Workers Decry Argentina Economy Plan

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Union workers fearful of yet another round of punishing austerity measures staged noisy protests Tuesday, opposing government attempts to resurrect the economy through deep spending cuts.

Argentina's second largest labor confederation, led by teamster leader Hugo Moyano, organized the march by thousands of angry demonstrators to the Government House, just one day after Economy Minister Domingo Cavallo embarked on a crucial debt swap.

Protesters carrying anti-government banners said deficit reduction efforts was being carried out on the backs of struggling Argentines, particularly those dependent on hard-hit pension and health care programs. More than eight austerity plans have been unveiled since 1999.

Moyano told the nearly 3,000 union workers, pensioners and jobless people in the crowd that opponents of government budget-cutting could take stronger measures if hard-pressed.

"They want to take away the little that Argentines, that the people still have ... we are not going to accept this," said Moyano in a fiery speech. "If we have to, we will promote and organize civil disobedience."

No incidents were reported, but anger was running high, signaling deep popular discontent with the ruling coalition that has struggled fruitlessly to end 41 months of withering recession. Many called for Cavallo's ouster.

"Cavallo has to go," said ambulance driver Dario Blancho, 19, as he fired off fireworks in the buildup to the protest. "He is one of those most responsible for the situation."

On the eve of the protest, Cavallo hinted that protracted austerity measures would be needed to rein in a severe crisis highlighted by 41 months of recession and a struggle to pay off dlrs 132 billion in national debt.

He said 2002 will be a year of "great sacrifice" for the people, but added "these are sacrifices that the Argentine people must be prepared to undertake."

Those comments came as Cavallo acknowledged late Monday that Argentina would still fall $1.3 billion short of its target for narrowing its budget gap for 2001.

Argentina had set a target deficit of $6.5 billion for the year, but Cavallo said $7.8 billion was more likely - missing the target made by the government to the International Monetary Fund for the continued release of billions of dollars in bailout loans.

Local reports on Tuesday signaled the government would override popular discontent and seek to maintain a 13 percent cut in state workers' salaries and pensions, which was introduced earlier this year as a "temporary" solution to government overspending.

The staggering debt burden, accumulated through years of government borrowing and overspending, has international investors increasingly anxious that Argentina's prospects for staving off a default are dwindling.

Skepticism over Argentina's prospects continues to pervade Wall Street despite Argentina's launch of an ambitious debt restructuring program Monday, which is intended to save the country up to $4 billion in interest payments annually.

Cavallo wants lenders to exchange bonds bearing double-digit interest for new securities yielding 7 percent or less. In return for accepting lower interest rates, lenders will be repaid in full within three years.

Some credit rating agencies have warned such a plan is dangerously close to a default, bit Cavallo insists the government will honor its payments.