Argentine High Courts Overturn Government's Economic Program

The Supreme Court of Justice ruled against a government decree that converted dollar denominated savings into Argentine pesos

Thousands of Argentine savers got together Wednesday morning at the National Palace of justice in Buenos Aires, waiting for Courts' ruling on the so-called pesification of bank accounts. The decision expected for Tuesday took one more day, as Duhalde's Government put a lot of pressure on the members of the tribunal to block the resolution. After one hour of debate, hundreds of cheering people could celebrate to the steps of the courthouse.

The high court declared unconstitutional the government decision last year and ordered a $247 million deposit belonging to the provincial government of San Luis be restored to its original dollar value. The ruling is expected to set a precedent for 380.000 of Argentine savers who have been claiming since January 2002 for the restitution of their savings in the original currency.

However, analysts do not expect this to affect bank's financial situation as they say that is impossible for them to settle debts at 3.2 pesos per US Dollar. Therefore, they will have to negotiate compensation in bonds, guaranteed by the National Treasury, to pay back the frustrated savers.

Until now, banks offered their frustrated clients a compensation that did not meet savers' expectations. They could withdraw savings in Argentine pesos at a value of 2 per US Dollar, when the market value of the foreign currency is 3.2 to each.

"For the first time, this country makes justice", shouts one of the demonstrators at the courthouse. Savers still protest three days a week through the streets of Buenos Aires financial district claiming for their money since demonstrations started more than one year ago. Bank facades speak for themselves, as have been covered with paints and partially damaged by the anger of the demonstrators.

Government's officials said Courts ruling was an "economic aberration" and expressed suspects about a political hand behind the decision. In fact, five of the nine members of the Supreme Court of Justice respond directly to former President Carlos Menem, a well-known foe of the current President Eduardo Duhalde. Menem is running for his third presidency on the elections scheduled for April 27.

Even when Duhalde and Menem belong to the same party, Peronism, they have completely opposite ideas about country's future. In fact, Duhalde supports another candidate for the coming elections: the Governor of the Province of Santa Cruz, Nestor Kirchner. The third peronist candidate for president is the former Governor of San Luis Province, Adolfo Rodriguez Saa. Courts' ruling against pesification has directly benefited his province.

The savings of San Luis province had been frozen as part of a banking freeze imposed in December 2001 by former President Fernando de la Rua in an effort to halt a run on the nation's banks. The account was then later converted into pesos after the country's economic crisis forced current President Eduardo Duhalde to end the peso's one-to-one peg with the U.S. dollar and devalue the currency.

According to official estimations almost 400.000 savers still claim for their deposits. A total of US$8.7 billion is the amount banks should return to their clients after the new ruling.

Hernan Etchaleco PRAVDA.Ru Argentina

Photo: A group of Argentine savers banging the gates of an international bank in Buenos Aires.