Argentina's deep, empty pockets

Pity Argentina, a poor little rich country!

"We're broke," exclaimed President Eduardo Duhalde, when asked about lifting the freeze on every bank account in the country, decreed in December following Argentina's default on its $141 billion foreign debt.

Rarely in its long history of political and economic disarray have things been so grave. The pillars of government are trembling. Half the population is below the poverty line, and the other half is heading in that direction. In a land full of opinionated people, nobody knows what to do, not the government, not the man on the street. No figure has yet appeared on the horizon whom people have faith in, so impoverished of genuine leadership is this country.

It's harder to get around Buenos Aires these days, especially downtown. There's always a cacerolazo to avoid – an assembly of agitated people at the presidential palace, or outside a bank making a big, joyless noise.

A cacerola is a stew pot. The cacerolazo is a gathering of people who put the pot to uses other than those of cookery: They bang on it, or otherwise make a racket to call attention to what Johns Hopkins University economist Steve Hanke described as the "greatest robbery in history."

Mr. Hanke was an adviser to the Argentine government. "Robbery" is his word for the freeze, or as it is popularly known, the corralito. It was imposed by the former president, Fernando de la Rua, to prevent a run on the banks after the International Monetary Fund put Argentina beyond the pale for failing to make its debt payments.

About $40 billion and 30 billion pesos were on deposit at the time. Dollars were fleeing the country even before the corralito was declared, so Mr. de la Rua's draconic action was understandable.

From the start, the corralito was not absolute. Account holders could withdraw about a thousand dollars worth of pesos per month, but no actual dollars. De la Rua resigned after signing it, departing amid lethal street protests. Congress chose a new president, Adolfo Rodriquez Saa. Unable to calm the furies loosed by the corralito, he vanished in a week. Congress then selected a former governor of Buenos Aires Province to finish de la Rua's term. Eduardo Duhalde has struggled ineffectually ever since.

Mr. Duhalde relaxed the corralito: Funds can now be transferred out of accounts to pay taxes, settle utility bills, to buy property. But no dollars can be withdrawn. Duhalde promised to eventually release the dollars, then reversed himself. Now depositors expect their dollar accounts to be transformed into pesos. But the peso is losing value fast. For a decade, it was pegged at par with the dollar. Near the end of March, the peso was worth one US quarter.

No wonder people are angry. They regard all politicians as corrupt. They are furious at the banks and mad at the Supreme Court, even though it declared the corralito unconstitutional. And they don't hide their anger. Politicians are chased from restaurants, threatened on the streets.

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