The Argentine economy Fernando de la Rúa, as the candidate for the
Alliance for Work, Justice and Education, had assumed the role of president in December 1999 in the middle of a recession, which was caused in part by the
Convertibility plan () passed in 1991 which pegged the value of the
Argentine peso to the
United States dollar. While political reforms under the previous president
Carlos Menem had succeeded in reducing
inflation, the downsides of his economic policies became more and more apparent starting in 1997. Maintaining the convertibility of pesos to dollars required the government of Argentina to obtain an abundant supply of American dollars. At first, this supply was maintained by the
privatization of nearly all of the Argentine
state's industries and
pension funds. As the privatization process was completed, Argentina's
agriculture export-based economy was unable to maintain a sufficient flow of dollars to the state, and the system began to require more and more
sovereign debt.
Fernando de la Rúa's presidency One of the key factors leading to the victory of the
Alliance in the 1999 elections was its promise to uphold the convertibility plan. One of de la Rúa's campaign slogans declared "With me, one peso, one dollar" (). Despite a changing international economic situation (including economic downturns in
Brazil, one of Argentina's key economic partners), and mounting demands for increased
monetary sovereignty from the left and some Peronists, the
Alliance committed itself to maintain the status quo at all costs.
October 2000 Crisis De la Rúa's political situation was precarious. His arrival to power in 1999 had been possible thanks to the
Alliance for Work, Justice and Education (), a coalition formed by the
Radical Civic Union and the
FrePaSo, which managed to defeat the incumbent
Justicialist Party (the
Peronist party) in that year's presidential elections. However, the Alliance (as it was known) failed to achieve a majority in the
Senate and the
Chamber of Deputies, and lost the provincial elections to the Peronists, who then remained in charge of large and critical districts such as the
Buenos Aires,
Córdoba and
Santa Fe provinces. The government coalition was strained from the first moment; the FrePaSo leaders resented being "junior members" of the government (being forced to that position after losing their bid to the Governorship of Buenos Aires), while the Radicals were divided between their left- and right-leaning factions (De la Rúa was a leader of the party's conservatives), especially regarding economic policy. In late 2000 a
political scandal broke out when it was reported that
SIDE, Argentina's
intelligence service, had paid massive
bribes to a number of senators to approve a controversial Labor Reform Act. The head of SIDE, Fernando de Santibañes, was a personal friend of De la Rúa. The crisis came to a head in October 2000 when Vice President
Carlos Álvarez resigned, citing De la Rúa's unwillingness to tackle corruption.
March 2001 Crisis De la Rúa's economic policies suffered a severe blow in March 2001 when Economy Minister
José Luis Machinea resigned from office. He was briefly replaced by the then-Defense Minister
Ricardo López Murphy, who himself was forced to resign following negative reception to his shock program. After only two weeks in office, López Murphy was replaced by
Domingo Cavallo, who had previously served as Economy Minister between 1991 and 1996, and who was the original author of the Convertibility plan during Menem's presidency. Because of the worsening economic situation and mounting foreign debt, the government enacted two enormous campaigns of debt-expansion and
refinancing under the supervision of the
International Monetary Fund (IMF), named "The armoring" () and "The
Megaexchange" () respectively. From the first moment, there were allegations of corruption and
money laundering about the
megacanje. The crisis also caused the resignation of all the FrePaSo Cabinet ministers, leaving de la Rúa without political support. The
congressional elections of October 2001 were a disaster for the government, which lost many of its seats in the Senate and the Chamber of Deputies to the Peronists. The election results marked also a growing unrest within Argentina's voters, who took to cast millions of null or blank votes. The Peronists seized the opportunity to appoint Senator
Ramón Puerta to be President Pro-Tempore of the Argentine Senate, a situation which added to De la Rúa's political weakness since in the Argentine system the President Pro-Tempore of the Senate is next in line for the Presidency after the Vice President. With no Vice President of its own, Puerta's designation meant that De la Rúa had a virtual Peronist Vice President. Social unrest was also growing. Since the late 1990s, protest movements had formed in Argentina, notably the
piqueteros ("picketeers"), initially made up of unemployed workers. The piqueteros
blockaded major roads and highways demanding government subsidies and other
welfare measures. They featured prominently during the March 2001 crisis. The crisis reached a breaking point on 29 November 2001, as major
investors began to withdraw their deposits from the banks, summarily causing the collapse of the Argentine banking system due to
capital flight. This was compounded by the IMF's decision to refuse to refinance Argentina's debt.
Corralito At the beginning of December 2001, the IMF cut off the flow of funds to Argentina and capital flight became uncontrollable, with 25% of all the money in Argentine banks having been withdrawn since the beginning of 2001. On 2 December, Finance Minister Cavallo announced a national cash-withdrawal limit of $250/week. Popular opinion was very negative, especially amongst the
middle class (bearing in mind that the weekly withdrawal limit was higher than the total savings of the majority of the Argentine population), for whom the economic crisis caused a breach of political confidence. Protests were held throughout December, although the largest and most important protests were those held on 19 and 20 December. Although people could still use their money via
credit cards,
checks and other forms of non-cash payments, the enforcement of these measures caused delays and problems for the general population and especially for businesses. Massive queues at every bank and growing reports of political crisis contributed to inflame Argentina's political scenario. De la Rúa's position had become unsustainable, and an attempt by the
Catholic Church to mediate between the government and the opposition in mid-December failed. Between 16 and 19 December there were several incidents involving unemployed activists and protesters who demanded the handing-out of food bags from supermarkets. These incidents ended up with outright looting of
supermarkets and
convenience stores on 18 December, taking place in the
Rosario and
Greater Buenos Aires areas.
General strike and looting On 13 December, the
General Confederation of Labour and the
Argentine Workers' Central Union declared their seventh
general strike against the policies of de la Rúa's government. The strike had a high participation rate, including strikes in sectors that rarely participated in general strikes, such as the
financial sector and un-
unionized workplaces. During the time of the strike, there were riots in the
working-class neighborhoods of some cities, largely instigated by the striking
piqueteros. Looting occurred in various commercial districts in the country's interior and in
Buenos Aires. Thousands of people participated in looting, truck-robbery, and street-blocking. From 13 to 19 December, seven people were killed by security forces and shopowners. == 19 December ==