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December 2001 riots in Argentina

Period of civil unrest in Argentina

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The December 2001 crisis was a direct response to the government's imposition of "Corral" policies (Spanish: Corralito) at the behest of economic minister Domingo Cavallo, which restricted people's ability to withdraw cash from banks. Rioting and protests became widespread on 19 December 2001, immediately following the president's declaration of a state of emergency and his resignation on the following day. A state of extreme institutional instability continued for the next twelve days, during which the successor president Adolfo Rodríguez Saá resigned as well. While the degree of instability subsided, the events of December 2001 would become a blow against the legitimacy of the Argentine government that would persist for the following years.

Most participants in the protests were unaffiliated with any political party or organization. Over the course of the protests, 39 people were killed by police and security forces, most of them during sackings in provinces governed by the Peronists opposition. Of the 39 killed, nine were minors.

Background

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 (Spanish: Ley de Convertibilidad) 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" (Spanish: Conmigo, un peso, un dólar). 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 (Spanish: Alianza para el Trabajo, la Justicia y la Educación), 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 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" (Spanish: El blindaje) and "The Megaexchange" (Spanish: El Megacanje) 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, especially businesses. Massive queues at every bank, and growing reports of political crises 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.

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