Crisis grips Argentina

Protests continue despite a ban on public gatherings

The death toll in Argentina has risen to 16 as widespread protests and riots over government austerity measures continued.

Hundreds of people gathered on the historic Plaza de Mayo outside the presidential palace in Buenos Aires - despite a state of emergency which granted police special powers of arrest.

Riot police on horseback were trying to disperse the crowds who demanded the resignation of President Fernando de la Rua; the authorities also used tear gas and water canons.

The White House has expressed concern about the crisis in Argentina and said it was monitoring the situation closely.

President de la Rua blamed the riots on "enemies of the republic"

President Fernando de la Rua, meanwhile, refused all the resignations of his cabinet members except that of Economy Minister Domingo Cavallo.

Mr Cavallo, who is widely blamed for failing to halt the country's slide into economic ruin, stepped down on Wednesday, when the most serious protests in Argentina in a decade started to escalate.

The president was meeting political leaders on Thursday to try to fill a power vacuum and stave off national bankruptcy.

Political revolt

Analysts say the government - with public debts of $132bn - may have to choose between two unpalatable options: devaluation or adopting the US dollar.

But it is far from clear that changes to government will satisfy the anger on the streets.

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.

It's great that Cavallo's gone...but they all have to go...we want a fair government of the people

Elena Sicilia
Demonstrator

While protests on Buenos Aires' Plaza de Mayo continued, supermarkets, banks, shops and other buildings elsewhere have been clearing up the mess after widespread looting.

Overnight, riot police fired tear gas to disperse tens of thousands of angry protesters who had gathered outside the presidential palace.

People banged pots and pans and blew car horns, angry at the government's declaration of a state of emergency, which went into effect at midnight local time (0300 GMT). <

Call for unity

The emergency decree grants the government special powers to quell looting and rioting.

It allows the authorities to bring troops and other security forces onto the streets. Public meetings are also banned.

Mr 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 on Wednesday night.

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.

	COUNTRY FACTS Population: 37 million Major exports: food, live animals, mineral fuels, cereals and machinery Average annual income: $7,550 Second largest country in South America after Brazil Click here for country profile

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

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.

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.

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

Food handouts - an attempt to quell unrest

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

Economist Roger Nightingale blames the government's economic mismanagement for the crisis.

"Argentina was the only country that went demonically down the road of linking currencies," he said.

Other countries which faced high inflation, such as Chile and Brazil now have inflation under control and have reasonably satisfactory economies, he said.