Argentines cling to last pesos
ATMs are empty, banks are closed, and the economics minister has resigned.
BUENOS AIRES — Argentina is suddenly the world's largest laboratory for a cashless society.
Since the Argentine government took the extraordinary step of closing the nation's banking system last weekend, the country's 36 million people have been plunged abruptly into penury. Automatic teller machines are empty. Bank doors are bolted shut. Perhaps for the first time in Argentina's history, lawyers and laborers, models and maids are experiencing a similar hardship.
"People who were planning to go to Europe can't even go to the supermarket now," says Verónica Palmieri, a leading fashion illustrator.
The streets of Buenos Aires are normally teeming with night life. But an eerie quiet has settled on the capital, as diners, theater-goers, and party animals opt to stay home to save their pesos. "This is a disaster," explodes Omar Vlacich, a taxi driver, after hours of vainly trolling the streets in search of a customer. "It's so quiet, it's like the city died."
With no access to cash, Argentina's sophisticated and cosmopolitan middle classes are turning to the country's fastexpanding barter clubs, once the preserve of the jobless and desperate, to survive. The national daily newspaper Clarín ran a cover story recently when a barter club opened in Barrio Norte, one of the most upscale neighborhoods in the capital.
Many saw the event as yet another sign of the death of the middle class. "A new group is emerging from the middle class in Argentina," says Sylvia Baez, a charity worker. "They're hungry, they have inadequate clothing, and they have anguish in their faces. We call them the 'new poor.' "
Until this week, the country's four-year recession has hurt most deeply those on the bottom rungs of society. With the jobless total reaching 20 percent, a currency whose value has plummeted by some 70 percent since January, and a threadbare welfare benefits system, real hunger has appeared for the first time in Latin America's second largest economy.
President Eduardo Duhalde halted all banking operations and foreign-exchange transactions, effectively closing the banks. Yesterday, Argentina's Senate voted to strengthen the banking freeze. Argentines have been going to court to gain access to their money. The legislation will allow the government to appeal any court ruling before the depositor can receive their money.
Mr. Duhalde had hoped the freeze would help prop up the country's banking system, reeling from the outflow of about $100 million a day as depositors sought to withdraw their savings before the value of the Argentine peso plummeted further.
But the move has inflicted hardship on all levels of Argentine society. "Even the privileged are feeling the pain now," says Ms. Baez, the charity worker.
"We'll survive, but it's not going to be easy," says Juan Maciel, a prominent lawyer. "I have seven employees depending on me, as well as the laborers at my dairy farm, and my family, of course. I'll try to give them each enough to survive for four or five days, but the truth is that I don't have much cash left."
Argentines have already endured a five-month partial banking freeze that has limited cash withdrawals to about $500 a month. The president's economy minister, Jorge Remes Lenicov, devised a plan to convert bank deposits into low-interest five- to 10-year bonds in lieu of cash, effectively forcing Argentines to lend to the government.
The plan collapsed in disarray on Tuesday when Remes resigned after failing to win political backing for his project. Argentina is seeking $9 billion in loans from the International Monetary Fund to help stabilize the economic crisis. Testifying before the US Congress Wednesday, Treasury Secretary Paul O'Neill expressed concern that Argentina wasn't on the right track.
"I'm not eating much at the moment," says Sidney Page, a sculptor and film student. "I've eaten almost everything in the fridge. The only place I can afford is the discounted food section at the local supermarket, and I have no idea how long I can afford to go even there."
The country's cash shortage has become so acute that many of the immigrants who once flocked to Argentina for work from Paraguay, Bolivia, and Peru have opted to return home.
Others are just scraping by. "I have 50 pesos ($16) in cash, which might last me for two weeks if I'm careful," says Dionisia Acuña, a Paraguayan who works as a maid for a prosperous Buenos Aires family. "I can't ask my boss for more because she has no cash either."
Even those too poor to hold a bank account are feeling the pressure. Susanna Ortega, a homeless mother of two, spends her days rummaging through trash cans for food, or anything else of value. "I usually ask around for money, or ask at shops if they can spare some meat or bread," she says. "No one can spare anything at the moment. I've run out of diapers for the kids, so we're using old rags at the moment."
With a touch of desperation, some Argentines are searching for meaning in their new poverty. Many take heart from a renewed sense of community, as neighbors and even strangers learn to depend on each other. Others draw parallels with their pioneering ancestors, mainly dirt-poor immigrants from southern Europe, who survived and sometimes prospered through frugal living and constant struggle.
For some, however, impotence in the face of governmental mismanagement is just too much to bear. "For sanity's sake, I prefer to to be disconnected from the news," says Sidney Page. "I don't want to read a newspaper or watch TV. It's better not to know what's coming next."