Argentina: Political Fallout From Austerity Plan

BUENOS AIRES -- The Argentine government found itself Monday
struggling to contain political fallout from the announcement three days
earlier of major public spending cuts, as the first protesters took to the

Friday's announcement of an austerity plan comprising spending cuts of
almost eight billion dollars over the next three years prompted three
ministers to resign in protest.

As President Fernando de la Rua over the weekend attempted to construct a
government of national unity to carry out the plan, the unionized left-wing
announced street mobilizations rejecting the cuts.

High school and university students and their teachers were the most vocal
protesters Monday, with hundreds rallying at various points in the capital.
Education and social security are to bear the brunt of the cuts -- one
figure cited is for a two-billion-dollar cut in education spending.

Outside the engineering faculty of the prestigious National College of
Buenos Aires, in the southern neigborhood of San Telmo, normally busy
avenues were blocked as lecturers gave classes in the middle of the road.
Outside the university's economics faculty, closer to the city center, the
scene was the same.

The students and lecturers were joined by protestors describing themselves
as retired or unemployed. Hundreds of leftist activists were already setting
up roadblocks announced for Tuesday and Wednesday.

Members of the powerful CTERA schoolteachers' union plan a two-day strike
starting Tuesday. Dissident trade unionist Hugo Moyano also has called for a
general strike and march on the presidential palace.

The austerity plan, announced Friday by Economy Minister Ricardo Lopez
Murphy, will cut government spending by more than 1.9 billion dollars this
year, by almost 2.5 billion dollars in 2002 and by 3.5 billion dollars in

If the cuts help keep the country's annual budget deficit to within 2.4
percent of gross domestic product, Argentina would continue to qualify for
the 40-billion-dollar IMF-led loan package which was announced in December
as a bid to salvage the country's perilous economic situation.

On Monday, de la Rua was attending the annual meeting of the Inter-American Development Bank, where he told reporters his government was stable. He said Argentina would keep the peso pegged to the dollar, maintain
exchange rates and service its debt -- despite almost 33 months of recession
and falling industrial output.

De la Rua announced Sunday he would form a national unity government to
include former economy minister Domingo Cavallo -- credited with having
bailed out Argentina from a previous economic crisis under the
administration of Carlos Menem by pegging the peso to the dollar.

After a four-hour meeting with de la Rua Sunday, Cavallo said that he and
his right-of-centre Republican Force party were willing to be part of a
"broad-based" government.

De la Rua said Monday that ministerial appointments would be announced after his return from Chile and after he had met with political parties.
De la Rua's government -- itself an alliance of the Civic Radical Union with
the left-leaning Front for a Country in Solidarity -- is expected also to
offer cabinet positions to the Peronist Justicialist party.

Share prices on the Argentine stock exchange closed lower, with the Merval
index of leading shares falling almost two percent, after a similar fall

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