Posted on 08/07/2002 3:01:27 AM PDT by Cincinatus' Wife
BUENOS AIRES, Argentina -- U.S. Treasury Secretary Paul O'Neill met with President Eduardo Duhalde and business executives Tuesday to discuss the general unraveling of Argentina's economy, including its debt default, currency devaluation and 22 percent unemployment rate.
As O'Neill arrived from Uruguay -- where he praised that country for how it handled its banking crisis -- about 1,500 demonstrators marched through the Argentine capital, Buenos Aires, burning an American flag and holding signs saying, "Yankees, get out of Latin America!"
Many here blame free market systems for failing to end the poverty of half of Argentina's 36 million people. The country has been rocked by December street riots and the shut-off of billions of dollars in international aid for failing to meet budget-cutting targets.
"We resent O'Neill and we resent the politicians of the United States and the world coming to our country," unemployed 22-year-old Patricia Vergara said while holding a sign reading, "O'Neill go home!"
She added, "They are responsible for the repression of our people. Capitalism needs to go."
Others, however, blame corruption and government bungling for Argentina's worst recession on record.
Argentina has struggled this year to win renewed international economic aid, but the country has been urged to devise a sustainable plan for ending a four-year recession and repairing a tottering banking system that nearly collapsed.
During their 35-minute meeting, Duhalde told O'Neill that Argentina needs international financial aid as soon as possible, Duhalde spokesman Eduardo Amadeo said, adding that O'Neill "had a cordial response."
O'Neill's four-day South American trip reflects Washington's concern about the region's widening economic troubles. He opened the trip on Sunday in Brazil and spent three hours in Uruguay on Tuesday before arriving here just before sundown.
The angry chants of Argentine demonstrators differed from the reception O'Neill received in Uruguay. There, President Jorge Batlle thanked him for Monday's $1.5 billion emergency U.S. loan that rescued Uruguay's banking system from a run on deposits.
On July 30, Uruguay shut its banks for four days, reopening them Monday after the U.S. Federal Reserve wired the loan. The country's reserves plunged from about $3 billion in January to $655 million in July after massive withdrawals by depositors.
The Uruguay loan was the first time the Bush administration has provided direct economic support to a country in financial crisis.
Asked in Montevideo why Uruguay qualified for a loan and neighbors like Argentina did not, O'Neill responded: "Why Uruguay? Because Uruguay is a country that has followed very sound economic policies."
Alberto Bernal, a Latin America expert at the IdeaGlobal think tank in New York, said the Bush administration went out of its way to help Uruguay for fear that Argentina's economic calamity could spread.
But he said the Bush administration remains averse to even short-term loans like the one to Uruguay -- which must be repaid, with interest, after International Monetary Fund assistance comes through within days.
"O'Neill is very uncomfortable about this whole trip, but he has to do it anyway," Bernal said. "He's uncomfortable because his philosophy of the future of capital markets, his basic view, is that bailouts are not efficient."
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