Argentines recall economic crisis 10 years on
2 December 2011
Journalist Carina Etchegaray will never forget 3 December, 2001. She and her family were buying a flat in the Argentine capital, Buenos Aires. Within hours, her hopes of being a property owner had vanished into thin air. Faced with a mounting economic crisis, the government had announced a new decree to limit bank withdrawals or transfers to the equivalent of $250 (PS160) a week. The aim was to stop a run on the banks. At a stroke, Ms Etchegaray and millions of her fellow citizens were unable to access all their savings. Long queues formed at banks across Argentina as people tried to get hold of their money. Soon frustration turned to anger. "It was something we had never seen before. You did not know what to do or where to go to ask for your savings, because all the banks were closed," says Ms Etchegaray. "You would knock on their doors and nobody answered." The decree, known as the "corralito" or "ring fence", sparked such unrest that the elected government fell, and many feared for the survival of the political institutions. Riots started in the main cities and there was widespread looting. A state of emergency was declared, but it only made things worse. By 20 December, some 40 people had died in clashes with the police. "Coming up to this 10th anniversary, I've been thinking about those moments of tension, uncertainty and sadness," says Ms Etchegaray. You had to get on with life, she says, but it was a very anxious time. "When you went to buy food for your children, it was common to find that the supermarket had been looted. "Many people were affected, like those who were evicted from their homes as they were unable to pay their mortgage." When Ms Etchegaray invested her money in the bank, the Argentine peso had been pegged to the US dollar for about a decade. But the upheaval of December 2001, which saw the country go through five leaders, put an end to that. In January 2002, the caretaker government of Eduardo Duhalde allowed the currency to float freely in the market, causing a sharp devaluation. Amid the crisis, Argentina also defaulted on debts of $141bn. Inflation soared to more than 40% by the end of 2002. So when people were allowed full access to their bank accounts in 2003, the money in them was worth far less. "I had recently received a lump sum in cash which we were going to use to buy a flat. But the money was frozen in the bank and when I eventually got it back it was just enough to buy a car," Ms Etchegaray says. "It was our chance to have a new life for our children. And in minutes, because of political decisions, we lost that opportunity." Argentina's GDP shrank by 10% in the wake of the crisis. In 2002, nearly three-quarters of the population were estimated to be living under the poverty line. That was a drastic change for a country whose economy grew throughout the 1990s. It has taken Ms Etchegaray and her family the past 10 years to rebuild their savings to afford a new home. But amid the doomsday scenario, some people profited. Businesswoman Micaela Restano had a small amount saved in US dollars when the meltdown started. "I exchanged my dollars at the bank, at a very good rate, with the people who were desperate to get foreign currency at the time," Ms Restano says. With some $6,000, she was able to pay off her whole mortgage. "I don't have very nice memories from those times, as it was very traumatic to see how desperate people were, but I know I got something positive from all this." She is not ashamed of what she did and says others acted in a similar way. For Ms Restano, who has just opened an art shop in Buenos Aires, the crisis was just how things unfold in Argentina. "You can fall really hard, but then everybody gets back on their feet as if nothing had happened." Domingo Cavallo, the economy minister at the time, is equally sanguine, insisting that the restrictions on withdrawals were justified. "People could still take out a small amount in cash and there were no limits on debit cards transactions. But something had to be done to stop the run on the banks," he told the BBC. He believes the unrest was not spontaneous public anger but orchestrated political unrest. He also says the International Monetary Fund exacerbated the crisis by stopping the loans which Argentina needed to pay its huge foreign debt. That move, Mr Cavallo, believes sparked the panic and the subsequent run on the banks. "When I see the situation in Greece today it reminds me of Argentina in 2001. But thankfully the international financial bodies have learned their lesson and  decided to support Greece," he says. "It took the suffering of the Argentine people for them to have a change in  their attitude." Argentina may be an example, good and bad, for those currently struggling with Europe's economic woes. But for Carina Etchegaray, the lesson of 10 years ago is clear. She does not, she says, keep her money in banks any more.
Domingo Cavallo, the economy minister at the time, is equally sanguine, insisting that the restrictions on withdrawals were justified. "People could still take out a small amount in cash and there were no limits on debit cards transactions. But something had to be done to stop the run on the banks," he told the BBC. He believes the unrest was not spontaneous public anger but orchestrated political unrest. He also says the International Monetary Fund exacerbated the crisis by stopping the loans which Argentina needed to pay its huge foreign debt. That move, Mr Cavallo, believes sparked the panic and the subsequent run on the banks. "When I see the situation in Greece today it reminds me of Argentina in 2001. But thankfully the international financial bodies have learned their lesson and  decided to support Greece," he says. "It took the suffering of the Argentine people for them to have a change in  their attitude." Argentina may be an example, good and bad, for those currently struggling with Europe's economic woes. But for Carina Etchegaray, the lesson of 10 years ago is clear. She does not, she says, keep her money in banks any more.
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Different outcome?