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Duhalde Makes Last-Ditch Play in Argentina
May 9, 2002
Summary
Argentine President Eduardo Duhalde launched a last-ditch attempt May 1 to salvage his fragile regime by naming several Peronist labor leaders to his cabinet. The move will not save the economy from further collapse, however, as social turmoil and political instability increase. By mid-2002, Duhalde likely will be forced to resign and call for new elections -- long before the currently scheduled date of September 2003.
Analysis
Argentine President Eduardo Duhalde restructured his Cabinet May 1 to include several Peronist politicians with longtime ties to the General Workers Confederation (CGT). The inclusion of labor figures in the cabinet is Duhalde's last option to maintain some semblance of social stability and build the political coalition he needs in Congress to approve reforms demanded by the International Monetary Fund.
Duhalde's last-ditch gambit likely will fail, as both Congress and the country's powerful provincial governors continue to resist IMF pressures to reform bankruptcy laws or to sharply cut provincial and federal spending. This means Argentina's economic crisis will deepen over the next several weeks, and social turmoil and political instability will grow much worse. By mid-2002, Duhalde likely will find himself in an untenable situation that could force him to resign the presidency and call new elections well ahead of the currently scheduled date of September 2003.
Even this outcome would do little to improve Argentina's economic and political outlook. Senior IMF sources told STRATFOR May 6 that Argentina very likely will suffer a total economic meltdown that will plunge it into a lengthy hyperinflationary depression before the country's political leaders bend to the wishes of multilateral entities like the IMF and foreign private lenders. The problem with even this gloomy assessment is that it assumes Argentina's ruling establishment and increasingly furious populace would react to a complete economic collapse by adopting IMF-mandated policies to salvage and revive their national economy -- something at least one source did not deem likely.
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(c) 2002 Stratfor, Inc.
Dan
Duhalde Makes Last-Ditch Play in Argentina . . .