Riot Spread in Argentina

A large-scale riot took place in Argentina, which is on the verge of the `default` crisis. While six people died and 100 people were wounded, the Argentine government declared a state of emergency on Wednesday.

As the mass protest, which took place in some of the large cities including Buenos Aires, was likely to spread to the nation, President Fernando de la Rua called for an emergency cabinet meeting in the presidential palace and decided to declare a 30-day state of siege.

The press reported that the cabinet would resign on Thursday following the resignation of Economy Minister Domingo Cavallo, who was widely blamed for the cruel retrenchment policy, Wednesday night.

The Argentine government, which has 132 billion dollar sovereign debt, has repelled the people by adopting the retrenchment policy since last year to receive the financial support from the International Monetary Fund (IMF). The large-scale revolt was stirred by the government`s announcement of the next year`s budget, which sharply cut the government expenditure in accordance with the IMF`s request, on Tuesday.

The Argentine government decided to distribute 7 million dollar worth food to prevent the spread of revolt. However, as the Argentine labor union declared a protest strike against the government`s declaration of a state of emergency on Thursday, the situation is likely to come to a climax soon.

The U.S. Standard and Poors (S & P) anticipated that the Argentine government would declare default within few weeks.

Mi-Kyung Jung mickey@donga.com