WASHINGTON – The Bush administration 1ooked askance Thursday at the idea of direct aid for Argentina, urging President Fernando De la Rua to work with the International Monetary Fund on solving economic problems that fed riots and put his government in jeopardy.
Treasury Secretary Paul O'Neill said the Bush administration, the IMF and the World Bank have tried since January to pull Argentina back from the verge of economic collapse, and would continue to work with De la Rua's government.
But O'Neill discounted the notion of giving Argentina direct assistance such as the $20 billion bailout the United States gave in 1995 to pull Mexico out of an economic crisis. He noted Argentina's $132 billion in outstanding debt and said the United States should not appear to drive the government's decisions about it.
"It seems quite clear they're not able to service that level of debt," O'Neill said. "They're working through the difficult options that a sovereign nation has to look at to put itself on a sound financial footing. That initiative has to come from the leadership of the country. It's not something that can be imposed from outside."
The Bush administration was monitoring the situation in Argentina closely, White House spokesman Ari Fleischer said Thursday. He said Bush considers Argentina "a valued ally and friend," and wants Argentina, through the IMF, to institute reforms that can lead to sustainable economic growth.
Major political leaders were trying to repair De la Rua's fraying coalition government and keep the political crisis from worsening. De la Rua declared a state of siege Wednesday, after a strike last week triggered two days of protests and looting in which several people were killed.
Argentina reached an agreement with the IMF in August that provided for $8 billion in new loans, with $3 billion of that amount tied to efforts to restructure Argentina's debt burden, as the Bush administration had insisted.
The IMF said Thursday that the Argentine government must develop an economic plan that can be maintained before it will resume lending to the crisis-stricken nation.
Thomas Dawson, the IMF's director of external relations, said the lending institution was prepared to work with new ministers to try to solve economic problems that have led to unrest and 16 deaths in Buenos Aires and outlying provinces.
He told a news conference that the IMF will wait until a new government is installed before renewing negotiations over a stalled $22 billion loan package.
"We stand ready to work with the Argentine authorities, with the change of ministers and of government taking place ... to work with and assist the new government as they assume their responsibilities," Dawson said.
He sidestepped several questions from reporters who asked whether the IMF should be held responsible for the failure of economic policies that led to the unrest.
"As we've made clear, we were not requesting any specific policy measures," Dawson said of recent talks with former Argentine economy minister Domingo Cavallo, who resigned Wednesday.
"Our aim has been to help the Argentines develop — on their own — a program that can be sustained both economically and politically, and that remains our goal," Dawson said.