President Eduardo Alberto Duhalde Maldonado - 2002-2003

On 02 January 2002 Argentina's Congress picked a new President for the second time in less than two weeks. The special joint session was called following the resignation of interim President Adolfo Rodriguez Saa after just one-week on the job.

Caretaker President Eduardo Camano, who was House majority leader, convened the special Congressional session, as provided for by Argentina's Constitution when there is no President or sitting Vice President. Camano, who will served in his post for the time it takes for lawmakers to choose a President, told reporters he hoped the decision can be made quickly. "I hope within a 24 hour period we can have a new President chosen by the Congress who can implement a serious program to restore the quality of life for all Argentines," said Mr. Camano.

Lawmakers could choose either a Senator or Deputy, or one of Argentina's provincial governors to become interim President. But with Argentina's traditionally dominant Peronist party in control of the legislature, it appears almost certain that the new President will be a Peronist. As lawmakers prepared to meet, a consensus formed around Senator Eduardo Duhalde, a one-time vice president, former governor and unsuccessful Presidential candidate in the 1999 election.

Eduardo Alberto Duhalde Maldonado, a 60-year-old lawyer, was a veteran Peronist party leader and a critic of free-market policies. Duhalde took the place of former interim President Adolfo Rodriguez Saa, whose surprise resignation plunged this South American nation into a renewed crisis.

Whoever assumed the Presidency had to deal with the same problems that brought down the De la Rua government. These included a recession that has lasted almost four years, an 18 percent unemployment rate, an overvalued currency and the burden of Argentina's huge $132 billion public debt.

One of the first steps by the former governor and senator from the dominant Peronist party was to devalue the currency by almost 30 percent, after it had been pegged by law at a one-to-one rate to the U.S. dollar since 1991. The peso-to-dollar peg originally provided financial stability to Argentina, but was increasingly viewed by many economists as a hindrance to efforts to end the crippling recession. A dual exchange rate mechanism was in force.

Duhalde pledged upon taking office that those who had dollar deposits would get their money back in dollars, despite a devaluation. His government also promised that debts up to $100,000 would be repaid in pesos at a one-to-one rate. But soon Duhalde said there were not enough dollars in the banking system to honor his pledge, and that the dollar-denominated bank accounts will be changed to pesos.

On 22 January 2002 tens of thousands of Argentines took to the streets of Buenos Aires and other cities in the biggest protest since Mr. Duhalde took office. Beating pots and pans, marchers denounced the country's politicians for bringing Argentina to ruin through mismanagement and corruption. Most of the demonstrators protested peacefully, but there were some clashes between police and rock throwing youths that resulted in injuries and more than a score of arrests.

Argentine Duhalde walked a delicate tightrope as he struggled to balance the conflicting demands by different sectors of society suffering from the impact of the country's financial crisis.

Economy Minister Jorge Remes Lenicov resigned in April 2002 after the Congress refused to consider a controversial government proposal to convert billions of dollars in bank deposits into long-term government bonds. The plan's aim was to prevent a collapse of the banking system which was on the verge of running out of money. The banking system's problems were part of an overall economic crisis inherited by President Duhalde when he took office in January 2002 following the resignation of two Presidents in December 2001.

Duhalde was a strong critic of the economic policies of the 1990s. He instituted revolutionary changes by devaluing the peso; forcibly converting dollar deposits and loans into pesos (“pesofication”); and voiding many kinds of contracts. He upset property rights that had been well established in Argentine law for at least a decade, and in some cases since the 1800s. The economy plunged further, with the year-over-year estimate of monthly economic activity falling a record 16.9 percent in January and 16.6 percent in March 2002. The estimate did not turn positive until December 2002. The economy shrank 10.9 percent in 2002 following a 5.5 percent decline in 2001. It is common for stabilization measures to take some time to work, but an already shrunken economy should not shrink 10.9 percent further if the measures really help rather than hurt.

In May 2002 Duhalde faced his first general strike against his government since taking office at the beginning of the year. The 12-hour strike came as the Duhalde government was trying to meet the conditions for securing an emergency loan from the International Monetary Fund to help pull the country out of its deep economic crisis. A dissident faction of Argentina's powerful General Confederation of Workers called the 12-hour strike to demand higher salaries and an end to government efforts to obtain an IMF loan. Strike leaders warned that Argentina will suffer further hardships if it agrees to the IMF's conditions for obtaining the loan.

Argentines saw their money lose more than 70 percent of its value since January 2001 and many lost their dollar-denominated savings because of measures to prevent the banking system from collapsing. The country cannot get access to international credit lines because it had suspended payments on its massive debt. All this had a profound impact on Argentine politics, and especially on the governing Peronist party.

In November 2002 Argentina decided not to pay some $800 million in debt due Thursday to the World Bank, but only the interest on the debt. The decision could put Argentina into a technical default, deepening the country's financial crisis. Argentina stopped debt payments to private creditors earier in the year.

President Duhalde - who was the country's fifth leader in two weeks - was expected to serve until elections in December 2003.