Cavallo asked Argentina's Congress for emergency powers to try to pull the country out of a nearly three-year recession and to generate funds needed to make interest payments on what the World Bank reports is a $150 billion foreign debt owed to U.S. banks and other financial institutions. Cavallo says he will reorganize state agencies, restructure the tax system, privatize state banks and enterprises, and directly attack the working class by altering the labor code and pensions, and firing or cutting the wages of state workers.

Cavallo, the third person to occupy the ministry post in less than a month, was appointed by Argentine president Fernando de la Rúa after Cavallo's predecessor, Ricardo López Murphy, was forced to resign after his proposed austerity plan was met with protests by workers and students and the resignation of several government ministers.

Cavallo's new economic plan, called the Competitiveness Bill, will sharpen trade disputes among South American nations as the government aims to cut imports and boost exports. Tariffs on imports of consumer goods from outside the Mercosur trade bloc, which includes Brazil, Paraguay, and Uruguay will be increased up to 35 percent, while taxes on imported capital goods will be eliminated as an incentive to encourage foreign investment. Cavallo says he aims to boost industrial productivity by 20 percent as part of this drive.

Cavallo traveled to Brazil to meet with his counterparts. The instability of Argentina's economy, the lack of economic growth in Brazil, and a slowdown in the U.S. economy have forced the Brazilian government to take steps to stabilize its weakening currency.

"The best gesture of our neighbors has been to understand the emergency that Argentina is in and to give full support to the measures we are taking," said Cavallo, referring to the Brazilian government's response of support to Cavallo's plan. Before leaving Brazil, Cavallo also rejected rumors circulating about President De la Rúa's resignation due to the political turmoil.

Hugo Moyano, a leader of the dissident wing of the Confederation of Labor (CGT), which led what the New York Times called a "damaging 24-hour strike" March 21, said unions would not stop their protests. "I don't believe Cavallo's policies will remove the country from its crisis," he said. "They always postpone the social needs of the people."

Cavallo claims that his plan would result in strong economic growth this year and would reduce unemployment and the foreign debt. Argentina's official unemployment rate is currently at around 15 percent. Some 30 percent of the population lives below the government designated poverty line.

Cavallo also claims that he will carry out his economic measures without devaluing the peso or ending the decade-old currency board system, which he was responsible for introducing under the government of Carlos Menem in the early 1990s. This system pegged the peso to the dollar at a one-to-one exchange rate. Given the strength of the U.S. dollar on world markets, Argentina's exports have become relatively expensive.  
 
Debate on extent of powers
The divisions inside the Argentine government that came to the fore in the face of popular resistance after former economy minister López introduced what some politicians now call a "ridiculous plan," continued in the debate over granting minister Cavallo sweeping executive powers.

After more than 14 hours of debate in congress, the legislature granted limited emergency powers to de la Rúa, not to Cavallo. The measure did not include the authority Cavallo sought to privatize state enterprises, modify labor laws and state pensions, or to fire state employees or cut their wages.

Despite reassurances by the Argentine government that it would not default on its debt payments, wealthy imperialist investors are clearly worried. The Buenos Aires Herald reports a Bear Stearns analyst saying that the Argentine government has the money to meet a payment of $400 million due on March 30. But after that, all bets are off.

On March 24 an estimated 50,000 people marched to commemorate the 25th anniversary of the military coup that brought to power a bloody dictatorship that was responsible for the death of an estimated 30,000 people. A Financial Times article observed, "Many draw comparisons between the military coup of 1976 and the market-based economic model that has followed the return to democracy." One banner read, "The coup--terror of blood. The market--terror of hunger."

A 36-hour national strike called by the country's labor federations is set to occur April 5-6. With López's resignation, the Argentine government and media have attempted to demobilize the workers and students by calling the protests "illogical" since they were aimed at a plan that had already been rejected when Cavallo came into office.

The Financial Times article stated, "Left-wing parties, trade unions, and community groups that organised the Saturday [March 24] march blame him [Cavallo] for the job losses and austerity that accompanied reform."  
 
 
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