BUENOS AIRES, Argentina, AP
President Fernando De la Rua has appealed to all of Argentina’s political parties to band together and form a national unity government to confront the country’s growing political crisis.
In a nationally televised address Sunday, De la Rua said he will ask Congress to grant him “special emergency powers” to cope with the crisis. He added he will soon unveil a new government including a cross-section of party members, after a new austerity program threatened to rupture his own two-party ruling coalition
The situation “forces us to look beyond just one single political party,” the president said in a five-minute address to the nation.
On Friday, hours after the government rolled out its new austerity program aimed at pulling Argentina out of a 33-month recession, three key Cabinet members resigned and the junior partner in the two-party coalition withdrew all of its officials from De la Rua’s Alliance government.
The defection of six senior officials of the left-leaning Frepaso party has left De la Rua scrambling for badly needed political support to implement economic reforms demanding spending cuts of US$4.5 billion over the next two years. On Sunday, De la Rua huddled with his advisers at the Olivos presidential compound and met with Domingo Cavallo, a former economic minister and the architect of Argentina’s convertibility plan pegging the peso one-to-one with the dollar.
De la Rua was reportedly considering how to incorporate Cavallo, the leader of the center-right Action for the Republic party, into his government as part of a cabinet overhaul.
Cavallo told reporters after meeting with the president Sunday night that he was willing to join forces with De la Rua’s Radical party, the senior partner in the ruling Alliance government. “I’m willing to join the government in order to help the president,” he said. De la Rua is seeking to corral support from different parties, aware that his belt-tightening plan faces fierce opposition in Congress. The austerity plan is crucial to the government’s efforts at taming the fiscal deficit, now at US$120 billion, close to half the country’s economic output.
De la Rua hopes the austerity plan will help rebuild investor confidence in South America’s second-largest economy. In October, investors’ turned skittish over worries that the country would have trouble making its debt payments, sparking a financial crisis that lasted for months.
The crisis subsided in December, when international lenders awarded Argentina a US$39.7 billion dollar emergency aid package.
The IMF-led rescue package requires Argentina to reduce its budget deficit for this year to US$6.5 billion. But economic data released last month showed a slowdown in industrial production and higher-than expected government spending may complicate its ability to meet the target.