1. Archive

Argentina recession turns violent

As Argentina weathers its worst recession in more than a decade, riots and protests by state employees and unemployed workers in the nation's interior are escalating to levels not seen in years.

Riots were raging out of control Friday night in the southern Patagonian province of Neuquen, where more than 40 percent of the work force is unemployed and the provincial government has not paid its workers for more than three months. Angry protesters spilled into the streets screaming, "Argentina, Argentina" as they attacked a branch of Citibank and stoned the governor's residence.

Violent skirmishes and protests also were reported in the provinces of Tucuman, Cordoba, Corrientes and Tierra del Fuego as police pushed back thousands of protesters with rubber bullets and tear gas. More than 100 protesters and dozens of police officers have been wounded in skirmishes this week.

The riots erupted in response to the way Argentina's severe, nationwide recession has intensified a mounting fiscal crisis in the provinces. With unemployment near 15 percent nationwide, and more than double that in some provinces, provincial governments' tax revenues are evaporating and their bills are going unpaid. In addition to being unable to meet their payrolls, many local governments have been forced to fire thousands of workers in recent weeks. In some provinces, there isn't even enough money to pay for school lunches.

Protesting alongside affected state workers are jobless Argentines who blame their plight on the government's privatization program of the 1990s, which they say spurred unemployment as the corporate owners of formerly state-run industries fired tens of thousands of workers.

Economic analysts say, however, that the enormous budget deficits faced by provincial governments are mostly the result of overspending, corruption and poor management. For instance, the small northern province of Corrientes, with a population of 800,000, has a deficit of $1.4-billion _ roughly equal to the total foreign debt of Paraguay.

"There is going to be no easy exit for the provinces," Rosendo Fraga, a Buenos Aires-based political analyst. "But the one thing you can say is that they've brought the problems on themselves."

The turmoil in Argentina comes at a time when most of Latin America is in recession and shares many of the same problems. Freewheeling spending and widespread corruption have pushed many provincial governments in Argentina, Brazil, Ecuador and other nations to the brink of insolvency.

"It's simple: The governments in the provinces have spent irresponsibly, and now the time to pay for their errors has come," said Marie Emhart, an economist at the Buenos Aires-based Latin American Foundation of Economic Investigation. "Recession has come and has dried up tax revenue, and the provinces in many cases just don't have enough money to pay their workers."

Indeed, some local governments are meeting their payrolls by doling out vouchers that can be spent only within the borders of the province. Since not all stores accept such certificates, workers often sell them on the black market for the national currency, the peso, at a fraction of their face value.

The federal government in Buenos Aires, facing a growing budget deficit of its own, is nevertheless offering bailout packages of several million dollars to some states. But economists say it's likely the violence will continue until the economy picks up again, which is not forecast until the end of this year or the beginning of next.