Argentina's New Chief Stops Payments

Photos AP Photo Audio/Video Saa Becomes Argentina's Interim President (AP)

By EDUARDO GALLARDO, Associated Press Writer

BUENOS AIRES, Argentina (AP) - Adolfo Rodriguez Saa, a populist provincial governor, was sworn in as Argentina's interim president Sunday, saying he will suspend payment of a crushing foreign debt and risking the biggest sovereign default in history.

The announcement by the 54-year-old leader, who was sworn in days after deadly riots drove predecessor Fernando de la Rua power, prompted a rousing ovation from Congress. Minutes earlier, it had voted 169-38 to appoint him as caretaker president following night-long debate and wrangling.

Rushing to fill the term vacated last week by de la Rua during a popular rebellion, Rodriguez Saa is to rule pending the results of a special election on March 3.

``Let's take the bull by the horns. We are going to talk about the foreign debt,'' Rodriguez Saa said in his inaugural address. ``The Argentine state will suspend the payment of the foreign debt.''

``All the resources allocated in the budget to pay the foreign debt will be dedicated instead to create jobs while debt payment remains suspended,'' Rodriguez Saa added. ``The social emergency is Argentina's most serious problem.''

``Ar-gen-TI-na, Ar-gen-TI-na!'' legislators and the public chanted as he spoke.

But the new president made clear that suspending payments on the $132 billion debt does not mean repudiating it and that his interim government will seek an early dialogue with creditors.

``Argentina's situation is very difficult. I ask for help,'' Rodriguez Saa said three days after deadly rioting and looting forced de la Rua to resign. Twenty-seven people were killed and hundreds injured.

Rodriguez Saa said his priority would be to help pull Argentina out of a four-year recession that has left nearly 40 percent of the 36 million population in poverty. Some 18 percent are out of a job.

The measures announced by Rodriguez Saa mark a radical shift, bringing the country closer to an all-out default on the foregin debt and threatening to plunge Argentina back into inflationary chaos.

He ruled out a devaluation and dismissed calls to replace Argentina's currency, the peso, with the U.S. dollar. Instead, he announced without elaboration plans to introduce a new ``third currency.''

He also vowed to distribute food among poor families and to create 1 million jobs. ``Wherever an Argentine family exists without a job, that will be our priority,'' he said.

Rodriguez Saa's announcement on suspension of the foreign debt payment won widespread support, especially from his Peronist Party, now returning to power after two years in opposition.

Support also came from ordinary Argentines, who often complained they were paying a stiff price for de la Rua's policies and the restrictions he imposed in order to pay the debt.

The restrictions including a partial freeze on access to bank accounts - a measure expected to be lifted soon.

``They did the right thing in not paying foreign debt now,'' said Francisco Cordoba, a deliveryman. ``We've got to get things in order. There is a lot of poverty.''

But there was some criticism, especially from conservative economists.

Manuel Solanet of the Foundation for Latin American Research called the move ``typical Peronist demagoguery and populism.'' Jorge Avila of the Center for Currency Studies warned that ``reality will crush the president. In a few weeks he will have to face the United States and foreign creditors. He will quickly loose his optimism.''

Rodriguez Saa easily won the Peronist nomination to become president, but the debate was heated over the terms of his brief presidency. He took over from Senate leader Ramon Puerta, who served as acting president for two days after de la Rua's departure.

Seeking popular support, Rodriguez Saa raised cheers with a pledge to seek better salaries for workers while cutting back those of politicians, and selling airplanes at the disposal of the president, including one known as Tango One. No politician, he said, will earn more than $3,000 a month.

The economy will not be his only problem. Politics will also be complicated as a campaign develops to elect his successor, who will finish out the two years left in de la Rua's term.

After his inauguration, Rodriguez Saa swore in his cabinet members. He eliminated seven of 11 ministerial jobs, leaving them in the hands of deputy ministers.

Earlier Stories
Argentina to Suspend Debt Payments (December 23)
Saa Named Argentina's Interim Leader (December 23)
Vote to Name Argentine Leader Delayed (December 23)
Saa May Likely Become Argentine Leader (December 23)
Saa Likely to Become Argentine Leader (December 22)
Saa to be Argentina's 3rd President (December 22)

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