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Thursday, 20 December, 2001, 09:40 GMT
Argentina plunges into turmoil
union members in violent protest in Buenos Aires
Union members resorted to violence in Buenos Aires
Mass protests in Argentina over the government's handling of the worsening economic crisis have left seven people dead and forced the resignation of the Economy Minister, Domingo Cavallo.

Riot police fired tear gas to disperse tens of thousands of angry protesters who had gathered outside the presidential palace in the capital Buenos Aires.

Running battles broke out, with protesters throwing stones at the police, and some rioters set fire to the economy ministry.


Enemies of the Republic are taking advantage of the economic and social situation to sow discord to enable them to achieve what they could not at the ballot box

President Fernando de la Rua
The latest protests began with people banging pots and pans and blowing car horns, angry at the government's declaration of a state of emergency, which went into effect at midnight local time (0300 GMT).

The government was responding to riots on Wednesday in which at least four people were killed and dozens injured. Thousands of people went on the rampage, ransacking shops and supermarkets in the worst civil unrest to grip Argentina since 1989.

Protests have been escalating since the government halted pension payments and froze bank accounts as part of austerity measures to deal with its massive debts.

Several other ministers are said to have offered their resignations; the BBC's Tom Gibb in Buenos Aires says most Argentines do not trust any of their politicians and this appears to be a revolt against a whole political class.

Call for unity

Argentine President Fernando de la Rua blamed the riots on "enemies of the republic" and called for political co-operation to tackle the crisis, in a televised address to the nation.

Our correspondent says Mr Cavallo's resignation is very significant and it will be very difficult for the government to carry on without him.

The emergency decree grants the government special powers to quell looting and rioting and will last for 30 days.

Crisis unfolds
Wednesday AM: Widespread looting
Wednesday PM:
Emergency cabinet session declares state of emergency
Cavallo stripped of special powers by Congress
Shop owner stabbed
President de la Rua addresses nation
Midnight:
State of emergency comes into force
Protests intensify
Cavallo resigns
Thursday AM:
Thousands still demonstrating
It will allow the authorities to bring troops and other security forces onto the streets. Public meetings are also banned.

The credit ratings agency Standard & Poor's has warned that Argentina could default on its $132bn sovereign debt as early as next month.

"It is likely, though still not certain, that in the very short term, Argentina will miss a payment on their debt," said the agency's managing director of sovereign debt rating, John Chambers.

"That would be outright default."

A default would in effect cut off any lifeline from the International Monetary Fund and send Argentina spiralling even deeper into a chaotic economic crisis.

The government has acted swiftly to try to take control of the situation, announcing it will start distributing free food.

The Labour Minister, José Gabriel Dumón, said the president had already authorised the distribution of $7m worth of food, and he called on Argentines to remain calm.

Running battles

Protests which began at the weekend escalated on Wednesday.


I feel bad about it but we're dying of hunger

Sonia Aristici, looter

Dozens of stores were ransacked in Buenos Aires and the northern Entre Rios province, while in the second-largest city, Cordoba, workers protesting at government plans to reduce wages set fire to the town hall.

Looting of supermarkets was reported in at least half a dozen cities, including Rosario, north of Buenos Aires, and Mendoza in the west.

In Santa Fe province, north of the capital, a 15-year-old boy was shot dead by an unidentified gunman.

Elsewhere, a man was stabbed to death by a storeowner on the outskirts of the capital, and a man and a woman were shot dead by shopkeepers trying to protect their stores in the same area.

President under pressure

As the violence raged, the opposition-dominated Congress voted to repeal special powers granted to Mr Cavallo earlier this year.

Argentinean woman pushing to get food parcel
Women fight to get food handouts
Similar unrest marked the last financial crisis in Argentina in 1989, forcing the then president, Raul Alfonsin, to leave office early.

There is now growing pressure on President de la Rua to do the same.

The violence also resulted in the cancellation of the second-leg final of the Copa Mercosur football competition between Argentina's San Lorenzo and Flamengo of Brazil.

Argentina has been in a recession for almost four years, and unemployment has risen to almost 20%.

Mr de la Rua and Mr Cavallo are desperately trying to avoid a devaluation or a default on Argentina's foreign debt payments.

Earlier this month, the IMF refused Argentina a further $1.3bn in standby loans, unless it balanced its budget for the year 2002.

Mr Cavallo has put forward budget proposals slashing government spending by 20% - but only by cutting public sector wages and reducing pension provisions.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Tom Gibb
"The declaration of a state of emergency has just inflamed the situation"
See also:

20 Dec 01 | Business
Who next after Cavallo?
14 Dec 01 | Business
Argentina meets debt deadline
13 Dec 01 | Americas
Argentina delays pension payments
10 Dec 01 | Business
Argentina in new bid to cut debts
09 Dec 01 | Business
Argentina fails to win IMF reprieve
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