Argentina Offers Economic Plan, Hoping to Sidestep Court
By: Larry Rohter
The New York Times, February 4, 2002
Buenos Aires, Feb. 3, The Argentine government said tonight that it would allow the peso to float freely against the dollar and ease, but not eliminate, a freeze on bank accounts ruled unconstitutional on Friday.
The measures are apparently an effort by the government to undermine the adverse decision of an unpopular Supreme Court while reaching out to foreign creditors.
In a 40-minute televised speech detailing a sweeping plan aimed at reactivating an economy that has ground to a halt, Economy Minister Jorge Remes Lenicov also said that all financial debts and assets would be converted from dollars into pesos, but at differing rates that could signal big losses for banks but make the change less painful for debtors and account holders.
"We want our autonomy and our own currency," he said.
The government's decision to abandon the two-tiered exchange rate it adopted last month, with a fixed rate of 1.4 pesos to the dollar as its anchor, is a major concession to the International Monetary Fund and other lenders.
For the last month, ever since Argentina abandoned a decade-old policy of linking the peso to the dollar at a one-to-one rate, the lenders have contended that such a system is inherently unworkable and vulnerable to corruption.
President Eduardo Duhalde made it clear, however, that he is willing to risk an open confrontation with his country's own Supreme Court, one he seems confident he can win. The measures announced tonight remove restrictions from many, but not all, bank accounts and transform all assets originally held in dollars into pesos, except for those held by smaller depositors who are willing to accept a new government bond denominated in dollars.
In remarks Saturday on a radio program of which he is the host, Mr. Duhalde dismissed the Supreme Court as a "totally discredited" institution engaged in "trickery." He linked the Friday ruling to a decision by Congress earlier in the week to set up a committee to evaluate 28 complaints against various Supreme Court justices that could lead to their being removed from the bench.
"When the Chamber of Deputies created an impeachment commission, they began to blackmail the deputies," Mr. Duhalde said. "They even spoke to a cabinet minister, demanding that they not be subjected to trial."
Justices had rebuffed earlier attempts to weaken or overturn the bank freeze, imposed early in December in an effort to prevent dollars from leaving the country and banks from collapsing. That position made them one of the main targets of the pot-banging middle-class street demonstrations that have become a regular feature of Argentine political life for the last two months.
Technically, the judgment handed down Friday applies to the single complaint of a depositor with an account denominated in pesos and not, in sharp contrast to most of the funds held in the Argentine banking system, American dollars.
Most other depositors may have to file individual suits to get their money back. That would be a complicated and time-consuming process that would give the government room to maneuver — which it apparently intends to utilize fully.
"We're trying to adjust our economic program to the ruling," said Eduardo Amadeo, Mr. Duhalde's press secretary. "We're not going to say it doesn't exist. We don't plan to disavow it. But we're not going to stop governing and we don't foresee far-reaching changes in our program, since our lawyers say the decision offers room for interpretation."
Speaking with reporters at the World Economic Forum in New York over the weekend, Horst Kohler, the managing director of the International Monetary Fund, appeared to endorse Mr. Duhalde's approach. "The ruling of the constitutional court complicates things tremendously," he said, "but I think it is still right to do the defreezing of the deposits on a gradual basis."
The Argentine Supreme Court, though nominally independent, bears the stamp of former President Carlos Saúl Menem, who was in power for most of the 1990's. Early in his tenure, Mr. Menem, a Peronist, was able to negotiate a political accord that increased the number of justices from five to nine and allowed him to put friends and allies on the bench.
With the packed court and its so- called "automatic majority" in place, Mr. Menem soon benefited from a series of favorable rulings on political and economic initiatives whose constitutionality had been widely questioned. These included privatization of state companies and sweeping pardons for military officers and guerrillas accused of human rights abuses during the military dictatorship from 1976 to 1983.
Mr. Duhalde was Mr. Menem's first vice president, but the two quarreled and now are bitter enemies. Mr. Menem has declared his candidacy in presidential elections scheduled for late next year, which political analysts here say gives him an interest in seeing Mr. Duhalde fail.
Though Mr. Menem left office more than two years ago, the court continues to be regarded as loyal to him and responsive to his interests. Before his appointment to the court, Chief Justice Julio Nazareno was a partner with Mr. Menem and his brother in a law firm and other business interests in their home province, according to local news reports.
In July, Mr. Menem was placed under house arrest in connection with charges that he approved and then covered up the illegal sales of 6,500 tons of arms and munitions to Croatia and Ecuador during his presidency. But in a widely criticized move, the court ordered him freed in November, saying there was insufficient evidence of a gunrunning and "illicit enrichment" conspiracy.
Congressional leaders said they intend to accelerate their investigation of the supposed wrongdoing by the Supreme Court justices. The 28 pending complaints of "improper performance" of duty include the Menem arms case as well as the botched investigation of a terrorist attack on the Israeli Embassy here in 1992.
"The ruling constitutes an act of absolute irresponsibility," said Sergio Acevedo, chairman of the commission and a member of Mr. Duhalde's Peronist party. "The judges who endorsed it seek nothing more than to drag down the three branches of government and deepen the political and social crisis that afflicts the country."
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