has reached 16 percent and several million people live in extreme poverty after years of economic hardship.

Overcast weather and raindrops only seemed to animate some protesters. "Let it rain. Let it flood," said union member Luis Alberto Cepeda. "We want to wash away (Economy Minister) Cavallo and this economic model."