Fernando De la Rua's administration (1999-2001)


1.    In October 1999 de la Rua led a center-left coalition to a landslide victory as Argentines registered their disgust over the unbridled corruption of de la Rua’s Peronist predecessor, Carlos Menem.

2.     Arriving in office in 1999 on a campaign based around the slogan "I know I'm boring", Mr De la Rua had promised to end the rampant corruption under his Peronist predecessor, Carlos Menem

3.     But Mr De la Rua's own government soon became bogged down in corruption charges similar to those once made against Mr Menem, and his abrupt end in office came with his popularity rating at 4% in the polls.

4.    A grey, indecisive politician, de la Rua was prone to bouts of depression during much of his 740-day presidency

5.    Throughout the de la Rua era, the Peronists had called for a suspension of payments on Argentina’s $US132bn ($254bn) foreign debt.

6.     De la Rua inherited an overvalued Argentine peso that was pegged to the dollar on a one-to-one parity basis and rendered the country’s exports too expensive to compete in international markets.

7.    His stubborn refusal to devalue the peso against the dollar sharply limited the country’s ability to boost exports and pull itself out of the economic tailspin. Matters only worsened when a desperate de la Rua invited Menem’s former economy minister, Domingo Cavallo, to join the cabinet in March 2001.

8.    With unprecedented powers to put Argentina back on the road to economic growth, Cavallo tried to reduce the government budget deficit by cutting public-sector spending and salaries.

9.    But his austerity measures only managed to breed more unemployment and lower living standards.

10.                       The match that set the nation alight was furnished by Cavallo, when he imposed draconian limits on the amount of cash Argentines could withdraw from their bank accounts (banking freeze limits cash withdrawals to $250 a week, a move that has provoked public anger).  His goal: to halt the billions of dollars that jittery businesses and individuals were spiriting out of the country.

11.                       Official unemployment jumped to nearly 20 percent; another 15 percent of workers were "underemployed."' One-third of Argentinians lived below the poverty line, and 2,000 more fell into poverty every day.

12.                       Private-sector wages declined by 20 percent since the beginning of the recession in 1998, and in July 2001, the government cut public-sector wages and pensions by 13 percent as part of a "zero deficit" budget plan.

13.                       Adding insult to injury, Cavallo and de la Rua later siphoned off $3.5 billion from state pension funds to make a payment on the external debt, resulting in delayed benefits for some 1.4 million retirees and their families.

14.                       Hailed as the economic magician who cured Argentina’s four-digit inflation rates under Menem in the early 1990s, Cavallo resigned as economy minister in December 2001, just a few hours ahead of his nominal boss.

15.                       de la Rua’s resignation brought back to power the opposition Peronist party.  Eduardo Duhalde (defeated by de la Rua in 1999) became the country's firth president in two weeks.

16.                       Duhalde devalued the national currency by 30% and may convert dollar-denominated savings accounts, contracts and loans into pesos. That would decimate the life savings of millions of ordinary Argentines and threaten the viability of local businesses that have taken out loans from foreign creditors in dollars, but collect their revenues in pesos.